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0920 EDT Wednesday April 12 2006

Good Morning: Yesterday, we did get a brief early bounce in Equities, but as we feared this was unsustainable in spite of some easing of the tensions that have spooked stocks over recent days. We are probably better positioned for a rebound of sorts today although we are still running at very high levels in Crude Oil, Gasoline and Heating Oil, being just a few Dollars from all time record highs in Crude which is actually several Dollars higher than levels that previously send stocks tumbling, so there is that pressure in the background, although the Equity markets appear to have gotten more tolerant of these historically high prices of late. According to news reports this morning, the World is already bordering on our near maxxed out figure of 85 Million Barrels per day, which is considered tops as far as total Global Oil production is concerned and would explain why Brent Crude already hit new record highs in London and the fears of disruptions of what is considered extremely sought after Oil in the form of Nigerian Sweet also may be helping to push prices higher. Just as the lack of Ethanol is causing Gasoline prices to soar, a shutoff of any Crude sources, such as Venezuelan that are refinery specific could play havoc with Oil prices, just as could the threat of hurricanes later on this year, which is another factor that is again coming into the mix. Technically, Crude Oil's charts would have to be interpreted as potentially very bullish being almost already at new continuation chart all time highs. On the other hand, even though Gasoline futures are nearing contract highs they are still quite a ways from the extreme all time highs that were inspired by Hurricane Katrina. Again, with the so called driving season just around the corner and with supplies being as tight as they are one cannot rule out new all time highs in Gasoline soon and Heating Oil even in spring, is trying hard to test its all time highs as well.

So, the pressure remains on Equities for now although they have fared better in Europe perhaps because of the weighting of Oil related issues over there. The trade deficit coming in a bit better than expected is helping the US Dollar this morning and as we have previously suggested, the Dollar looks like it is not ready to break down yet as each time it tests lower levels, it seems to want to rebound strongly and therefore may be ready for a test of recent highs soon and technically the Euro looks poised for a significant breakdown, although we cannot get too anchored to this view as the currencies have been particularly volatile of late and there are many influences affecting them.

Previously, as Equities have pulled back from their highs, they have managed to dig in and rally back quite strongly. This time around there seems to have been a change in behavior to one of a lack of will to rally thus far, so yesterday's late efforts at digging in become a fulcrum for the markets in terms of building of potential additional support or probing for better levels from which to mount any possible Easter rally.

Trade Well
From the Desk of Savant

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