On Prices

The unsung hero of the Government shutdown and Taper-gate has been the relentless retreat of RBOB. We speculated during the end of August during the ramp that equilibrium was closer to a sub 3 buck pump price for much of the country.

Gasoline futures are now treading around the low end of the 2011 and 2012 range. The break has manifested itself in a cluster of better reading from the industrial sector, despite the Congressional ignorance. A dud of a Back to School and a drop in the early Summer car buying could lead to a refreshed Holiday shopper with gas down here. (The big drawback being a lack of "must have" items after several years of electronics stocking)

As for10 Year Notes, a significant weekly down (higher than previous weeks high-settles lower on the week) also saw the 10 and 20 day moving averages taken in a single session (fri.) It is common for a market in that condition to come back as much as 50% of the break before falling apart. Should that squeeze develop the extreme would be around 127.12 (Hooper's turned objective is 127.16) The SP, after 3 orderly declines, is still holding for what may be one last divergence inducing run.

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