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DJIA for arguments sake I remain bullish and invested.
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Chemical Update 2016
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Chemical Update 2016

DJIA Quiet consolidation

Quiet Consolidation. After the market makes a large move to the upside, it often becomes “overbought,” which mostly means some stocks have moved up too much and too fast, and now need to go through some kind of a consolidation period before the uptrend can resume. This appears to be where the market is positioned now after the 10% gain by the DJIA and S&P over the past six weeks. We believe the market can relieve this condition by moving sideways for a few weeks, or by pulling back and correcting a portion of the previous advance, or something in between, where some stocks pull back, but others do not.

New highs, for Christmas, DJIA approaches 20K

To Be Continued. The stock market has been hitting new highs recently, but the number of stocks supporting the move has been decreasing over the past few weeks, which is an indication a pullback could be coming. We think the long-term trend continues to be positive, but the market is extended for the near term, and a dip of about 5% on the indexes would not be unusual to see over the next few weeks. The short-term sentiment has also become a bit high on the bullish side as the Dow approaches 20,000, which also suggests to us a correction is due.

Oil peak again

Oil Peak Again. The rally on oil appears to have stalled again, despite the world developments that would indicate a strong likelihood of higher prices. The price has peaked in line with previous tops of the past year, and even though the recent peak was a slight new high, it has so far not carried through with an extended gain. This makes it likely that the commodity could pull back to the low end of the recent range of around $45 again. The recent weakening trends of a number of the energy-related stocks adds to the likelihood of a pullback in the price of oil as well, in our view, and suggests that investors should hold off for now on increasing exposure to the group.

DJIA new high up 10% / continued Bull run

The stock market has made a dramatic move to the upside since the election, with the Dow Industrials rising more than 1800 points, or 10% in a little more than a month. This size of a rally is not unprecedented, however. It rose more in both percentage and actual points when it recovered earlier this year in January and also in the fall of 2015. Both of those advances led to some months-long consolidation periods, and we see the same thing coming for the current rally, but we are also confident that the longer-term trend will continue to be bullish. The smaller-sized growth stocks have led the Dow and S&P in performance during this most recent rally, which is a change from those previous rallies, where the FANG stocks led on the upside, and this is a positive change that should have better long-term implications, as it signals a higher level of investor confidence that is needed to support longer-term gains. Eventually, we expect the underperforming Health Care stocks to join in on the upside, but this probably won’t happen until later next year when the policies of the new administration are more apparent. Donald Dickey RBC.

7 year Crude technical chart / bounded @ $40-50 PBBL

Crude is bounded $40-$50. RBC Technical Charts Dec 7 2016.

Crude resistance $52-53

$43–$53. That has been the range of crude oil for the past four months, and it continues to be neutral within that range on an intermediate-term basis. The OPEC news has caused oil to rally in the short term, but if it fails to get through the ceiling of resistance in the $52–$53 area, we would expect it to roll back down to the lower end of the range once again. And so, for the oil bulls, we think it is important that this short-term strength carry through with a breakout over the next week or two.

Oil on the verge......

Oil on the Verge. The trend on the price of oil has been largely neutral for the past year in what appears to be a bottoming trend, and we think the trend would be confirmed as bullish if the oil price was to clearly close above the $52 level. Oil has topped out in the $50–$52 area three times over the past year, so we believe a breakout above that level would be a significant change from the stalling and struggle we have witnessed for quite some time. We think, on a technical basis, such a breakout would generate a target to the $75 area, and obviously would have major implications for energy-related investments and the market as a whole.

Oil on the line

Oil on the Line. The trend on oil has been moving up over the past several weeks and is now up to what we believe is the critical resistance area of 50–51 that has been the high area for the past year. If oil were able to clearly break through the 51 level, the technical measure would be up to a target of 75. At this time, we would say the likelihood of a breakout is good, as the pattern of the past year appears to be that of a long bottoming range that may have longer-term bullish implications if the breakout happens.

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Propylene volatility returns USA/ drives solvents price up Q4

September propylene nominations are up 7 cents/lb ($154/tonne) and 8 cents/lb ($176/tonne)

August contract settled up 3.5 at 37.0 cents/lb due to unplanned outages. Propylene contract prices have been rising on higher spot prices, which have climbed 8-9 cents/lb since the end of July.

According to producers, that increase has mostly been tied to tighter supply from crackers, propane dehydrogenation (PDH) units and increased exports, drawing down inventories.

The spike in price has pulled refinery-grade propylene (RGP) prices up a lot to 32.
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