When we talk of oil prices, we tend to discuss West Texas Intermediate Crude. This Texas light sweet oil is a type of crude oil. It contains about 0.24% sulfur and is refined generally in the Midwest and Gulf Coast areas of the United States. The other main category of oil is North Sea Brent Crude. Petroleum production in Europe, Arica, and most of the Middle East tends to be priced within the Brent realm. It contains 0.37% sulfur meaning it’s not quite as sweet as WTI crude and is used mainly in the production of gasoline. The two oil types have historically been priced differently because of the types of oil and currency issues. The spread has historically been around $2 or so…but is now going on $15. Why is this? Many investors are getting antsy about the U.S. dollar as it continues to weaken due to such policies as QE2. The Brent Sea markets as well as those in Dubai are becoming routine conduits for Middle Eastern producers who want to sell oil. The violence in Africa and the Middle East is closer to the markets where Brent is produced. And most notably, Cushing, Oklahoma (where much domestic oil is held) actually has a fairly sharp supply surplus at this time. It’s relevant to us day traders because one oil price can be doing one thing while the other doesn’t move as sharp on any given day. Furthermore, the spread is a harbinger of all of the factors noted above which is why it costs almost twice as much to buy gas in London as it does in new York City. So, keep your eye on all of the factors causing this spread as they will continue to affect the currency and bond markets…and continue to impact stock prices as well.
Markets in Asia were mixed overnight with Sydney and Shanghai marginally positive but Hong Kong slightly negative and Tokyo down 1.6% after an increased radiation level was found in drinking water in Tokyo. Everything is mixed in Europe with Frankfurt down 0.3% but Paris up 0.2%. The external markets are all quiet. Futures are down slightly on Tokyo worries. New Home Sales (285K) are due out at 10AM, crude oil inventories at 10:30. and Bernanke is to speak at 12PM. Look for another relatively quiet day with action in the LED plays (CREE), the small cap biotechs in the news (XOMA), the rare earths, and small cap energies.
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.
If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-
Good- The following stocks have good news and/or a strong technical pattern
MCP, REE, CHGS, AVL, SHZ- closed near a high after positive CEO comments at MCP
HNR- closed near a high after announced it will sell its Utah oil and gas assets
REDF- closed near a high
PANL- closed near a high
AMT- closed near a high
MEE- closed near a high
BIDU- closed near a high
NFLX- closed near a high after an upgrade
DANG- closed near a high after an upgrade
MOTR- closed near a high and featured on “Mad Money” last night
STJ- closed near a high after an analyst raised price target
CTAS- good earnings
DFS- decent earnings
JBL- good earnings
ROYL- closed near a high
BDCO- closed near a high
ATEA- closed near a high
LNG- closed near a high
LEI- closed near a high
AXK- closed near a high
Bad-The following stocks have bad news and/or a weak technical pattern
FFIV- closed near a low
AMZN- closed near a low
BSFT- closed near a low
NPTN- closed near a low
APKT- closed near a low
ADTN- closed near a low
VOG- closed near a low
CCL- closed near a low after posting earnings
XOMA- indicated phase 2b trial of XOMA 052 diabetes treatment did not achieve primary endpoint
DGW- poor earnings
ADBE- poor earnings
NCT- 15 million share offering
PRAN- share offering
Earnings:
WED MAR 23 BEFORE
GIS
WED MAR 23 AFTER
PAYX RHT SCS
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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