Crude futures dipped from our 2nd tier uptrend line after the U. S. released mixed economic data. Today’s contraction in Philly’s manufacturing index counters the positive showing from the Empire manufacturing index yesterday. Despite the setback in Philly’s number, the data still appears to be on an upward trajectory. In addition to the Philly data, the U. S. released a much better than expected unemployment claims number for the second week in a row.

Altogether, the positives seem to outweigh the negatives since lower unemployment implies higher consumption, which should in effect improve the prospects of both manufacturing indexes. We can’t forget the U. S. reported shallow inventories again this week. On the earnings front, JPMorgan continued the theme of an optimistic 2nd quarter season. Finally, China reported a GDP number pretty much in line with expectations while industrial production showed a respectable increase.

Correlation wise, the Euro and Pound have appreciated considerably against the greenback and the S&P futures are on a tear. Overall, Crude’s catalysts are implying a rising price and a healthy bottom may be in place at July
13th lows.

The near-term keys will be for crude futures to get past our 2nd tier uptrend and downtrend lines along with July 8th highs. If crude can accomplish these three feats, more aggressive gains may be in the picture. The next level of solid resistance would likely be July 7th highs and the psychological $65/bbl level.

As for the downside, investors should keep an eye on intraday lows and the highly psychological $60/bbl level. Below here, July 13th and May 16th lows shore up the bottom-end defenses. IBM and Google are on deck today for earnings. If both companies blow away expectations this could fuel a solid near-term rally in crude.

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