Crude is strengthening from our 1st tier uptrend line after bottoming out above the psychological $75/bbl level. Crude futures managed to avoid any significant technical setbacks on Friday despite the substantial selloff in U.S. equities. Crude's strength stemmed from relative stability in the EUR/USD and gold. Speaking of which, both are trying to set new bottoms of their own as we speak. Meanwhile, the S&P futures are bouncing nicely after ISM Manufacturing PMI and Pending Home Sales data points both printed much better than analyst expectations. The Manufacturing PMI is the more important number of the two since the ramp up in production ultimately implies an increase in demand for and consumption of crude. Today's data negates Friday's sluggish personal spending number, and crude futures are stabilizing as a result.
However, despite crude's present strength, the futures still need to deal with their psychological $80/oz zone, previous 2009 highs, and our downtrend lines. Therefore, crude does have some work cut out for it to the topside. As a result, crude may look for either the EUR/USD, U.S. equities, and/or gold to make the first move. As for the downside, crude futures have our 1st tier uptrend line, Friday lows, and the psychological $75/bbl level serving as technical cushions. Meanwhile, the EUR/USD is trading well off October highs and its psychological 1.50 level while the S&P futures are presently staring down their own psychological 1050 level. Therefore, topside headwinds remain with more important econ data on the way along with central bank meetings beginning with the Fed on Wednesday. Hence, while the technicals are beginning to work in crude's favor again, there is more than enough fundamental and psychological news/data to send the markets in either direction. As a result, investors should remain alert and aware of the potential for high volatility.
Resistances: $78.91/bbl, $79.53/bbl, $80.26/bbl, $80.96/bbl, $81.52/bbl
Supports: $77.66/bbl, $77.10/bbl, $76.63/bbl, $75.74/bbl, $74.91/bbl
Psychological: $80/bbl, $75/bbl