Traders,
We pulled off the resistance levels during the day – but had some strength going into the close. We really haven’t broken down or up from the resistance area – meaning that volatility is still loading into the range. The dollar is also sliding fast – and commodities are ramping again. The news about Citigroup yesterday – combined with durable goods put a damper on any rally through resistance.
________________________________________________
Oil Pipeline Bombed!
One of Iraq’s major pipeline was bombed by terrorist a few hours ago. Iraq is saying it will take a couple of days to make the repairs once the fire is out. The pipeline feeds about 30% to 50% of Iraq’s oil. With supply vs. demand spread is narrow - even this amount (about a million barrels per day) – will have an impact. However, the greater impact is the “show” of political instability in the region.
Even with the region relatively quite for a while – oil has still rallied above $100. This latest news shows the vulnerability and the continued instability of the region. Oil is up small in the early hours. As more details come out – we could get more volatility injections into oil price.
________________________________________________
ORCL doesn’t meet high-end expectations
True, while ORCL did have double digit growth – it fell below expectations. Additionally in the conference call the mentioned that the slow-down and credit problems in the financial sector is also going to curtail growth going forward. Reading – into the durable goods number yesterday – it clearly shows that ORCL will be also facing a slowdown as companies order less (since businesses are ORCL’s primary clients).
ORCL is getting hit in the pre-market – expect it to put pressure in the tech sector.
________________________________________________
ConAgra selling its trading unit for $2.1 billion to Hedge Fund
Ospraie Management (a 10 billion dollar hedge fund) has agreed to buy ConAgra Food’s commodity trading operation for $2.1 billion. Thus giving Ospraie greater access to information into supply changes and pricing. Ospraie’s Special Opportunities unit invests in commodity producers such as agriculture and mining companies.
Ospraie is gaining edge buy this purchased – and both Lehman Brothers and Credit Suisse have made large equity stake holdings into Ospraie. This acquisition will most definitely take them to the next level and give them unprecedented insight.
________________________________________________
Futures Pre-Open
While the futures are UP in the opening – they are trading below fair value and a below the cash by $4 points. It does happen sometime and is confusing – but the futures had made a huge UP side move after the market close and before the globex session – thus causing this disparity. The ARB traders will be buying futures and shorting the basket going into the opening. Expect downside pressure on stocks at the opening as the spread closes.
_______________________________________________
Support / Resistance
The INDU pulled off from 12500 but not really enough and the other indices are still flirting with the resistance levels. The market did see some strength going into the close and the futures even moved higher in the aftermarket. However – not enough to break through.
INDU 12250 / 12500 (I would not really get long at the 12250 level – and while we did pull off the resistance – it was not enough. 12500 is still a resistance area.)
NDX 1750 / 1800 (Yeah we are above 1800 – but that is a magnet area and watch the close to see if we are above or below it)
SPX 1300 / 1350 (Getting through 1350 has not really happened – seems the resistance is fairly strong)
RUT 650 / 700 (We did close above 700 with a rally into the close – but expect to see a little pressure this morning.)
I am still overall 70/30 bearish and the longer we CAN NOT get through the resistance – the more the move to the downside will be exacerbated.
________________________________________________
Conclusion
The oil pipeline explosion is alarming in that it shows the vulnerability of oil supplies – true the oil futures are not reacting that much to the attack – but it’s a clear warning, since supply lines are already tight vs. demand. The dollar is also sliding very hard and fast again against the Euro – from 1.54 to 1.58 in a couple of days is a huge move. Ospraie’s huge investment into the commodity trading pipelines is a clear sign that the big money is taking some serious bets in the expansion of commodities in the current bull market. I guess Jimmy Rogers was right these last couple of years.
ORCL news is also going to put some pressure on the tech market today – being a leader in the industry.
Last night’s lecture went very well – and I hope that they learned something. I do talk a little fast and I hope the information was not too technical for the audience.
We pulled off the resistance levels during the day – but had some strength going into the close. We really haven’t broken down or up from the resistance area – meaning that volatility is still loading into the range. The dollar is also sliding fast – and commodities are ramping again. The news about Citigroup yesterday – combined with durable goods put a damper on any rally through resistance.
________________________________________________
Oil Pipeline Bombed!
One of Iraq’s major pipeline was bombed by terrorist a few hours ago. Iraq is saying it will take a couple of days to make the repairs once the fire is out. The pipeline feeds about 30% to 50% of Iraq’s oil. With supply vs. demand spread is narrow - even this amount (about a million barrels per day) – will have an impact. However, the greater impact is the “show” of political instability in the region.Even with the region relatively quite for a while – oil has still rallied above $100. This latest news shows the vulnerability and the continued instability of the region. Oil is up small in the early hours. As more details come out – we could get more volatility injections into oil price.
________________________________________________
ORCL doesn’t meet high-end expectations
True, while ORCL did have double digit growth – it fell below expectations. Additionally in the conference call the mentioned that the slow-down and credit problems in the financial sector is also going to curtail growth going forward. Reading – into the durable goods number yesterday – it clearly shows that ORCL will be also facing a slowdown as companies order less (since businesses are ORCL’s primary clients).
ORCL is getting hit in the pre-market – expect it to put pressure in the tech sector.
________________________________________________
ConAgra selling its trading unit for $2.1 billion to Hedge Fund
Ospraie Management (a 10 billion dollar hedge fund) has agreed to buy ConAgra Food’s commodity trading operation for $2.1 billion. Thus giving Ospraie greater access to information into supply changes and pricing. Ospraie’s Special Opportunities unit invests in commodity producers such as agriculture and mining companies.
Ospraie is gaining edge buy this purchased – and both Lehman Brothers and Credit Suisse have made large equity stake holdings into Ospraie. This acquisition will most definitely take them to the next level and give them unprecedented insight.
________________________________________________
Futures Pre-Open
While the futures are UP in the opening – they are trading below fair value and a below the cash by $4 points. It does happen sometime and is confusing – but the futures had made a huge UP side move after the market close and before the globex session – thus causing this disparity. The ARB traders will be buying futures and shorting the basket going into the opening. Expect downside pressure on stocks at the opening as the spread closes.
_______________________________________________
Support / Resistance
The INDU pulled off from 12500 but not really enough and the other indices are still flirting with the resistance levels. The market did see some strength going into the close and the futures even moved higher in the aftermarket. However – not enough to break through.
INDU 12250 / 12500 (I would not really get long at the 12250 level – and while we did pull off the resistance – it was not enough. 12500 is still a resistance area.)
NDX 1750 / 1800 (Yeah we are above 1800 – but that is a magnet area and watch the close to see if we are above or below it)
SPX 1300 / 1350 (Getting through 1350 has not really happened – seems the resistance is fairly strong)
RUT 650 / 700 (We did close above 700 with a rally into the close – but expect to see a little pressure this morning.)
I am still overall 70/30 bearish and the longer we CAN NOT get through the resistance – the more the move to the downside will be exacerbated.
________________________________________________
Conclusion
The oil pipeline explosion is alarming in that it shows the vulnerability of oil supplies – true the oil futures are not reacting that much to the attack – but it’s a clear warning, since supply lines are already tight vs. demand. The dollar is also sliding very hard and fast again against the Euro – from 1.54 to 1.58 in a couple of days is a huge move. Ospraie’s huge investment into the commodity trading pipelines is a clear sign that the big money is taking some serious bets in the expansion of commodities in the current bull market. I guess Jimmy Rogers was right these last couple of years.
ORCL news is also going to put some pressure on the tech market today – being a leader in the industry.
Last night’s lecture went very well – and I hope that they learned something. I do talk a little fast and I hope the information was not too technical for the audience.
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