Market Tea Leaves

Tuesday, March 5, 2013

Pre-Market Global Review - 3/5/13 - The Dow Rises, Again

This newsletter provides market direction trading insights that are derived from our seasoned and unique, inter-market analysis. We hope that this information will provide both the novice and seasoned trader with valuable assistance. Our approach is to harvest clues from the Market's “tea leaves” as to what the market is doing or is likely to do.

March 5, 2013

Good Morning Traders,

As of this writing 4:50 AM EST, here’s what we see:

US Dollar –Down at 81.990 the US Dollar is down 255 ticks and is trading at 81.990.

Energies – April Oil is up at 90.53.

Financials – The 30 year bond is down 13 ticks and is trading at 143.17. Indices – The March S&P 500 emini ES contract is up at 1529.50 and is up 15 ticks.

Gold – The April gold contract is trading up at 1579.00 even and is up 65 ticks.

Conclusion

Finally we have a correlated market and it is correlated to the upside. The dollar is down- and oil is up+ which is normal and the 30 year bond is trading lower. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa. The indices are up and the US dollar is trading lower which is correlated. Gold is trading higher which correlates with the US dollar trading down. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

All of Asia closed higher. As of this writing all of Europe is trading higher.

Possible challenges to traders today is the following:

- ISM Non-Manufacturing PMI is out at 10 AM EST. This is major.

- IBD TIPP Economic Optimism is out at 10 AM EST. This is major

Yesterday we said our bias was to the downside because the markets were nearly correlated to the downside. The major outlier being Gold. The net result was the Dow gained 38 points after spending most of the trading day in negative territory. Today the markets are completely correlated to the upside with no outlier. Additionally Asia closed higher and Europe is currently trading higher. Therefore our bias is towards the upside today. Could this change? Of course. Remember anything can happen in a volatile market.

The great thing about market correlation is that it gives you an insight as to what the market fundamentals are. Now you might ask yourself "why is that important"? It's important because markets generally tend to lean towards those fundamentals regardless of what news is being reported. Are there exceptions? Of course. Look at what happened yesterday, the markets were poised to go lower but didn't. But as a trader if you see that it changed abruptly, take the appropriate action. Remember that as traders, your number one rule is to preserve your trading capital because without it there is no trading. Click here for a video on why the Dow Rose, Again:

On the political front, nothing's new except the sequester is now the law of the land. The impact of this will not be felt immediately and most people will shrug and say "see, that wasn't so bad." That is until we start to have not so stellar economic reports and Wall Street starts to retreat. A couple of months later that will show up in everyone's 401K but by that time it will be felt. The DC folks are playing the usual blame game with the GOP dead set against any revenues increases (aka tax hikes) and the Democrats warning of impending doom. Ironically the reason why there is a sequester to speak of is because when this law was enacted in 2011 it was thought to be so horrific that no one would consider the prospect or possibility of such an event occurring. Yet here we are, with a sequester enacted. The US Government will officially run out of money by the end of the month, however the President has the right to extend funding should no compromise can be found. I have no doubt he will do so.

Thus far Wall Street has treated this issue as if it's a famine in China, in other words so far removed that it couldn't possibly have an effect on us. I suspect that will change if the economy turns sour and we start to have bad economic reports. For the time being nothing will change as it will take some time before these cuts are felt thru out the economy. However sooner or later it will. The longer this issue is present and not resolved, the worse it will be. Remember that we still have the debt ceiling issue hanging over our heads and this won't happen until the May time frame. Another aspect of this that we are seeing is no follow thru when it comes to fundamentals. What I mean by this is when the markets are correlated to either the long or short side; they may take the opposite direction during the trading day but by the end of the day saner minds rule and they return to fundamentals. They aren't doing that now. So the markets could initially be correlated to the downside and then close higher by the end of the day, completely ignoring all fundamentals. The Smart Money doesn't have any issue doing this but the danger to a trader is that if the Smart Money finally wakes up (and sooner or later they will) you as a trader could be stuck on the wrong side of the market. And that will be painful.

This is the new and improved GOP in action. They won't outwardly hold the country hostage as they did in 2011; they'll set up events such that it works out that way. It will be interesting to see what happens come April 15th as this is the day when either a budget is approved or Congress goes without pay. The GOP is adamant about sticking to their guns and will not relent. The question is what will the Democrats do?

As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There is no earnings reports with futures and we don't have to be concerned about lawsuits, scandals, malfeasance, etc.

Anytime the market isn't correlated it's giving you a clue that something isn't right and you should proceed with caution.. Today market correlation is calling for a higher open and our bias is towards the long side. Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. For awhile now we've promised a video on how a trader can use Market Correlation in tandem with their daily trading. A good friend of Market Tea Leaves: Carl Weiss of Sceeto and I produced a video on December 22nd that shows this. Here it is:

Please note the video is about a half hour in length and we plan on producing more in the near future. Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading higher and the US Dollar is declining. This is normal. Think of it this way. If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa. Crude trades with the expectation that business activity is expanding. The barometer of which is the equities or stock market. If you view both the crude and index futures side by side you will notice this. Yesterday crude dropped to a low of 89.33 a barrel but did not stay there. We'll have to monitor and see if crude either goes lower or holds at the present level. It seems that at the present time crude's support is at 90.00 with resistance at 96.00 a barrel. This could change. All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see. Remember that crude is the only commodity that is reflected immediately at the gas pump.

Future Challenges:

- Sequester spending cuts to commence March 1st.
- Debt Ceiling in the May time frame.

- European Contraction

Crude oil is trading higher and the US Dollar is declining. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. If you feel compelled to trade consider doing so after 10 AM when the economic reports are released and the markets give us better direction. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Remember that without knowledge of order flow we as traders are risking our hard earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow. Sceeto does an excellent job at this. To fully capitalize on this newsletter it is important that the reader understand how the various market correlate. More on this in subsequent blogs.

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Monday, March 4, 2013

Pre-Market Global Review - 3/4/13 - Obama Signs Sequester

As of this writing 4:45 AM EST, here’s what we see:

US Dollar –Up at 82.495 the US Dollar is up 137 ticks and is trading at 82.495.

Energies – April Oil is down at 90.39.

Financials – The 30 year bond is up 12 ticks and is trading at 146.07.
Indices – The March S&P 500 emini ES contract is down at 1511.75 and is down 19 ticks.

Gold – The April gold contract is trading up at 1577.40 and is up 51 ticks.

Conclusion

This is a nearly correlated market, unfortunately it is correlated to the downside. The dollar is up+ and oil is down- which is normal and the 30 year bond is trading higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa. The indices are down and the US dollar is trading higher which is correlated. Gold is trading higher which does not correlate with the US dollar trading up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

With the exception of Japan's Nikkei, the rest of Asia closed lower. As of this writing all of Europe is trading lower.

Possible challenges to traders today is the following:

- FOMC Member Yellen speaks at 8 AM EST. This is major.

- FOMC Member Powell speaks at 1:15 PM EST. This is major

- No Major Economic News.

- Lack of major economic news..

On Friday we said our bias was to the downside because the markets were correlated to the downside. However we had major economic news reports that came in better than expected plus vehicle sales had gone up in February which served to drive the markets higher. The net result was the Dow gained 36 points. Today the markets are nearly correlated to the downside with the outlier being Gold. Gold is currently trading higher which tells me that the fear factor is starting to take hold. Therefore our bias is towards the downside today. Could this change? Of course. Remember anything can happen in a volatile market.

The great thing about market correlation is that it gives you an insight as to what the market fundamentals are. Now you might ask yourself "why is that important"? It's important because markets generally tend to lean towards those fundamentals regardless of what news is being reported. Are there exceptions? Of course. Look what happened on Friday, the markets were poised to go lower but didn't. But as a trader if you see that it changed abruptly, take the appropriate action. Remember that as traders, your number one rule is to preserve your trading capital because without it there is no trading. Click here for a video on why the Dow Rose:

Well March 1st came and went and over the weekend the President was forced, by law to sign the sequester order. The order itself is approximately 80 pages in length and no department goes unscathed. Each and every department will be forced to trim it's operating budget by upwards past 5%. Medicare will be cut by 2%. Fortunately Social Security will remain untouched as it is solvent. Officers serving in any branch of the Armed Forces will have their pay cut by 5%. The President met with the GOP leadership over the weekend and they are adamant that they will not consider revenue increases (aka tax hikes). So here we are. Fortunately many of these cuts will not be implemented immediately but will happen over time. If something isn't done they will be implemented. Ironically the reason why there is a sequester to speak of is because when this law was enacted in 2011 it was thought to be so horrific that no one would consider the prospect or possibility of such an event occurring. Yet here we are, with a sequester enacted. The US Government will officially run out of money by the end of the month, however the President has the right to extend funding should no compromise can be found. I have no doubt he will do so.

As I write this the crude markets are trading lower and the US Dollar is advancing. This is normal. Think of it this way. If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa. Crude trades with the expectation that business activity is expanding. The barometer of which is the equities or stock market. If you view both the crude and index futures side by side you will notice this. On Friday crude went to a low of 90.04 a barrel and held there. I expect this selling to continue and we will monitor crude prices carefully. It seems that at the present time crude's support is at 90.00 with resistance at 96.00 a barrel. This could change. All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see. Remember that crude is the only commodity that is reflected immediately at the gas pump.

Future Challenges:

- Sequester spending cuts to commence March 1st.
- Debt Ceiling in the May time frame.

- European Contraction

Crude oil is trading lower and the US Dollar is advancing. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. If you feel compelled to trade consider doing so after 10 AM when the markets give us better direction. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Friday, March 1, 2013

Pre-Market Global review - 3/1/13 - Sequester Starts Today

This newsletter provides free market direction trading insights that are derived from our seasoned and unique, inter-market analysis. We hope that this information will provide both the novice and seasoned trader with valuable assistance. Our approach is to harvest clues from the Market's “tea leaves” as to what the market is doing or is likely to do.

March 1, 2013

Good Morning Traders,

As of this writing 5:25 AM EST, here’s what we see:

US Dollar –Up at 82.250 the US Dollar is up 247 ticks and is trading at 82.250.

Energies – April Oil is down at 91.09.

Financials – The 30 year bond is up ticks and is trading at 145.26.
Indices – The March S&P 500 emini ES contract is down at 1510.00 even and is down 13 ticks.

Gold – The April gold contract is trading down at 1570.00 even and is down 81 ticks.

Conclusion

This is a correlated market, unfortunately it is correlated to the downside. The dollar is up+ and oil is down- which is normal and the 30 year bond is trading higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa. The indices are down and the US dollar is trading higher which is correlated. Gold is trading lower which correlates with the US dollar trading up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

With the exception of Shanghai and the Hang Seng, the rest of Asia closed higher. As of this writing all of Europe is trading lower.

Possible challenges to traders today is the following:

- Core PCE Price Index is out at 8:30 AM EST. This is major.

- Personal Spending is out at 8:30 AM EST. This is major

- Personal Income is out at 8:30 AM EST. This is major.

- Final Manufacturing PMI is out at 9 AM EST. This is major.

- Revised UOM Consumer Sentiment is out at 9:55 AM EST. This is not considered major.

- Revised UOM Inflation Expectation is out at 9:55 AM EST. This is not considered major.

- ISM Manufacturing PMI is out at 10 AM EST. This is major.

- ISM Manufacturing Prices is out at 10 AM EST. This is not major.

- Construction Spending is out at 10 AM EST. This is major.

- Vehicle Sales - All Day. This is major.

Yesterday we said our bias was to the short side because the underlying fundamentals were uncorrelated and have been all week. You cannot ignore fundamentals as sooner or later it will come home to roost. The net result was the Dow fell 21 points and I don't think we're done. The market dropped after the news came out that two Senate bills to avert the sequester failed. This happened late in the trading day. This shouldn't surprise readers of this newsletter as we've been saying all week that two things can happen: a.) the underlying market fundamentals will correct or b.) the market will go lower. As I write this the market is correlated but it is correlated to the downside. As such our bias is to the downside. Here's why. Besides the market correlated to the downside and the sequester kicking in today, we have 11 economic news reports that will make trading trading erratic. There is no Ben Bernanke speaking today. I perceive that the selling that started late yesterday afternoon will continue. Could this change? Of course. Remember anything can happen in a volatile market.

The great thing about market correlation is that it gives you an insight as to what the market fundamentals are. Now you might ask yourself "why is that important"? It's important because markets generally tend to lean towards those fundamentals regardless of what news is being reported. Are there exceptions? Of course. Look what happened yesterday, the markets were poised to go lower but didn't. Mid-morning after this newsletter was published, the markets changed direction abruptly. But as a trader if you see that it changed abruptly, take the appropriate action. Remember that as traders, your number one rule is to preserve your trading capital because without it there is no trading.

Well March 1st is now upon us and two Senate bills that were supposed to avert the sequester failed to achieve a 60 vote majority in the Senate. The GOP bill came in at 38 yeahs and the Democrat Bill came in at 51, neither of which is enough. Now it appears as though it's blame game tine DC. Already both parties are blaming the other. The Democrats are saying that President Obama would have vetoed the GOP bill even if is passed the Senate. The GOP is saying the Democrats will blame them if the United States falls into recession. Speaker Boehner has already stated "the President got his tax hikes." What he fails to mention however is that the Democrats want to employ a balanced approach; which by the way 76% of Americans want that approach. The GOP approach will pose a shock to an already fragile economy. It seemed to me that thru out this issue everyone was betting on the concept that at the very last moment Congress would come together and get something done. When it didn't happen, the market sold off. President Obama has stated that he will meet with party leaders from both sides over the weekend, so another political drama will unfold. Just so you're aware of what will be cut if Congress does not come to terms on this issue:

- Education

- Small Business

- FDA Food Inspections

- Research and Development

- FBI and law enforcement

As stated previously:

It is painfully aware to me that Congress has no intention of doing anything on this issue. The GOP wants sequestration to happen. They seem to believe that their number one goal is to starve the government. What they fail to realize is that we the people are the government. They don't seem to be mindful of the fact that many innocent government employees (FBI, Law Enforcement, Meat Inspectors, etc.) will be effected by the sequester and will wind up on furlough and hence unemployed. Unemployment will increase and this no doubt will spill over to the private sector. Does anyone know any employer who wouldn't jump at the chance to layoff? I don't. Think about this for a moment. It's illegal for any food retailer to put out meat that isn't inspected. If a particular type of meat isn't inspected, they can only put meat that is and has been inspected. What do you think will happen to the prices of meat that they can legally put out? You guessed it. The price of that meat will go up. This is one simple example. What about milk, eggs and any other staple we take for granted? They need to understand that what they are doing is liken to the person stuck in a dark cave with a stick of dynamite in one hand and a match in the other; and then they light the match to see their way forward. Currently Congress isn't even in session right now and I suspect that they are willing to throw caution to the wind and see what happens. I would also suggest that this will change come April 15th. Why April 15th? Because it's tax day? No. The bill that Obama just recently signed extends the debt ceiling into May but if Congress can't get a balanced budget by April 15th, they will forgo their pay. This I have to see. Of course Speaker Boehner has no problem blaming the President but fails to mention that legislation comes out of the House of Representatives and currently there is no bill on the floor to vote on. As an update to this the Senate will be voting on a bill to balance the sequester spending cuts with revenue increases but the GOP will hear none of it. Speaker Boehner publicly stated "they've already had their revenue increase."

This is the new and improved GOP in action. They won't outwardly hold the country hostage as they did in 2011; they'll set up events such that it works out that way. So come March 1st they'll just innocently sit back and say "oh well we have to cut, it's the law you know." I've been wondering why they're so eager to extend the debt ceiling. They're waiting for a tsunami of events to occur such that there will be no other alternative. If you're wondering what this has to do with markets; I would say to you everything. Look at what happened during the recent fiscal cliff crisis. If you're wondering why we haven't had correlated markets since the election, look no further. The markets do not like uncertainty when it comes to fiscal issues and anything that reeks of uncertainty is not viewed in a positive light. The Smart Money is loving it because thus far they made any issues about March 1st or sequester spending cuts. Will the markets survive? of course. But it also seems to me that the GOP knows all too well that Congress will only act when it has to. In other words, they know that DC drags it's feet when it comes to spending cuts and they've setup events such that it has to happen.

As I write this the crude markets are trading lower and the US Dollar is advancing. This is normal. Think of it this way. If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa. Crude trades with the expectation that business activity is expanding. The barometer of which is the equities or stock market. If you view both the crude and index futures side by side you will notice this. Yesterday crude went to a low of 91.57 and as I write is trading below 91.00 a barrel. I expect this selling to continue and we will monitor crude prices carefully. It seems that at the present time crude's support is at 90.00 with resistance at 96.00 a barrel. This could change. All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see. Remember that crude is the only commodity that is reflected immediately at the gas pump.

Future Challenges:

- Sequester spending cuts to commence March 1st.
- Debt Ceiling in the May time frame.

- European Contraction

Thursday, February 28, 2013

Pre-Market Global Review - 2/28/13 - Interview with Norman Hallett

As of this writing 4:40 AM EST, here’s what we see:

US Dollar –Up at 81.695 the US Dollar is up 23 ticks and is trading at 81.695.

Energies – April Oil is down at 92.56.

Financials – The 30 year bond is up 12 ticks and is trading at 145.17.
Indices – The March S&P 500 emini ES contract is up at 1516.75 and is up 4 ticks.

Gold – The April gold contract is trading down at 1589.80 and is down 59 ticks.

Conclusion

This is a nearly correlated market. The dollar is up+ and oil is down- which is normal and the 30 year bond is trading higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa. The indices are up and the US dollar is trading higher which is not correlated. Gold is trading lower which correlates with the US dollar trading up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

With the exception of the Indian Sensex, the rest of Asia closed higher. As of this writing all of Europe is trading higher.

Possible challenges to traders today is the following:

- Preliminary GDP is out at 8:30 AM EST. This is major.

- Preliminary GDP Price Index is out at 8:30 AM EST. This is major

- Unemployment Claims are out at 8:30 AM EST. This is major.

- Chicago PMI is out at 9:45 AM EST. This is major.

- Natural Gas Storage is out at 10:30 AM EST. This will move the Nat Gas market.

- FOMC Member Raskin speaks at 12:30 PM EST. This is major.

Yesterday we said our bias was neutral because the underlying fundamentals were uncorrelated with the outlier being Ben Bernanke speaking. Again as on Tuesday the markets went straight up and never looked back. Again as on Tuesday the fundamentals still pointed to a lower market. The USD and Bonds were trading higher as Bernanke spoke and even after the market closed still pointed to a lower market. This can mean only one of two things: a.) the underlying market fundamentals will correct or b.) the market will go lower. As I write this the underlying market fundamentals have not corrected and we are not dealing with a correlated market. As such our bias is to the downside. Here's why. The Dow just hit a new 5 year high and Ben Bernanke isn't speaking today. Any time the market hits a fresh 5 year high the Smart Money takes capital off the table afterwhich they will reassess the market to determine their next move. Could this change? Of course. Remember anything can happen in a volatile market.

The great thing about market correlation is that it gives you an insight as to what the market fundamentals are. Now you might ask yourself "why is that important"? It's important because markets generally tend to lean towards those fundamentals regardless of what news is being reported. Are there exceptions? Of course. Look what happened yesterday, the markets were poised to go lower but didn't. Mid-morning after this newsletter was published, the markets changed direction abruptly. But as a trader if you see that it changed abruptly, take the appropriate action. Remember that as traders, your number one rule is to preserve your trading capital because without it there is no trading.

For some time now we've been saying that next round of challenge for traders will be the sequester cuts scheduled to start on March 1st. March 1st is 1 days away and yet no one is raising this as any issue relative to the economy or markets in general. It seems to me that everyone is betting on the concept that at the very last moment Congress will come together and get something done. Just so you're aware of what will be cut if Congress does not come to terms on this issue:

- Education

- Small Business

- FDA Food Inspections

- Research and Development

- FBI and law enforcement

Oftentimes we listen to traders talk about problems and issues they are confronted with. One issue that keeps re-surfacing deals with trader psychology. Now I can deal with a market issue, I can deal with a trading issue but I'm not a trading psychologist. A good friend of Market Tea Leaves, Mr. Norman Hallett has been a leader in this field for over 20 years. I've followed his work for over 8 years and I highly recommend it. Norman and his wife Trish are considered trailblazers in this field and have been for some time. If you're having issues trading or fear of "pulling the trigger" or you want to know "what do I need to do to take this to the next step." I would strongly recommend listening to what Norman has to say. Norman is no stranger to trading as he was at one time a floor trader himself. This is someone who has the experience and scars to prove it. I recently had the opportunity to interview Norman a couple of weeks ago in a Q&A type setting. Here's the interview:

For more information on Norman's program, go to www.thedisciplinedtrader.com/nick

As I write this the crude markets are trading lower and the US Dollar is advancing. This is normal. Think of it this way. If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa. Crude trades with the expectation that business activity is expanding. The barometer of which is the equities or stock market. If you view both the crude and index futures side by side you will notice this. Yesterday crude went to a low of 92.17 but did not stay there long. So it would seem that at the present time crude's support is at 92.00 with resistance at 98.00 a barrel. This could change. All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see. Remember that crude is the only commodity that is reflected immediately at the gas pump.

Future Challenges:

- Sequester spending cuts to commence March 1st.
- Debt Ceiling in the May time frame.

- European Contraction