STOCK MARKET WATCH, Wednesday January 24

Getting Bullish on Oil and Oil Stocks
BY FRANK BARBERA, CMT

In my view with Oil prices falling sharply over the last few weeks, a little bit of big picture framing is necessary to put the recent decline in proper context. Simply put, this is a routine Bull Market correction and nothing more. Over the relatively near term, it is still possible that we could continue to face a “fast market” type condition, but the evidence is now starting to build that an important bottom has been seen. Once Crude Oil does complete a final low, in my view, the odds are high that we will see a rather strident recovery with prices likely moving back into the mid-$60’s as summer approaches. Thus, the outlook for Oil from here is not bearish, but bullish, as a recovery should do wonders for the equities in the energy sector. That said, let's take a moment and view the last few months in Crude from an Elliott perspective. In classic Elliott fashion, Oil has fallen in a three-step declining pattern, breaking out as a “5-3-5” declining sequence.

-cut-

Instead of a “Bear Market,” it is far more likely that Crude Oil is now completing Primary Wave A of a larger Cycle Wave Two correction. Over the next two years, it is likely that Oil – all things being equal – could trace out a “B” Wave back up across the range toward $80, and then a second “C” wave decline back down to the current $50 zone. That would take the better part of the next 18 to 24 months at which point we could then see Crude Oil begin its next SECULAR advance, Cycle Wave Three to even higher highs. Within Elliott, the “third of the third” is known as the “Point of Recognition,” the epicenter of an enormous advance, and the point where the broad scale “crowd” comprehends some basic driving principle that is under-pinning the price advance. In the case of Oil, I believe the secular advance will hit the ‘Point of Recognition’ sometime around 2010 and the subject of Peak Oil will be front and center on everyone’s lips. Ultimately if the world hits Peak Oil in the next few years, prices could easily spike above $100 and even above $200 dollar per barrel.

-cut-

There are many reasons why Oil prices could rise to such outwardly unprecedented heights, but chief among them has been the lack of CAPEX spending for new energy and alternate energy fuels over the balance of the last two decades. For the US, which imports nearly 70% of its Oil from foreign sources, this dependency on imported Oil is an Achilles heel and could have far reaching negative implications with regard to the inflation outlook and the outlook for real growth in the US Economy. In reviewing several important Time Cycles, I note that Crude Oil has had a reasonably consistent 5.2 year cycle in place, the half cycle of which was due to bottom in 2006. I believe that cycle is bottoming now, a bit later than normal ,and will soon turn up producing a solid recovery in prices. The next major five year cycle low for Crude (the full cycle low) is due in late 2008 which should be the end of Cycle Wave 2 and the beginning of the Peak Oil surge to above $100.

http://www.financialsense.com/Market/wrapup.htm

10:30 AM Crude Inventories 01/19
Prior 6768K

http://biz.yahoo.com/c/e.html

NEW YORK - Oil prices retreated Wednesday after the U.S. government reported that crude, gasoline and distillate inventories all rose last week.

The increase in supplies despite colder temperatures in the Northern United States led some traders to rethink their frantic buying of energy futures a day earlier, when they drove crude prices up by more than $2 after the U.S. government announced plans to boost its emergency crude stockpile this spring at a rate of 100,000 barrels per day.

-cut-

Those worries were allayed somewhat by the U.S. Energy Information Administration's report Wednesday, which said the nation's crude inventories rose 700,000 barrels to 322.2 million barrels — building on last week's increase, which was the biggest in more than four years.

Gasoline inventories, meanwhile, rose 4 million barrels to 220.8 million barrels. Distillate fuels, which include heating oil and diesel, rose 700,000 barrels to 142.6 million barrels. Heating oil inventories slipped, but a huge rise in diesel fuel more than offset the loss.

http://news.yahoo.com/s/ap/oil_prices

SINGAPORE - Oil prices fell back on Wednesday amid expectations that U.S. petroleum inventories rose in the most recent week.

After jumping the previous day, light, sweet crude for March delivery dropped 42 cents to $54.62 in afternoon Asian electronic trading on the New York Mercantile Exchange.

-cut-

The Department of Energy said it plans to increase the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels from 691 million barrels. The announcement raised the prospect of increased demand.

Traders were awaiting the release of weekly petroleum inventory figures from the Department of Energy later Wednesday. According to the average forecast of 10 analysts polled by Dow Jones Newswires, U.S. crude oil stocks may have risen by 1.1 million barrels.

http://news.yahoo.com/s/ap/20070124/ap_on_bi_ge/oil_prices_34

WASHINGTON (Reuters) - President George W. Bush on Tuesday called for Americans to cut their gasoline use by 20 percent over a decade, mostly through a nearly five-fold increase in use of home-grown fuels such as ethanol by 2017.

In his annual State of the Union address to Congress, Bush also called for tighter vehicle fuel efficiency standards and doubling the Strategic Petroleum Reserve's capacity to 1.5 billion barrels by 2027.

Bush asked U.S. lawmakers to "join me in pursuing a great goal" of reducing gasoline consumption by 20 percent -- the equivalent of 75 percent of current oil imports from the Middle East.

-cut-

Bush steered clear of calling for mandatory caps on U.S. emissions of carbon dioxide, despite a concerted push by big U.S. companies like General Electric Co. to cut heat-trapping emissions. In his speech, Bush called global climate change a "serious challenge" that should be addressed through technology.

...blah..blah..blah...

http://news.yahoo.com/s/nm/20070124/ts_nm/bush_speech_energy_dc_6

There's only so much technology and I think we have almost gotten there. Time to call for smaller vehicles and put a huge tax on SUVs and luxury (big or fast) cars

President George W. Bush plans to double the size of the country's emergency oil reserves to 1.5 billion barrels by 2027, Energy Secretary Samuel Bodman said.

The government this spring will start buying 100,000 barrels of oil a day to fill the stockpile to its current capacity of 727 million barrels, Bodman said in a conference call with reporters. Crude oil prices had their biggest gain since the aftermath of Hurricane Katrina in September 2005 on concerns that the purchases will stretch global supplies.

-cut-

Oil prices rise

Benchmark crude oil futures rose $2.46, or 4.7%, to $55.04 a barrel on the New York Mercantile Exchange.

"The market loved it," said Adam Sieminski, chief energy economist at Deutsche Bank. Bush's plan adds "significant upward pressure on oil prices," said Jason Schenker, an economist at Wachovia Corp. in Charlotte, N.C. "It would remove a significant amount of supply from the market. Refiners will have to spend more to get the available barrels."

http://www.freep.com/apps/pbcs.dll/article?AID=/20070124/BUSINESS07/701240385/1020/BUSINESS

glad I filled up yesterday.

Apple's boss Steve Jobs has been questioned by US government investigators about the company's alleged misuse of stock options, which has become the subject of a flurry of litigation.

It emerged yesterday that Mr Jobs was interviewed last week by the US Justice Department and the Securities and Exchange Commission. Mr Jobs was granted 7.5m share options in 2001. Apple has since admitted that the options were backdated by two months to make them more valuable - and that the records of company board meetings were falsified.

A New York pension fund has stepped forward as the primary plaintiff in a potential class action by Apple shareholders who say the company's mishandling of executive options diluted the share price.

The New York City Employees Retirement System, which manages $89bn (£45bn) in investments, has filed proceedings in a Californian court. The suit names directors of Apple including Mr Jobs and the former US vice-president Al Gore, who is heading a committee investigating the scandal. Apple is the highest profile of more than 150 companies caught up in a furore over the way share options were granted at the height of the technology boom at the beginning of the decade.

http://business.guardian.co.uk/story/0,,1997115,00.html

NEW YORK -- An index of leading economic indicators rose last month for the first time since September, signaling a faster economic expansion in the next three to six months.

The Conference Board said Tuesday that its index advanced 0.3 percent in December after a November reading that was revised to show no change from a previously reported gain of 0.1 percent. Economists had forecast a 0.2 percent advance for last month.

Wage gains, lower energy prices and an improving housing market suggest a rebound in the pace of growth, which slowed to an annual rate of 2 percent in the third quarter. A pickup would give the Federal Reserve more reason to resist an interest-rate cut and hold its benchmark rate steady at 5.25 percent.

-cut-

The Commerce Department is scheduled to release its first estimate of fourth-quarter gross domestic product on Jan. 31. Economists surveyed by Bloomberg raised their forecast for expansion during that period to a median of 2.5 percent, up from 2 percent a month earlier.

http://www.chicagotribune.com/business/chi-0701240089jan24,0,913768.story?coll=chi-business-hed

NEW YORK (Reuters) - U.S. stock futures signaled a slightly higher opening on Wednesday, with tech shares set to gain after Yahoo Inc. (Nasdaq:YHOO - news) said a new Web advertising system was nearly complete and Sun Microsystems Inc. (Nasdaq:SUNW - news) struck a deal for future financing.

Shares of computer maker Sun Micro advanced 8.2 percent in European trading, a day after it said it struck a $700 million deal with KKR Private Equity Investors LP (KKR.AS), allowing the company to fund future growth.

-cut-

Standard & Poor's 500 futures were up 0.9 point, slightly above with fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were up 9 points, and Nasdaq 100 futures were up 9.50 points.

http://news.yahoo.com/s/nm/markets_stocks_dc

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 84.72 Change +0.05 (+0.06%)

Dollar Cuts Morning Drop Short With Strong Growth Read

http://www.dailyfx.com/story/currency/eur_news/Dollar_Cuts_Morning_Drop_Short_1169584952710.html

Though the currency market was casting its vote of confidence for the US dollar in the New York session, a strong run against the unit through the Asian and European hours had already set the tone. Now, with the day ahead set with little scheduled event risk, traders will have to decide whether today’s Leading Indicators index offers enough promise for the economy to keep the greenback from a strong follow through the key anti-dollar breakouts.

For the benchmark EURUSD, the night-session run tallied a 115-point advance that tired just short of resistance seen around 1.3050; and so far, the retracement has been shallow. The same was true with USDCHF which finally broke its range in a 140-point dive to 1.2380. Alternatively, the pound rallied to a new 14-year high against the greenback to 1.9920, but has since almost fully retraced the impressive rally. Finally, the yen finally caught a break with a modest 75-point move against the dollar starting in the European hours, but the carry proved overriding as the pair moved back towards highs.

While there were no top market-moving releases available to traders this morning, the surprises the few indicators provided was more than enough to make up for their usually lack of potency. The headline number came from the pushed-back Leading Indicators index for December. Even though 7 of the 10 components are know before hand, the report still managed to beat expectations with a 0.3 percent rise last month. According to the Conference Board, this was the highest level for the indicator since September and further supports a rebound in economic growth in the coming three to six months. Dissecting data reveals promising numbers for a few key areas. Representing steady growth in labor trends, the average level for jobless claims last month slipped from 328,600 to 316,500 for a generous contribution to the index. Accounting for the biggest percentage of the overall composite, the money supply sub-gauge adjusted for inflation added its own 0.08 percent addition. From there, the rest of the changes were a little more controvertible. The gauge following stocks proved helpful as the S&P 500 averaged 1,416.4 through December, 28.8 points better than the previous month. However, as stocks struggle for further gains to new highs, there are a greater number of analysts and equity traders trying to catch the market on its turn. Elsewhere, the 5.5 percent jump in building permits also steered the Leading Indicators higher; but this number is also being argued as a fluke spurred by favorable weather rather than a bottom in housing.

Compared to the leading indicators print, the Richmond Fed’s manufacturing index was a little more straightforward. At -11, January’s headline read was the worst in over three years. Putting this indicator in context, the two regional factory reports released before the Richmond number were evenly split. The Empire dove to a new low while the Philly Fed bested the market’s consensus. With today’s number, the balance sheet is clearly calling for another contraction in the nationwide ISM report; a decline perhaps more severe than November’s. Furthermore, breaking down the Richmond Fed’s numbers offered little hope for an improvement in regional factory activity moving ahead. New orders and backlogs each sank to three year lows as factory heads tried to salvage profits through selling off built up inventory. Looking to the days ahead, worries over the manufacturing sector will be put on the back burner; and housing will step up once again as the top concern for dollar bulls.

...more...

US Dollar (USD) Weakens after US Announced Plans to Increase Strategic Oil Reserve

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar__USD__Weakens_after_1169590942006.html

US Dollar
President Bush is set to give his State of the Union Address tonight and the US dollar is weaker going into it. Political and economic references will be our main focus as traders look for Bush’s comments on Iraq, Iran, oil and jobs. For the first time since his Presidency, Bush will be addressing a Democratically controlled Congress. With approval ratings according to a Washington Post–ABC poll at 33 percent, Bush may have little political clout to call for any grand sweeping changes. The dollar is also falling as a result of the jump in oil prices. Oil is trading higher after the U.S. Energy Department announced plans to double the US’ emergency oil reserve to 1.5 billion barrels by 2027. Beginning this Spring, this would involve a demand of 100,000 barrels a day. This announcement may just have what it takes to cement the bottom for oil prices. Meanwhile the leading indicators report which was originally scheduled for release yesterday came out firmer than expected. Improvements in the labor market and jobless claims helped the index rebound to 0.3 percent in the month of December from a flat reading the prior month. Any optimism from the report however was offset by a drop in the Richmond Fed manufacturing index. Aside from the weekly mortgage applications and oil inventories report, there is nothing on the US calendar. Unless we have a big surprise from the President tonight, we will probably see more mixed price action in the US dollar.

...more...

Richard Daughty, the angriest guy in economics -- World News Trust

Jan. 24, 2007 -- A lot of worried people ("I'm worried that gold and silver are not exploding to the upside even as we speak and that I won't be rich soon enough to suit me!") and a lot of angry people ("And I blame it all on you, you Stupid Mogambo Moron (SMM) and now I'm going to kill you!") are asking, in essence, "Why aren't precious metals moving up lately?"

To these, and many others, I hereby take the lazy way out and reprint my pithy reply to a certain Mike S., whose query was along that very line. "Dear Mike", I wrote, "What is happening is that there is a colossal short position in damned near everything, with the promise of more and more at the drop of a hat. Paper money, paper stocks, paper bonds, paper derivatives, paper silver, paper gold, paper soybeans, paper paper paper everything.

"And as long as everyone treats them as a money-equivalent, then how could prices go up if any additional demand was met with more paper silver (or paper soybeans or paper T-bonds or paper anything else) being instantly created and dumped on the market?"

And how long will this situation last? Ahh! That is the Big Important Question (BIQ)! And since you asked, I firstly assume that neither the scumbags who run the exchanges nor the regulators who are supposed to keep this corrupt crap from getting out of hand will, as usual, show any interest whatsoever.

Therefore, you can expect the price to remain artificially low as long as the number of people trying to take physical delivery is less than what can be brought to market without undue losses for the shorts, as then everything falls apart, with bankruptcy, scandal, investigations, media coverage, consumer and investor outrage, and a government that is suddenly a little too interested in what OTHER market scams are out there to suit the slimy insiders who are making all the money and running all the scams, and who are desperate to keep this thing going as long as they can!

more

http://www.worldnewstrust.com/index.php?option=com_content&task=view&id=871&Itemid=1

:donut: I made a sacrifice last night for you guys. I listened to the Chimperor's speech....without alcohol. It didn't make much difference though-I still have a horrible headache today.

My favorite moment of the speech was the tax deductions for health care. Here I am, scraping by. I have an emergency, like break my arm. As I go out the door they stop me and ask how I intend to pay. I can see myself proudly saying...do you take tax break. Oh, you only take cash and credit cards? But Bush said tax cuts would pay for my health care-oh, you don't take tax cuts...Well I have an extra mouth to feed, will you take my first born? Oh, you've stopped doing that-the government stopped taking them as payment-got enough mercenaries for the army now. Well I guess I really didn't need that minimum wage raise-we are use to the old rate.

Seriously, I usually listen with the volume down and watch for the facial expressions any way. Just like we would do when trying to figure out the power structure in Russia and China in years gone by.

Happy hunting and watch out for the bears.

I did like his acknowledgment of the 1st female Speaker of the House. YAY, Nancy!

The rest of the speech was rather bland and full of repeated promises:

1) Tort reform (didn't they do that one already?)
2) Social Security (tried before and failed miserably)
3) Medicare/Medicaid (well, the GOP rubber stampers sure screwed the pooch on that one, eh? At least re: the prescription drug program)
4) Iraq War escalation/justification (at least he minimized the linkings of this to Nine-Eleven)
5) NCLB (still touting this as a great success despite the exact opposite being the truth)
6) Balanced Budgets (Claimed to have halved the deficit 3 years early. Uh, MORAN-in-Chief? Keeping the "war on terror" funding out of the budget as a supplemental doesn't mean you've halved the deficit. *sigh*)

and the kicker:
7) Economy (touted 7.2 million new jobs over a 6-year period as something great. Ok, let's break this down. 7.2 million / 6 years = 1.2 million/yr. Divide that by 12 months and you get 100,000 new jobs each month. What's the equilibrium point, folks? 150k-160k per month. Heckuva job, George!)

He was quite impressive in his outline of how money and other resources are being diverted from the War on Drugs, or WOD, (another war (against an abstract concept) that we have not won since the Nixon administration) to the War on Terror, or WOT. Bush proves his amazing strategic skill by demonstrating that any world power cannot fight effectively on more than one front at the same time. See you later WOD - gotta go fight the WOT.

OH WAIT! He didn't say that. Silly me. Must've been the bright lights and shiny objects mesmerizing my alcohol-addled brain.

and was sober for once. I was interested in how the the Congress acted-that tells me how things will be. Not all the GOP was up to their feet and applauding.
Did anyone else but me seem to think Cheney looked distracted on many occasions. Maybe it was wishful thinking on my part-but he did look a bit sad and distracted at times (esp in his eyes).

Libby's trial will do to him. If Libby's trial ends without Cheney having a new hole ripped in his ass, at least, then he's a divinely lucky man.

somehow he'll wiggle out of the libby trial.

or maybe I'm just a pessimist?

love the thread btw!

Off the Rails: Big Oil, Big Brother Win Big in the State of the Union

by Greg Palast
Tuesday, 23 January, 2006

There was that tongue again. When the President lies he's got this
weird nervous tick: He sticks the tip of his tongue out between his
lips. Like a little boy who knows he's fibbing. Like a snake licking a
rat.

In his State of the Union tonight the President did his tongue thing
124 times � my kids kept count. ~snip~

http://www.gregpalast.com/off-the-rails-big-oil-big-brother-win-big-in-the-state-of-the-union/#more-1570

per CNBC. Projected 2 mil bbl increase. Actual 700K plus. This while the Saudis have the spigots wide open and completely disregarded their scheduled OPEC cuts for political reasons.

Dow 12,596.37 Up 62.57 (0.50%)
Nasdaq 2,460.07 Up 28.66 (1.18%)
S&P 500 1,435.54 Up 7.55 (0.53%)
10-Yr Bond 4.816% Up 0.012
NYSE Volume 890,075,000
Nasdaq Volume 785,121,000

11:00 am : The major averages have broken out of their relatively narrow trading ranges, extending their reach to session highs in sympathy with further deterioration in oil prices. Crude for March delivery is now down 2.1% and back below $54/bbl following larger than expected builds in weekly distillate and gasoline inventories. While oil's recent pullback has subsequently pushed the Energy sector to its lowest level intraday (-1.1%), lower oil has given transports enough of a boost to help the Industrials sector turn positive. DJ30 +44.14 DJTA +0.3% NASDAQ +25.25 SP500 +5.98 NASDAQ Dec/Adv/Vol 976/1782/662 mln NYSE Dec/Adv/Vol 1179/1805/400 mln

10:30 am : More of the same for stocks as buying remains widespread across most areas. Of the two sectors succumbing to selling pressure, Energy is turning in the worst performance (-0.6%). That's not all that surprising since it was up an impressive 2.5% yesterday as oil prices soared nearly 5% to close above $55/bbl. The commodity is currently down 0.7% at $54.60/bbl as traders aren't willing to take any bets ahead of today's weekly inventories report, which will be out momentarily.

Notwithstanding oil's decline, transportation stocks are trading lower, which is contributing to the Industrials sector's underperformance this morning. The weakness in transports is due in large part to a Q4 shortfall from Norfolk Southern Corp (NSC 50.74 -2.99), which has sparked some consolidation in Railroads. The latter ranked among yesterday's best performers (+3.7%) but is among today's biggest laggards (-1.8%).DJ30 +17.79 NASDAQ +14.38 SP500 +3.03 NASDAQ Dec/Adv/Vol 1128/1580/456 mln NYSE Dec/Adv/Vol 1206/1678/256 mln