ZLBT Morning Views >>> Wall Street / Crude Oil May '11

DJIA Surrender Early Lead;
Bulls Take a Breather
Stocks spent most of the session north of breakeven today, with the telecom sector leading the pack amid upgrades for Alcatel-Lucent, Nokia, AT&T, and Verizon Communications. In addition, news that consumer spending rose at its fastest pace in four months in February, as well as a dose of stronger-than-anticipated housing data, also helped the bulls maintain an early lead. However, a dip in disposable income, as well as discouraging inflationary data, took its toll in afternoon trading. Against this backdrop -- and thanks to a late-session retreat among tech stocks -- the major market indexes snapped their three-session run higher, following crude and gold futures into the red by the close.

The Dow Jones Industrial Average (DJIA – 12,197.88) was up more than 50 points in early trading, but reversed course in the final hour of the session to end with a loss of 22.7 points, or 0.2%. Only 10 of the Dow's 30 components avoided negative territory, with telecom titans AT&T and Verizon tacking on 1.8% and 1.2%, respectively. Meanwhile, Home Depot paced the 19 laggards with a loss of more than 2%, while General Electric finished right where it began.

The S&P 500 Index (SPX – 1,310.19) also turned tail in afternoon trading, surrendering 3.6 points, or nearly 0.3%, by the bell. Nevertheless, the broad-market barometer maintained its perch atop the 1,310 level for the second consecutive session.

Finally, the Nasdaq Composite (COMP – 2,730.68) led the late-session about-face, giving up an early lead to end 12.4 points, or 0.5%, lower. However, the tech-rich COMP seems to have found a floor in the 2,730 neighborhood.

Libyan Resolution hopes pushed crude futures to a one-week low
Crude futures negated nearly all of last week's advance today, as Western-backed rebels captured key crude ports in Libya. The anti-Gaddafi victories boosted hopes that the civil conflict will end sooner than expected, which could translate into a quicker-than-anticipated resumption of oil production in the region. By the close, May-dated crude futures surrendered $1.33, or 1.26%, to end at $104.07 per barrel -- black gold's lowest finish in a week.

TECHNICAL ANALYSIS
Crude Futures May 2011
May crude oil closed lower due to profit taking on Monday as it consolidates some of the rally off March's low. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near-term.

If May extends the rally off March's low, March's high crossing at 108.25 is the next upside target. Closes below the 10-day moving average crossing at 102.99 would signal that a short-term top has been posted.

First resistance is last Thursday's high crossing at 106.69.

Second resistance is March's high crossing at 108.25.

First support is the 10-day moving average crossing at 102.99.

Second support is March's low crossing at 97.02.

TECHNICAL ANALYSIS
Dow Jones Industrial Average
The Dow closed lower due to profit taking on Monday as it consolidates some of the rally off March's low. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term.

If the Dow extends the aforementioned rally, February's high crossing at 12,391 is the next upside target. Closes below the 10-day moving average crossing at 11,988 are needed to confirm that a short-term low has been posted.

First resistance is today's high crossing at 12,272.

Second resistance is February's high crossing at 12,391.

First support is the 20-day moving average crossing at 12,048.

Second support is the 10-day moving average crossing at 11,988.

HAPPY TRADING