A huge opening gap quickly turned into fade as oil started to recover from pre-market lows following a less powerful Gustav hurricane than previously feared. Into midday, and as prices completely filled the gap, it appeared as if the market might stabilize and possibly reverse, but shortly after lunch the bears stepped up the pace and volume/volatility accelerated as Friday's supports were taken out.
The above chart of light sweet crude bears watching as prices react to key technical levels. We have just lost the 38% Fib. retracement level and the 200 DMA on a hammer reversal bar. Prices did attempt to rally from the trend line but failed. The next key level if the hammer doesn't follow through is the 50% Fib. retracement level which conveniently lines up with the psychologically significant $100.00 price level. I suspect that the big money is waiting and ready to buy at $100.00 so we should see an important technical bounce.
No Pre-Market post tomorrow.
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