Ben Cautions Slowdown
Gold – Gold futures rallied to a new high close yesterday on inflation worries and a sliding greenback. Cautionary inflation comments from Fed Chairman Ben Bernanke sent the market flying higher in early trading, but a short-lived midday recovery in the Dollar and a Crude Oil sell-off combined to bring prices down well off of the day's highs. Gold is slightly lower this morning on profit-taking and thoughts that a slowdown will decrease inflationary pressure. Profit-taking pressure and weaker energy prices could keep the market from making new highs today. December Gold had an inside day on the daily chart and the market is trapped within the same range this morning, failing to push above the 850 mark. Wednesday's bearish hammer, followed by yesterday's spinning top candlestick, suggests a bearish near-term bias. Gold is showing a very overbought 89.8 percent on the 9-day RSI, which could explain some of the profit-taking this morning. Support comes in at 825 and 808, while resistance may be found at 850 and 865.
E-mini S&P – Stock index futures are lower this morning on fears of an economic slowdown, a weak Dollar and continued subprime worries. Fed Chairman Bernanke, testifying before the Joint Economic Committee, cautioned that the economy is slowing and inflationary pressures remain. The market did recover later in the day, as many traders interpreted Bernanke's statements as opening the door for a rate cut in December. Driving the market lower this morning, Qualcomm cut its earning expectations for 2008 and Wachovia Bank is increasing its allowances for bad loans in the fourth quarter. The December e-mini S&P looks bearish on the daily chart, having fallen below the 1485 support area. Momentum remains very weak and comes into trading at -30.50. The market does look technically oversold, which could support prices in the near-term. Support now comes in at 1442 and 1400, while resistance can be found at 1485 and 1505.
Crude Oil – Crude Oil prices are trading lower for the third day in a row on fears that a U.S. slowdown could decrease petroleum demand. The market traded higher in the early going, as storms in the North Sea have interrupted production by about 220,000 barrels a day, but Bernanke's statement about slower economic growth, coupled with inflationary comments, drove prices lower late in the day. Oil traders viewed the statement as a warning that the Fed will remain hawkish and not cut rates in December – a completely different view than equity and fixed income traders, who saw the statement as opening the door for further cuts. The sagging stock market and profit-taking have weighed on Crude prices today and fresh bullish news may be needed for buyers to step in. The December Crude chart formed a spinning top candlestick on Wednesday and yesterday's candle had a long upper shadow, which suggests a bearish near-term bias. The market has found some support near the 9-day moving average in the early going, but a close below the average of 94.60 would be considered bearish near-term. Support comes in at 93.70 and 92.50, while resistance can be found at 97.50 and 98.62.
Rob Kurzatkowski, Commodity Analyst
