After hitting a low of 8217.05 this morning, the Dow has been able to recover some of its lost ground, recently trading at 8302.91. Weakness in the Dow can be attributes to economic concerns that a potential recovery could be losing steam. Further, as September 11th approaches, some investors could find themselves weary of making bullish bets before the anniversary.
Today's ISM non-manufacturing report fell from 53.1% in August to 50.9%. Although the report dipped well below expectations of 54.4%, any number above 50 does indicate economic expansion.
Jobless Claims decreased to 403 from 411 during the week of August 31st. Overall, the jobless claims numbers are disappointing, and indicate that employers are not stepping up hiring efforts at this time.
The API and EIA weekly oil and gas inventory numbers decreased for the second week in a row. The bold draws in crude inventories are exceptionally bullish for crude futures, as supply concerns continue to loom over the market's head. Crude inventories fell from 303.1 last week to 298.5 this week. Distillate inventories declined to 129.6 from 131.6, and gasoline stocks decreased to 205.3 from 206.8. Crude inventories are at their lowest levels since March 2001, while gasoline demand increased over the last week by 2%. Distillate inventories are worrisome, as the reserves usually grow during this time of year in anticipation of the forthcoming heating season. On a positive note, distillate inventories (though not building) are 6% above their level one year ago. Bottom line, tight supply lines have caused crude futures to maintain very high levels. Until the September 19th OPEC meeting to discuss production quotas passes, crude futures have no real reason to fall through the floor.
Chart of: Crude Futures, Daily.
Chart of: Gold, Daily.
With further weakness surfacing in the market, Gold has begun to elevate once again. The rise in gold futures can be attributed to broader market fear and extremely low yields in Treasuries. Gold is approaching descending resistance, and could face near- term confrontation if the metal attempts to move higher. However, bulls are encouraged by the daily Stochastics entering the overbought region and the MACD attempting a bullish cross above the 0 line.
Once again, buyers stepped into Treasuries, as the 10-Year, 5-Year, and 13-Week yields all dipped lower during the session. On the contrary though, traders have been selling the 30-year note, with the yield trading up +0.10 at 4.794.
The best thing about the future is that it only comes one day at a time. - Abraham Lincoln