Despite data pointing to bulging inventories in the United States,the price of crude surged from the low thirties up to the low seventies. Part of the reason can be traced to investors parking their cash in oil as a hedge against a declining U.S. dollar and inflation. Another factor is Chinese demand. over the past months, the Chinese have been taking advantage of low oil prices to build up their inventory.Their goal is to ultimately build a 90 day oil reserve, like that of the U.S. China not too long ago completed the first phase of their energy storage program, featuring a 100-million-barrel tank farm constructed and filled. They will soon build a second facility to which will contain 170 million barrels, and a third phase is expected in the future. With the global financial markets recovering, oil is unlikely to retest its previous low but it could correct back to the mid fifties.

Like most automakers, Toyota saw its sales crumble as the global recession hit, particularly in the United States. Led by its president, TM spent billions of dollars to expanded aggressively without factoring in a possible sales meltdown. With a new president in place, Akio Toyoda promises that Toyota will go back to the basics and be more responsive to consumer needs. TM has a global reach and is still highly regarded for the high quality of its vehicles. If a correction in the stock market takes hold, TM could go back to its previous level of resistance, $68. If this level holds, TM is a definite buy.

Home Depot has been rallying on hopes that a bottom and an eventual recovery will take place soon. Taking a glimpse at the charts of HD, it suggests that the rally is running out of steam. It has rallied from a low of $17 and is bouncing off the $27 level. Lately, the 20 day moving average around $24 has been acting as resistance. Though it is becoming evident that the economy will not collapse, the consumer coming back to spending in a vigorous fashion has yet to emerge. As a result, the rally might have gotten ahead of itself. The investor should sell HD into rallies.

Enterprise software giant Oracle stated in its earnings conference call that demand is improving, helping the stock move up during yesterday’s trading. With the stock currently at $21.47, it is heading into resistance. The 52 week high for ORCL is $23.62. For the short term, the stock is unlikely to break this level. The upward momentum in stocks is fading with the approach of summer. Furthermore, the latest economic data suggest that the recovery is still struggling to taker hold. The stock could go back to $18 in a stock market correction or at its 200 day moving average. The stock is likely to consolidate its gains and trade between a range of $18 and 23.62.

For the world’s major exporters, noticeably China and Japan, they are hoping that their best customer, the American shopper will soon go back to their big spending ways. That is however unlikely to happen in the short or immediate term. There many reasons why big spending is out and thrift is in. First, most Americans are carrying heavy debt loads, limiting their spending ability. With companies still cutting jobs, people will not spend aggressively unless they are more confident about their economic prospects. The housing market has yet to recover. Who wants to spend money if you see your net worth diminish or if your house is carrying negative equity. Because of the severity of the economic contraction, Americans are shifting their values. Materialism is out, simplicity is in.

Right now, any hope of a quick economic recovery is melting as fast as ice cream on a hot summer afternoon. In reaction, investors are taking profits on the stock markets that have rallied almost 40% from the March lows. Taking a look at the charts of the S&P 500, it has broken through the key 200 day moving average. The index has failed to go above the 20 day moving average, signaling a drop is likely to occur. The next target is 850. With the summer season settling in, investors are less apt to load up on stocks. Yes, the worst of the recession is probably behind us. Investors want to see corporate profits catch up with the stock valuations. Until then, the S&P 500 will likely range range trade between 850 to 950. The downside risk is the November lows around 750.

Despite bullish news for oil, it did not rally despite the political uncertainty gripping Iran, OPEC’s second-biggest producer. In fact, the price for crude is dropping this morning on doubts that an economic recovery is taking hold. Crude is down around 3% to trade below $68. The seasonal trade for oil is over. The commodity tends to peak in late June due to strong demand to build up gasoline inventories for the summer driving season. Despite evidence of high oil inventories, investors had been piling into it as a hedge against inflation, driving up the price from its lows in the thirties. Oil is likely to correct back to the $60 area. If this level is broken, the next target is $50. Most analysts expect oil to be in a trading range between $60 and $80.

As we enter the summer season, the excitement for stocks tend to level off. Looking at the charts of GOOG, the stock had a very strong run up from $290 to $450 between March and June. During this period, the stock traded above its 20 day moving average. Lately, GOOG has been struggling to break this level or $420. The stock is currently around $418. If the 20 day moving average cannot be broken on the upside, the stock could retest the 50 day and 200 day moving average, or the low $400 and $360 respectively. Evidence of a stronger economy and positive revisions to the top and bottom line are what is needed to push GOOG stock higher. If not, investors are more likely to lock in their profits on the stock.

Tech giant HPQ will probably consolidate its gains before breaking out on the upside as the economic recovery takes hold later on in the year. Fundamentally, HPQ has been posting decent financial results in light of a difficult economic environment. It has been gradually grabbing market share in the key sectors it competes in. It has also made strategic acquisitions to enhance its competitiveness. The stock has rebounded nicely from its 52 week low of $25.39. Given that we are entering the quiet summer months, HPQ will likely consolidate the gains from its March low. Looking at the charts, the expected range is between $34 to $38. Once more evidence of an economic recovery surfaces, HPQ will break out of this range towards the upside.

POT, last year’s stock market darling is falling on negative news that demand from European farmers will remain weak. In reaction, the stock is down almost 10% to trade just under $97. The largest fertilizer company in the world has already announced several production cuts. Given the current profit taking in commodities and the shares of the producers, POT is likely to test its 200 day moving average or $90. If there is much more evidence of an economic recovery taking hold, the stock could test the major support level around $70. The economies of the developing nations are still growing, creating demand for more protein, which ultimately translates to more fertilizer use. POT remains one of the world’s major producer. For now, the stock still has more ways to go on its correction.