Technical Report:

The ‘inside day’ mentioned yesterday proved to be a key factor in the short term direction as anticipated. After failing to make new highs and creating a short term treble top the only logical move was to test the downside support at $129.66. On breaking this level stops were triggered and we witnessed a $2 sell off. This level should now become resistance with a new downside target (after nearby support) being the lows of early June, a long way below in the $121.50 area.
The short term trend is down while the medium is sideways and long term trends remain bullish.


Support: $127.60 (yesterdays low) Resistance: $135.31 (40 day moving average)
Support: $127.23 (low of 06/06/08) Resistance: $133.75 (yesterdays high)
Support: $125.90 (high of 09/05/08) Resistance: $129.66 (low of 18/07/08)


Summary:

As often mentioned, the reaction to “the news” provides a better indicator of direction and sentiment than the underlying fundamentals taken unilaterally. We have hurricanes in abundance, nuclear tensions increasing in the Middle East and oil failed to reverse its current downtrend by rallying a mere $4.00 from the previous lows. DOE inventory figures are published this afternoon and the reaction to these as always will give us a firmer idea of market direction.