Crack Spreads: Both cracks were off to a bullish start on Tuesday on weakness in the crude spread and received an additional boost from a refinery explosion in Mexico which sent them soaring. Heat made a new 3Q high at 1375 and Gas made new monthly highs at 816 before retreating on the close. Both are in breakout legs with a sideways to bullish bias for today as overnight action consolidates on slightly lower trade.
The Heat Crack closed strong on the 1300 level with current action in a 4-day uptrend and good buying opportunities seen against 1270 X and 1255-1240 XX breakout support levels. Trade moving back above the 1300-1315 X Resistance level favors upward action targeting 1350 XX to 1375-1400 XXX targets.
Failures to trade through 1300-1315 X Resistance offers mild sell scalping opportunities with shorts using the 1270 X to 1255-1240 XX Support levels for targets. A turn below 1240 may set off sell stops triggering a drive into the 1220 to 1180 XXX and XXXX congestion support range.
The Gas Crack is slightly lower ahead of the open with buying opportunities seen against 660-645 X Support on early dips. Maintaining trade above this breakout range has bullish implications but we'll need to move above 715 Pivot to generate momentum targeting 740 XX to 760 XXX Resistance areas. Trade above 760 XXX sets the stage to retest yesterday's reactionary highs in the 785 to 816 XXXX extension range.
Failures to trade above 700-715 X Settle/Pivot Resistance in the primary session offers mild sell scalping on expected sideways trade with 660-645 X Support a target for shorts. Trade below 645 flips short term momentum down as profit taking kicks in targeting lower Support zones at 615-585 XX to 550-535 XXX.
Crude Oil: Crude prices traded sharply lower in early trading on Tuesday but pared much of the losses as an intra-day double bottom at 7265 generated a short covering reversal. The market rallied back to unchanged before closing down 51 cents on the day. The recent action is signaling a mixed to higher bias with trade expected to challenge the 24-day downtrend line today crossing at 7400-7435 X Resistance. Moves above 7435 favor rallies to upper targets at 7463 XX to 7500 XXX. Trade or a close above 7500 has strong Bullish implications today and in the days ahead.
On the downside, failures to trade above the 24-day downtrend line at 7435 followed by a press below the 7375 Pivot puts trade on the defensive targeting 7320-7300 XX Support to 7263-7250 XXX Support containing the 11-day and 20-month uptrend's. A drop below 7250 has strong Bearish implications likely to ignite a flush into the 7200-7150 XXXX bear extension range.
NG: Natural gas has been trading very mixed on choppy trade within a slight upward trend channel off of the 2010 lows at 3620. Today's bias is Mixed with overnight action trading unchanged and range bound within the 3800 to 3900 range.
Buyers today can scalp on trade holding above the 3840 PIVOT X Support or buy into congestion Support below at 3800-3755 XX Support. Use 3880-3903 X Resistance as a profit objective. Trade above 3903 is moderately bullish aiming for last week's 3946 high at XX Resistance with a chance to spike up to 3985-4035 XXX Resistance.
Sellers can scalp on trade or an open below 3840-3860 Pivot area and look to cover in the 3800-3755 XX Support range. A drop below 3755 breaks the 9-day and 3-week uptrends and shifts the tone to Bearish with the Sept and 2010 lows targeted at 3697-3693 XXX.
S&P: S&P futures fell sharply after the Bears stepped in to defend the Aug 11th breakdown levels at 1105-1108 while generating a double top pattern. The market fell to 1090 and closed on its lows at 1091 with losses of 12 handles. Overnight trade is trading around unchanged with a Mixed to Lower bias for today's session. Overall action remaining below 1095 to 1100 has Bearish implications on the market with downside targets placed at 1086-1084 XX and 1080-1075 XXX Supports.
On the upside, buy scalpers can trade against 1091-1090 X Support and should cover against 1095-1096 X and 1099-1102 XX Resistance targets. Trade above 1102 shifts the tone to moderately Bullish targeting this week's double top highs at 1105-1108 XXX Resistance with a chance to challenge the 200 DMA at 1113 XXXX target.
GOLD: Gold prices resumed upward trending forces on Tuesday closing strong and prompting follow through to the record highs at 12648 in overnight action.
The market outlook is Bullish today with dips expected to hold 12565-12556 X Pivot Support or 12515-12500 XX Support levels. Objectives are to continue to challenge the 12648 record high at XX Resistance, then extend to 12675-12706 XXX containing the record high for the Dec contract.
Any shorts from overnight against the 12648 record high can use 12565-12556 X and 12515-12500 XX Support to cover positions. Trade below 12500 alerts for extended corrective drives to 12464-12453 XXX Support targets.
