Crude futures continued yesterday's slide on rising volume with the futures crashing beneath our 1st tier uptrend line. Crude, along with U. S. equities, is reacting negatively to today's disconcerting unemployment data.

Crude futures are ignoring yesterday's inventories coming in shallow for the 7th time in 8 weeks, and are focusing more on the impact of climbing unemployment on the demand side.

Furthermore, we can't dismiss the IEA's downward revision of global demand for crude over the next five years. The defeat of our 1st tier uptrend line certainly gives us pause since this could be an important technical development for the near-term.

Crude futures are presently holding onto 6/23 and 6/3 lows with the S&P hovering around 900. If the S&P can't hold its own June lows, then we may see similar contractions in both crude and gold beneath their respective June lows. Despite the negative technical developments taking place in the market, crude should have enough strength to hold onto June lows since it's a holiday-shortened July 4th week. Investors may wait to see how 2nd quarter corporate earnings fare before causing irreparable damage to crude's uptrend.

Crude's present downturn isn't unexpected since the commodity has been on a tear so far this year with investors pricing in a global economic recovery. The question now becomes whether investors take this as a temporary setback, or whether the pullback has the momentum to head towards $60/bbl. If June lows don't hold, crude may not experience substantial support until the $60-$61/bbl range.

Due to the failure of our 1st tier uptrend line and the rising volume on the sell-side, it seems pressure to the downside is increasing. Therefore, while we may see a slight rebound Friday, it appears a new near-term downtrend is coming into play. We will have to see how the S&P interacts with its 875-900 range before we can anticipate how protracted crude's present pullback will be.

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