Equities and the Economy:

• Stocks close lower snapping 3 day winning streak.
• Losses a flesh wound.

U.S. equities closed marginally lower yesterday with the Dow off 19 points ending at 20,052, the S&P 500 shedding 5 points to 2,293 and the Nasdaq closing at 5,663, down 3. Per the Black Knight, “a flesh wound. {Come back here and take what’s coming to you! I’ll bite your legs off!} Yesterday’s price action resembles a pause after a rally with no big news to move the market one way or the other. I call this bivouacking. As I keep repeating, stocks have moved materially higher, S&P 5000 up 7.2%, since Election day and markets don’t go straight up, or down. Let’s move on.

Yesterday the Labor Department released its Market Conditions Index for January which came in both stronger than expected. Additionally, December’s index was revised up. As you regular readers know I put a lot of credence into revisions for in good times revisions are for the positive and vice versa.

Heard of “Frexit”? Well get used to it. France’s national elections in April and Marie Le Pen of the far-right National Front party is gaining support. She advocates leaving the EU and bringing back the franc.

This morning the Dow is up 58 on momentum from European stocks which are flat to higher.

Oil

• Oil prices have biggest one day loss since mid-January.
• Prices remain range bound.

Oil prices retreated yesterday on a combination of Friday’s Baker Hughes rig count data, a stronger U.S. dollar and technical trading. WTI closed down 82¢ at $53.01 and Brent lost $1.09 settling at $55.72. As I reported yesterday, the U.S. oil rig count increased another 17 rigs bringing the total rig count to 583 which is the most rigs working since October 2015. The correlation is easy: more rigs, more oil. The U.S. dollar has fallen the past week on comments from the Trump Administration that the euro was to strong. Technically, $54 has proven to be strong resistance and when it couldn’t be penetrated traders turned and start testing the short side. Not insignificant, the CFTC reported last Friday that speculative long oil positions are at a record level. The boat is heavily listing.

This morning the bears continue to test the low end with WTI down 76¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices unchanged.
• Weather and forecast super warm.

Natural gas prices started the week unchanged from Friday settles. The March Nymex contract lost a meaningless 1.3¢ settling at $3.050 but it was the only month to post a loss. All the other months closed flat to a penny or so higher. Total chatter. The weather continues to be unseasonably warm. Houston is predicted to hit a high of 84 today and 86 tomorrow. Both records! We’re having May temps in February! The warm weather has been a bull killer and natural gas prices have now fallen 83¢, 21%, since late December. This morning natty is up 7.0¢ but that’s simply a bounce off of strong support at $3.00

Elsewhere

Today in history:

1795: The 11th Amendment of the Constitution was ratified. This was the first Amendment after the initial 10, the Bill of Rights, and involved state’s rights.

1913: The Turks lose 5,000 men in a battle with the Bulgarian army in Gallipoli.

1950: The United States recognizes Vietnam under the leadership of Emperor Bao Dai, not Ho Chi Minh who is recognized by the Soviets.

1964: The Beatles arrived in New York for the first time greeted by 25,000 fans.

1983: Iran opens an invasion in the southeast of Iraq.

1990: The Communist Party of the Soviet Union allowed other parties to compete for power.

On a logistical note, I will be traveling the next three days on business so the next Morning Energy Blog will be on Monday.