Traders Nervously Await Non-Farm Data
Crude Oil – Profit-taking ahead of the weekend, along with some early reluctance among buyers, has Crude Oil futures trading lower in the early going. Today's release of non-farm payrolls, which are forecast to show a very small increase of 25,000 jobs for the month of February, has Oil traders a bit weary. Weaker-than-expected results could signal further slowdowns in demand for petroleum from U.S. consumers, especially if the figure shows further contraction in the labor market. A sharply lower U.S. Dollar could act as a buffer to any selling pressure the market may feel as a result of the data. Commodity markets – especially energies and metals – have risen sharply in recent weeks due to inflationary concerns, and the Oil market has become somewhat detached from supply and demand fundamentals. A strong figure could bolster some moderate buying, but traders may want to lock in profits ahead of the weekend, which could make it difficult to garner upside traction. The daily April Crude Oil chart remains bullish after breaking out to yet another new high yesterday. It would likely take sell-offs below 97.00 to reverse the recent trend. Support comes in at 103.55, 101.64 and 100.44, while resistance can be found at 106.67, 107.88 and 109.80.
Dow – Indecision among traders ahead of the non-farm payroll report has stock index futures little changed going into the number. Another month of contraction in the job sector may all but confirm that the economy is in a recession, which may adversely affect consumer behavior, even for those currently employed. Yesterday's release of foreclosure data suggests that distressed homeowners have lost hope and simply caved, which leads many to believe the housing market may get much worse before it gets better. The Fed's aggressive rate cut strategy may help bail out distressed banks, but banks have been reluctant to lend money after the sub-prime crisis, which may hurt them in the long run. The lack of buyers in the housing market may drive down the value of homes further, depreciating the value of foreclosed homes and thus compounding the woe for banks. The March Mini Dow chart shows a downside breakout of a wedge formation, signaling the possibility of even more downside. The move suggests the market may test the 11,000 mark before it rebounds. Weekly and monthly charts are much more ominous and hint at a more extended correction. Support comes in at 11950, 11831 and 11638, while resistance can be found at 12262, 12455 and 12574.
Platinum – The Platinum market has broken down this morning on South African authorities’ comments that electrical supplies to mines will be increased. This sparked a wave of long liquidation, which seems to have stopped out quite a few smaller traders that established longs late in the move. The thinness of the Platinum market certainly had an impact on the scope and swiftness of the drop in prices. The sharp losses over the past two sessions could also be the result of the market’s opinion that prices have risen too quickly. Today’s payroll report is a mixed bag for Platinum traders – on one hand, the metal could become more attractive as an investment vehicle and inflation hedge, but on the other, it could be a sign that demand will slow. If the market is unable to pare losses and regain the $2,100 mark, today’s sell-off will have done some chart damage. The violation of this support area could signal a reversal of the uptrend. The next significant chart support comes in at the first Fibonacci retracement area of 2003.90, with additional Fib support coming in at 1909.20 and 1814.50.
Rob Kurzatkowski, Commodity Analyst
