Written by Gary
Closing Market Commentary For 06-13-2014
Iraq is leading the news going into the weekend and has provided some volatility this afternoon for the bulls and bears betting on the outcome. Interestingly, the oils have come off their high marks when so many analysis we certain we would soon see $125 a barrel of oil.
By 4 pm gold was steadily melting up, but the averages were holding neutral in a somewhat sideways trading pattern on low volume. My weekend report will be up by 10 am tommorrow.
Your best guess for Monday is as good as any right now, but I would be especially cautious towards the end of the week when US financial reports come out. In the mean-time, there will probably be investor complacency regarding the Iraq situation and will not adversely affect the overall US markets opening Monday.
"The latest escalation in Iraqi tensions has introduced new event risk for global oil markets. However, current options market pricing suggests oil markets are still attaching a low probability to an oil price spike over the coming months.
We believe this sanguine approach to oil price spike risk reflects the fact that the major oil infrastructure in Iraq has not (yet) fallen into the hands of the militant extremists." - Deutsche Bank
The short term indicators are leaning towards the hold side at the close. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA's, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned down, but remains above zero at 16.25. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 88 % sell. Investing.com members' sentiments are 65 % bearish and Investors Intelligence sets the breath at 67.3 % bullish with the status at Bear Correction.
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The DOW at 4:00 is at 16776 up 41 or 0.25%.
The SP500 is at 1636 up 6 or 0.31%.
SPY is at 194.22 up 0.59 or 0.30%.
The $RUT is at 1163 up 3 or 0.28%.
NASDAQ is at 4311 up 13 or 0.30%.
NASDAQ 100 is at 3776 up 12 or 0.31%.
$VIX 'Fear Index' is at 12.02 down 0.54 or -4.30%. Neutral Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is positive, the past 5 sessions have been net negative and the current bias is sideways and volatile.
July Brent crude hit a nine-month high of $114.69/bbl earlier today, but has since stabilized at ~$113 after the IEA said Iraqi oil supplies are not at immediate risk; most of Iraq's oil production, export facilities and reserves are in the largely Shia areas in the south, where Islamist rebels enjoy little support.
But such a forecast assumes the conflict doesn't spread; if it does, there is "no doubt" that Brent could reach $125/bbl and beyond, says PVM Oil Associates' David Hufton, who adds that Saudi Arabia has 2M bbl/day of capacity it can turn on fairly quickly but that leaves no spare capacity margin.
Even if the insurgents don't advance to the south, the long-feared fragmentation of Iraq along sectarian lines has been set in motion, which damages the outlook for investment and production growth in Iraq in coming years, a period when Iraqi supply additions are critical to market balances, according to analysts at Energy Aspects.
WTI oil is trading between 107.67 (resistance) and 106.39 (support) today. The session bias is negative and is currently trading down at 106.78.
Brent Crude is trading between 114.05 (resistance) and 112.01 (support) today. The session bias is trending down and is currently trading up at 112.47.
Maybe I'm Wrong - Justifying $2,000+ Gold by Jeffrey Dow Jones
Gold fell from 1278.11 earlier to 1270.99 and is currently trading up at 1277.10. The current intra-session trend is positive and volatile.
Dr. Copper is at 3.026 falling from 3.041 earlier.
The US dollar is trading between 80.72 and 80.44 and is currently trading down at 80.65, the bias is currently elevated, but sideways.
Real Time Market Numbers
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Written by Gary