Crude futures have slammed beneath $70/bbl following a nearly -7% decline in the SCI during the Asian trading session. Investors are deeply concerned about the Chinese economy slowing down. We've noticed Chinese imports are dropping quickly and the BDI is heading south. The decline in shipping activity indicates China may be slowing down its commodity buying spree as the government's stimulus package starts to tap out. There is no secret that China's demand for commodities has been the driving force behind the recovery in crude, copper, etc. Therefore, the stream of news out of China is driving crude futures lower despite today's broad-based appreciation of the Dollar. However, we'll receive Manufacturing PMIs from China, Britain and the U.S. over the next 24 hours. Better than expected results could help crude futures find a temporary bottom since this would improve the outlook for consumption. On the other hand, weaker than expected Manufacturing PMI data would likely exacerbate crude's current pullback.

Technically speaking, crude's decline below our 1st tier uptrend line and $70/bbl are both strong technical movements to the downside. Therefore, it appears as if crude could be heading for another leg down, at least this is what the technicals are telling us. Then again, the concrete fundamentals are still in favor of strong crude with known demand holding steady and supply declining. However, it seems investors are taking a more speculative, forward-looking approach to pricing today. Meanwhile, the key for the bulls will be getting crude back above $70/bbl and our 1st tier uptrend line.

Price: $69.50/bbl

Resistances: $69.86/bbl, $70.44/bbl, $70.94/bbl, $71.55/bbl

Supports: $69.36/bbl, $69.11/bbl, $68.66/bbl, $68.24/bbl, $67.87/bbl

Psychological: $70/bbl