Alaron Energy Comment

CHICAGO - Jul 18/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

The Odd Couple! Can two markets diametrically opposed share an apartment? Remember the old days when oil and the stock market moved in the same direction. You don't? Well you should. For years stocks and oil basically went in the same direction. When oil rallied stocks did well. I know many people don't think that's true off the top of their heads.   But indeed it is!

Try laying a chart of the S &  P over oil! Why did oil and the stocks go in the same direction for so many years? Well for years the run-up in oil was always a reflection of strong economic growth. Lately of course that coupling has turned odd as oil has become a hedge against systemic risks. What kind of risks? Oh the usual, like bank failures, Fannie and Freddie failures, war in the Middle East, Financial Armageddon, you know the usual run of the mill stuff. Oil now is  acting as an  inverse to oil. In fact if we have another day that brings another plunge for oil then we may see  stocks soar again!

Can oil and stocks ever move back to the happy couple they use to be?  A big rebound in stocks yesterday came from the help  of a bearish natural gas report that sent oil prices plunging.   Yet today can the bloom be off the rose? Concerns about weather and staggering losses from Merrill Lynch could change the out look. The question is now if all the dirty laundry is out of the closet and does oil go back to reflecting strong economic growth.

It did  not hurt  that yesterday the options expired yesterday.

Call me for updates and to open your account at 800-935-6487 or email me at pflynn@alaron.com.  The markets are flying and volatility is extreme!

Sell August crude at 13300 -  stop 13600.

Buy August RBOB at 31550 -  stop 30700.

Sell August heating oil at 40100 -  stop 40300.

Stopped on long  August natural gas  from apprx 1090   at apprx  1070.

Buy August natural gas at 990 -  stop 970.

Have a GREAT day and weekend!            

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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