8-18-2010 Futures Technical Update!

RBOB continues to be week and after an the anticipated rally to work off oversold conditions we are seeing it continue its journey lower trading down almost 2% as I write this. On top of that Crude has broke an important support level at $75 after the API reported a build of almost 6 million bbls in the U.S. In yesterdays update I had said that /HO was not setting up as bearishly as /RBOB and still had a strong support level intact around 1.98-2.00 and that it was likely that we saw 2.06 before we saw the 1.98 again, I was wrong here. However /HO support still remains intact at 1.98 and unless this level breaks we should see high prices.

/HO
I think that support holds at 1.98 and the next target to the upside is 2.02 and then 2.05.

/RBOB
I hold my bearish stance on /RBOB and it continue to make lower lows on it latest down trend started 8-4-10 and believe it will be testing its May low of 1.88 very soon. If we get some real momentum to the downside in equities it could happen this week.

/CL
Last week crude had a sell off of better than 7% and continues to look week. Today after the API report last night crude is off about 2% and broke an important support and in my opinion physiological level of $75. This one is setting up identical to /RBOB and I have a downside target of 72-72.50.

On the economic and news front, today is a very light day. I will re-iterate that I believe yesterdays move up in equities, /CL, and /RBOB was just an oversold rally only to set up for a move lower. As we finish up the tail end of earnings season the market is running out of much catalyst to propel it to the upside and I remain bearish through the rest of the summer and into September.