Crude posted huge gains on moderate volume Thursday as U. S. equities experienced another large movement upwards. As predicted, Wednesday's selloff in reaction to higher inventory levels was overdone, and the shorts paid for it yesterday.

Investors are gearing up for Sunday when OPEC will meet with another production cut in the works. Crude futures leapt above our two uptrend lines and our 1st tier downtrend line. However, our 2nd tier downtrend line is presently weighing down on the futures.

The S&P futures posted another impressive rally on Thursday, following through on Tuesday's furious bull-run. The large movement upwards came in reaction to Citi and BofA reiterating they are presently sound financially, and will not need to be nationalized to stay afloat.

Additionally, Obama gave what can be considered a `business-friendly' speech, emphasizing the need for reform while keeping the entrepreneurial spirit intact. Finally, retail sales showed an improvement, declining only 0.1% versus estimates of a 0.5% decline. Investors ignored another discouraging unemployment claims release, which we view as a more relevant indicator of the economy's health.

The 30 Year T-Bond futures experienced profit taking on Thursday, ducking back below our 2nd tier downtrend line as U. S. equities flourished. Despite the decline, the 30 Year futures remain above our uptrend line, and will likely wait to make a serious directional decision when our 2nd tier downtrend and uptrend lines reach their upcoming inflection point. Meanwhile, the futures remain wedged between the trading zone built since February.

However, once the 30 Year futures do make a directional decision, expect large and sudden movements. China is filling the news wire expressing concern over the safety of U. S. Treasuries.

Gold leveled off on Thursday as surging U. S. equities tempered the recent bull-run in the precious metal. While Gold sits above our 1st and 2nd tier uptrend lines, the 3rd is still an arm's length away. Gold seems to be at a critical point concerning its near-term trend.

If the precious metal can't fight above March highs, then Gold could very easily dip back into its downtrend while equities continue their impressive rally. On the flip-side, if the precious metal can climb above March highs, we expect large near-term gains and a continuation of the up-trend. Gold has the psychological $900/oz level to defend itself from any exacerbated sell-offs for the time being.

The USD/JPY is recovering from earlier losses, rallying from our 1st tier downtrend line.  Though Japan’s Final GDP showed a decline of 3.2%, the number was still better than analyst expectations of a 3.5% decline.

The correlation between the S&P futures and the USD/JPY is all over the place these days as investors contemplate whether to rally the currency pair to the psychological 100 level.  If investors continue to favor the U.S. economy over Japan’s and U.S. equities piece together another rally, we could see new March highs. 

The Cable tried to rally from our previous bottom-end support of 1.3683 yesterday, yet failed to close above March 10 lows on the 4 hour. The GBP/USD is heading south Thursday in reaction to alarming industrial production data from Germany and China coupled with a disappointing unemployment claims number from the U. S.

The global economy is still weakening and the optimism from Citi is hardly reflected anywhere else in the market. Britain is already in a tight spot economically having to nationalize Lloyd's Bank and rely upon quantitative.