On Another Front in a Surreal Weekend...

The Arrest of Dominique Strauss Kahn, the head of the IMF "may" have some repercussions in the debt restructuring in Greece, which has now spread to Ireland as well as dealing with Portugal. I have a feeling we'll see some pressure on the Euro this week, the level to watch will be $1.40 as a breach below that level may force technical selling. This should be a strong week for the USD, which could very well have an effect on the market, commodities as well as PMs.

Here's about 5 days of accumulation on a 15 minute chart. We've seen about 6 days up since then, so there's certainly room for more upside just based on the last accumulation cycle.

The EU/USD is trading around $1.4098 right now, so if it loses about a point, we could see a real downdraft  in the Euro. You could use FXE as a short if that happened or go long the dollar, although I think a direct short on the Euro would be more advantageous.

More From This Weekned

Last week a positive divergence was apparent in oil, it seems nothing moves oil like tension in Israel so that's something to watch for this week as tensions are rising rapidly with Egyptian police firing tear gas and killing at least one protester as they tried to storm the Israeli embassy in Cairo. What really heightened tensions though was a group of Syrians and Palestinians that may have numbered in the thousands climbing the security fences which partition off the Golan Heights from Syria. Israeli security forces opened fire with tear gas and live ammo. There were other protests across occupied territories as well.

I just read a good piece from Stratfor this weekend about what it would take to attack Israel and I did a bunch of research about the 6 day war. Whenever there's internal tension within a country like Egypt or Syria right now, there is often a move to create a nationalistic fervor to deflect tensions. Israel would certainly be a target for those seeking to externalize internal  unrest. In any case, fundamentally speaking, oil should see some upside this week.

Energy Stocks Effected by the Opening of the Morganza Spillway

President Obama chose to open the Morganza Spillway  this weekend. Whether the spillway was opened or remained shut, there were a group of refineries and nuclear power-plants that could be threatened. Below is a list of those that are threatened from the opening of the spillway.

Interestingly, short term, most (the entire group, threatened either way) looked like they were seeing short term accumulation as you will see. This may be because of broader based bounce in the energy sector or in the case of these specific stocks below, it may have been a short term bounce that was going to occur because there was a probability that action would not be taken for about a week regarding the decision to open the spillway as the Mississippi River was not expected to crest at the spillway for approximately one week. Theres also the chance that these stocks (all of which are in some sort of long term top) may see a quick bounce regardless of the decision as production at most will likely not be effected for close to a week as it will take some time for flood waters to reach them. In either case these all look like good long term short positions. If they bounce a bit it will present an opportunity to take a short position at a better price. If they will not bounce because the decision was a surprise with regard to timing and they continue lower, that's fine as well, we'll know either way within days. The point being, these should be viewed as longer term trades.

APA-Apache

 APA is barely holding an important support level, a break of that trendline should occur on some volume.

 APA showing signs of recent short term accumulation for a short bounce.

COP-Conoco Phillips-this one was threatened either way, with facilities in the flood zone and in what would have been a flood zone if the spillway was not opened.

 This is a H&S top. Volume on the break of the trendline was helpful in identifying the correct trendline to draw. This has a 6-10 point drop based on the top, maybe a bit more.

 The 3C daily chart showing confirmation of the uptrend and a negative divergence at the top. Also the combo of Stochastics and divergent RSI I use to identify major tops is a pretty clean signal.

 Here's the recent positive (short term) divergence I mentioned. It's right below the break of the top's trendline.

CVX-Chevron

 Agian, volume was helpful in identifying the top's support trendline, which is now broken. MACD (long version) is also negatively divergent.

 CVX daily 3C chart showing uptrend confirmation and a negative divergence at the top.

 Again, the short term positive divergence mentioned above.

PO-Petroquest Energy

 Here's another well formed H&S top that is already broken as of Friday.

 Here's the daily 3C negative divergence at the top

 And again another short term positive divergence like all the others.

SFY-Swift Energy

 The  trendline  here was easy to identify, volume confirmed it on the break. This is already in a primary downtrend and is likely to retrace back to the summer lows, maybe further.

 3C daily did a great job calling distribution and accumulation, right now it's not only confirming the downtrend, but is also in a leading negative position.

 Another short term positive divergence.

SGY-Stone Energy

 Volume again was helpful in identifying the important support level which is now broken. MACD is negatively divergent.

 3C daily did a good job in identifying summer accumulation before the move up and recent distribution. The Stoch/RSI combo is also signaling a major top.

Once again, here's another short term positive divergence.

I suspect these divergences will play out which would be good for setting up a short position. There is the chance though that the earlier then anticipated decision to open the spillway may have caught the accumulators off guard. Either way, when viewing these as longer term positions, a bounce is not very significant.