Monday, November 30, 2009

Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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General Stock Market Commentary For Monday Evening

The U.S. stock indexes closed firmer today after being under modest selling pressure much of the session. Prices rebounded from Friday's sell off as worries about the Dubai debt crisis eased a bit.

The stock index bulls still have the overall near term technical advantage. However, don't be surprised to see some more profit taking pressure in the stock indexes heading into the holidays. Traders are awaiting Friday morning's important U.S. jobs data.

Monday evening's crude oil pivot point 76.85
1st resistance 78.57 2nd 79.72 3rd 81.44
1st support 75.70 2nd 73.98 3rd 72.83

Natural gas pivot point 4.947
1st resistance 5.075 2nd 79.72 3rd 5.447
1st support 4.703 2nd 4.575 3rd 4.331

The U.S. dollar index closed down 22 points at 75.18 today. Prices closed nearer the session high today. Bears still have the solid overall near term technical advantage.

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How Much do you Know About the “Greeks”?


No matter what the investment, an investor needs to know and fully understand the potential risks of the investment prior to committing capital to that investment. In the options market, the Greeks define and quantify the risks of your position before you commit to the investment.

Understanding the Greeks is a must for proper risk management. Further, the Greeks can also help you identify and select not only the proper strategy to fit the opportunity you selected, but also which specific options to use to create that specific strategy.

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Without a full understanding of the risks of an investment, an investor should never commit hard earned money. If you do not know your Greeks, you have no business being in the options market!

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Crude Oil Rises as U.S. Business Activity Gains a Second Month


Crude oil rose after a report showed that U.S. business activity gained for a second month, bolstering optimism that the economic recovery in the world’s biggest energy consuming country will accelerate. Oil rebounded after the Institute for Supply Management Chicago Inc. said today its business barometer increased to 56.1, the highest level since August 2008. Readings above 50 signal expansion. Prices dropped earlier as Dubai’s government said it hasn’t guaranteed the debt of Dubai World, a state controlled company struggling with $59 billion in liabilities.

“These are very good numbers,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas based energy consultant. “Any number above 50 points to an expanding U.S. economy and that’s very good for oil demand.” Crude oil for January delivery increased 37 cents, or 0.5 percent, to $76.42 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Futures are up 71 percent this year. Economists projected the Chicago index would drop to 53, based on the median of 53 estimates in a Bloomberg News survey.

Oil in New York declined 2.5 percent on Nov. 27 as Dubai World’s attempt to reschedule its debt bolstered the dollar. “The dollar is weakening again, which is giving oil support,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Any big dip in prices is being seen as an opportunity to get into the market”.....Read the entire article.

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Crude Oil Trading Slightly Lower, Do we Have a Near Term Bottom?


Crude oil was slightly lower overnight as it extends last Friday's decline. Stochastics and the RSI are turning bullish signaling that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 78.56 would confirm that a short term low has been posted. If January extends this month's decline, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target.

Monday's pivot point, our line in the sand is 75.43

First resistance is the 10 day moving average crossing at 77.84
Second resistance is the 20 day moving average crossing at 78.56

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

Today’s Stock Market Club Trading Triangles

Natural gas was lower due to profit taking overnight as it consolidated some of last week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends last week's rally, the 50% retracement level of the October-November decline crossing at 5.413 is the next upside target. Closes below the 10 day moving average crossing at 4.901 are needed to confirm that a short term top has been posted.

Natural gas pivot for Monday is 5.086

First resistance is last Friday's high crossing at 5.290
Second resistance is the 50% retracement level of the October-November decline crossing at 5.413

First support is the 20 day moving average crossing at 4.946
Second support is the 10 day moving average crossing at 4.901

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The U.S. Dollar was lower overnight as it consolidates below the 10 day moving average crossing at 75.11. Stochastics and the RSI are turning neutral to bullish hinting that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 75.35 would temper the near term bearish outlook in the market. If December extends this month's decline, monthly support crossing at 73.39 is the next downside target.

First resistance is the 10 day moving average crossing at 75.11
Second resistance is the 20 day moving average crossing at 75.35

First support is last week's low crossing at 74.21
Second support is monthly support crossing at 73.39

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Crude Oil and Natural Gas Technical Outlook For Monday Morning


Nymex Crude Oil (CL)

Intraday bias in crude oil remains neutral for the moment and some more sideway trading might be seen. But after all, risk will continue to remain on the downside as long as 80.51 resistance holds and fall from 82.00 is still in favor to continue. Below 72.39 will target 61.8% retracement of 65.05 to 82 at 71.52 next and then trend line support at 70.76.

In the bigger picture, the resumption of fall from 82.00 last week was inline with our preferred bearish view. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.76) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!

Nymex Natural Gas (NG)

Natural gas fails below 5.318 again and intraday bias is turned neutral for the moment. While some more retreat might be seen, as recent price actions suggest natural gas is consolidations only, hence, we'd look forward to an upside break out. Above 5.318 will confirm that whole rebound from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. Further will now remain in favor as long as 4.157 support holds, towards 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed again.....Here is the charts!

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Sunday, November 29, 2009

The Dow, Dollar & Gold – What Goes Down Must Come Up

This year has been a very exiting time for traders and investors. We have seen a steady climb in prices with controlled pullbacks in the broad market and gold.

Using technical analysis we are able to quickly and accurately make informed decisions just from looking at the charts. In the charts below you will see how simple chart patterns along with support & resistance levels can provide excellent low risk entry points. Also you will see how candle stick charts can be an early indicator for prices to reverse direction.

DIA ETF – Daily
The DIA (Dow Jones Index Fund) is trending higher. By applying some basic technical analysis you are able to time your entry points having the odds in your favor.

In this chart I use two simple forms of analysis. The broadening formation (red trend lines), and horizontal support zones shown in blue.

Broadening Formations: This is when the price becomes more volatile making higher highs and lower lows. I think of it as one of those Megaphones for talking to large groups of people. So when a chart has this pattern it’s virtually yelling at me and I start taking profits or tightening my stops.

Horizontal Support Zones: I like to focus on support or resistance zones which are a little different than most traders. I do not use the top and bottoms of previous waves for these levels. Instead I take the average price then expect the support level to be penetrated somewhat as the level is tested. This is how the market keeps you out of the good trades. I cover this in great detail in my Stock Market Trading Education Course available in January.

Analysis: The DIA ETF looks ready for a pullback to the $99- 100 level.



GLD Exchange Traded Fund – Weekly
Gold has been on fire and riding this wave up has been very profitable thus far. Last week a doji candle was formed on the chart and this can signal a change in short term price action.

This chart shows some of the past doji candles and what happened to the price of gold soon after. What this candle is telling us is that the buying and selling pressure is equal. So we know momentum is slowing and we should expect a consolidation or correction.

Because gold has rocketed higher, indeed going almost straight up in the recent weeks, I expect a pullback to be very quick. A drop to the $110 or even the $100 level in the coming weeks is not out of the question, but we all know commodities can go parabolic for several months (straight up). This is why we continue to tighten our stops and keep holding out long positions.



US Dollar – Weekly
The US dollar has been up and down like a yo-yo in the past 15 months. The chart below clearly shows what has been happening with this currency and what I think we could see very soon.

The blue support zone (73-74) is a key pivot point for the dollar. That being said lets take a look at the chart.

During the time when the price is trending higher July 2008 – Feb 2009 we see lower wicks appear more often. This tells me that sellers pushed the price down early in the week but were then overcome by buyers nearer the end of the week. This is bullish price action. Also the broadening patterns during this timeframe’s tops indicate increased volatility and we know that is a sign of weakness.

From March 2009 – Sept 2009 the trend was down and there are longer upper wicks telling us buyers became over powered by sellers each time the price rallied.

In the recent 3 months we observe lower wicks meaning buyers are moving into the US dollar again. Knowing that there is major support below the current price I have to think the dollar could start to bottom around this level.



Trading Conclusion:
The broad market is becoming unstable and looks like it could have more of a pullback this week. I would not be adding to any long positions until we see the market trading near support. Three out of four stocks move with the market so it is crucial to understand the overall market direction when buying and selling stocks and commodities.

Gold is trading at a level which is fuzzy. The weekly chart is neutral and the daily chart is still on fire as it moves up. All we can do is ride our positions and keep raising our stop prices.

The US dollar could start to bottom over the next few weeks. Depending what happens with Dubai this week we could be in for a big bounce in the dollar as investors flock to safety as the US dollar is still the currency of choice if/when other countries start to have a financial melt down again.

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Oil Rises on U.A.E. Backing for Dubai’s Banks, Weaker Dollar


Crude oil rose in New York after the United Arab Emirates’ central bank said it “stands behind” the country’s banks, easing concerns about a possible default by Dubai World. Oil gained as much as 0.9 percent after the Abu Dhabi based U.A.E. central bank said yesterday lenders will be able to borrow using a special facility tied to their current accounts. The dollar declined against the euro, bolstering the attraction of commodities as an alternative investment.

“The market is still coming to terms with the implications of the Dubai debt scare for oil,” said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. The move by the U.A.E central bank could be a “positive sign,” he said. Crude oil for January delivery gained 45 cents, or 0.6 percent, to $76.50 a barrel in electronic trading on the New York Mercantile Exchange at 12:09 p.m. Sydney time. It earlier dropped as much as 0.3 percent.....Read the entire article.

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Saturday, November 28, 2009

U.S. Crude Oil Production Poised for Biggest Jump Since 1970


United States crude oil production for 2009 is on target to have its biggest one year jump since 1970, according to a Platts analysis of industry data. With U.S. oil production averaging 5.268 million barrels per day (b/d) through October, the gain in U.S. output will be the most since the country produced 9.637 million b/d in 1970, which turned out to be the peak year of U.S. crude output, according to Platts' analysis of data published by the U.S. Energy Information Administration (EIA). If that 5.268 million b/d figure holds through December, this year would show a 6.4% boost from the 4.95 million b/d average of 2008 and rank as the best U.S. oil production year since 2004, when output averaged 5.419 million b/d.

For comparison, in the 40 years since U.S. oil production peaked annual output has jumped only eight times. Seven of those increases were minimal; only in 1978 was there a jump of significant magnitude, an increase of 5.6%, to 8.7 million b/d. Last year's hurricane curtailments distorted the production numbers somewhat for the 2008 comparison, given that 183,000 b/d of Gulf of Mexico output was still offline at the end of that year. However, 2009 is still expected to post increases of 3% and 4% from the relatively storm free years of 2006 and 2007, respectively.

Projections from the U.S. Minerals Management Service (MMS) indicate that the primary driver for this year's U.S. oil production resurgence is actually just getting started. That driver is the Gulf of Mexico, where operators have begun launching a group of new fields, fulfilling what has been a decade long focus on unlocking the promise of deepwater exploration there.....Read the entire article.

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Friday, November 27, 2009

Crude Oil Futures Tumble to Six Week Low on Dubai Debt Crisis


Crude oil in New York fell to the lowest level in six weeks as Dubai’s attempt to reschedule its debt bolstered the dollar and prompted investors to sell commodities.
Oil dropped as much as 7.1 percent as the U.S. currency climbed, dulling the appeal of raw materials as an alternative investment, and equities tumbled. Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayments, raising concern that worsening defaults may hold back the global recovery.

“The situation in Dubai revives worries about the recovery of the economy,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “The strength of the recovery has an obvious and immediate impact on both oil demand and prices.” Crude oil for January delivery declined $2.28, or 2.9 percent, to $75.68 a barrel at 12:09 p.m. on the New York Mercantile Exchange. Futures touched $72.39, the lowest since Oct. 12. On a closing basis the market is heading for the biggest drop since Nov. 12. New York oil futures didn’t settle yesterday because of the Thanksgiving holiday. Floor trading and electronic trading will end at 1:45 p.m. today, instead of the normal closures at 2:30 and 5:15 p.m......Read the entire article.

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Crude Oil and Natural Gas Technical Outlook For Friday Morning


Nymex Crude Oil (CL)

Crude oil fall sharply to as low as 72.39 today and the development is inline with our bearish view that fall fro 82.00 is still in progress. Intraday bias remains on the downside for 61.8% retracement of 65.05 to 82 at 71.52. Sustained break there will pave the way for even deeper decline to 65.05 support next. On the upside, while some recovery might be seen, upside should be limited by 75.57 support turned resistance and bring fall resumption.

In the bigger picture, we'd continue to slightly favor the bearish case as long as 80.51 resistance holds. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.60) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!

Nymex Natural Gas (NG)

Natural gas retreat mildly after the rise from 4.157 was limited below 5.318 resistance. With 4 hours MACD crossed below signal line, intraday bias is turned neutral again. Some more consolidations would be seen between 4.157 and 5.318. Nevertheless, note that break of 5.318 resistance will confirm that whole rally from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, current development suggests that price actions from 5.318 are merely consolidations and should have completed at 4.517 already. Rise from 2.409, which is still in progress and will likely extend to 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed.....Here is the charts!

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Thursday, November 26, 2009

Oil Stock Valuations Increasing....and Not Just From Higher Oil Prices


I have noticed valuations in the junior oil sector creeping up, sometimes to the point where I have to blink. But it’s not just the increase in the price of oil this year that has driven up valuations. Technology is increasing how much oil or gas companies can produce from a well in a day, and in the overall amount of oil or gas they can recover from a given formation, essentially how fast and how much they produce. Technology is giving investors more leverage to the price of oil.

This is especially true of the hot new “tight” plays that are being developed in western Canada and the US, where I have been focusing the subscriber portfolio.
(“Tight” just means the oil is held in rocks like shale or sandstone, as opposed to the more conventional type of looser sands that hold hydrocarbons, and from which almost all the world’s production has come from in the last 100 years.

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As an example of valuations increasing, in August 2009 TriStar Oil and Gas merged with Petrobank’s Canadian operations, and was valued at about $109,000 per flowing barrel, which was almost double its average peer group valuation at the time. They were a 20,000+ bopd producer, and the larger the company, generally, the larger the valuation.

But now I am seeing junior producers one tenth that size, 2000 bopd or even 1000 bopd producers, get valuations in the $90,000 – $110,000 per flowing boe (barrels of oil equivalent) range. Most of these are in the 3 year old Bakken play in Saskatchewan, or the several months old Cardium play in Alberta. Several Canadian brokerage firms have issued reports saying these two oil plays have the best economics of any in Canada.....Read the entire article.

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Wednesday, November 25, 2009

Weak Dollar Boosts Commodities – So What’s Next?

Another fantastic week for precious metals as the US dollar continues its slide lower. Energy commodities like oil and natural gas are having some difficulty finding buyers.

When commodities start to trend they become very profitable for those riding them up or down. But when a short term trend starts to virtually go straight up (parabolic) then we must be prepared for a sharp pullback. Once the price starts to slide I figure a lot of short term traders will begin locking in profits, sending gold down.

I’ve recently discovered the Money Flows table from The Wall Street Journal and I gotta say it’s awesome. My thanks to John Townsend for bringing this resource as well as hidden gem play – DFSH – to my attention.

The Money Flow table calculates whether money is moving in or out of a stock or ETF on a given day, and whether it is selling on strength or buying on weakness. It also tells you if there are more up or down ticks. Really powerful stuff in my opinion.

For example, the GLD gold fund continued its move higher today as it must follow the underlying commodity. And though the fund traded higher institutions were selling their positions in masse. For every 9 block trades bought there were 100 block trades on the sell side. This is strong evidence that institutions/large traders are moving out of GLD. Indeed, over $161 million dollars moved out of GLD today alone and a total of $251 million dollars in the two days preceding today.

The SPY fund was 12 buy orders for every 100 sell orders. Today alone over $675 million was flowing out of SPY which his CRAZY huge. Just click here to check out the table!

GLD ETF Trading – Weekly & Daily Trading Charts
Gold continues to claw its way higher as trader’s trip over each other trying to buy this shiny investment. The weekly chart clearly shows a parabolic spike. Vertical spikes like this do not last for long, but the largest percentage of the move will be made riding this trend up with a tight stop.



SLV ETF Trading – Weekly & Daily Trading Charts
Silver is still trending up but lagging its big sister (yellow gold). The daily chart shows a nice mini bull flag and we could get an upside pop soon.



USO Fund Trading – Weekly & Daily Charts to Trade
Crude oil just does not have people participating. The dollar is dropping yet oil continues to be dormant. It has provided several intraday plays as it trades the top and bottom of the trend channel.



UNG Fund Trading – Trade the Weekly & Daily Charts
Natural gas really came to life today. It looks like people started to cover their shorts and it just kept running up for the entire session. I mentioned in a previous report that the $9 level could be a bottom and today’s reversal sure makes it look good to the eye. But if this is a short coving rally, prices are still headed lower yet.



ETF Trader Conclusion:
Gold continues its incredible rally and we love every minute of it. I keep moving our stops to lock in maximum gains while providing enough wiggle room for more growth.

Silver and precious metals stocks are lagging and that is a concern. The charts look solid but I think investors are not currently willing to pay higher prices for riskier plays which include silver and precious metal stocks.

Crude oil is just drifting lower in a controlled manner. The chart looks bullish but buyers just are not in a panic to buy it right now.

Natural Gas has put in a nice bounce this week. I expect a lot of this is short covering and it could rally to the $10.50 – $11.00 area if all goes well.

The broad market is starting to look and feel over bought. We could see the market continue higher Friday because of the holiday light trading volume which virtually always moves the markets, or whatever investment is HOT, higher. This is because the large traders take time off so there are not a lot of large sellers in the market. But be ready for next week because these nice lofty prices could start tumbling down.

I just want to wish everyone a great holiday!

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Crude Oil Declines on Rising U.S. Inventories, Stronger Dollar


Oil fell in New York as traders sold contracts to lock in gains ahead of the U.S. Thanksgiving holiday and after the U.S. Energy Department said crude inventories held by the world’s largest energy consumer rose. Oil also pulled back after rallying 2.6 percent yesterday, the most since Nov. 16, as the dollar retraced some of its losses against the euro. Commercially held U.S. stockpiles rose to a four week high of 337.8 million barrels in the week to Nov. 20, renewing concern over the pace of recovery in fuel demand.

“We can expect some profit taking selling after last night’s sharp gains led by gold and the euro,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “It’s possible to go as low as $76.50, that’s the level before it started rising yesterday.”

Crude oil for January delivery fell as much as 56 cents, or 0.7 percent, to $77.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $77.55 a barrel at 11:20 a.m. Singapore time. Yesterday, it rose $1.94 to $77.96 a barrel. Futures have gained 74 percent this year. Floor trading in New York will be suspended today because of Thanksgiving. The exchange will close early tomorrow, while electronic trading will continue through the holiday.....Read the entire article.

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EIA Weekly Petroleum Status Report


U.S. crude oil refinery inputs averaged 14.0 million barrels per day during the week ending November 20, 177 thousand barrels per day above the previous week’s average. Refineries operated at 80.3 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged 9.0 million barrels per day last week, up 371 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.4 million barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 928 thousand barrels per day. Distillate fuel imports averaged 234 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 337.8 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are slightly above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.

Distillate fuel inventories decreased by 0.5 million barrels, and are above the
upper boundary of the average range for this time of year.

Propane/propylene inventories decreased by 1.9 million barrels last week and are in the lower half of the average range.

Total commercial petroleum inventories decreased by 0.9 million barrels last week, and are above the upper limit of the average range for this time of year.

Just click here for the entire report....

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Bloomberg Analyst: Oil to Extend Drop, Test Channel Below $74


Crude oil, declining since touching a one-year high of $82 a barrel Oct. 21, is poised to test the bottom of a downtrend channel below $74, according to an analysis of price charts by Societe Generale SA. Oil, trading lower today for the fourth day in five, could extend its drop as traders pull out in the absence of profit opportunities, according to Stephanie Aymes, a London based commodity technical analyst at France’s second largest bank by market value. “We are in a range, a descending channel,” Aymes said in an e-mail. “It looks like the one in August, but that was deeper. This range is very long and the daily indicators are breaking supports.”

Crude oil has pared its gains for this year from as high as 84 percent to 70 percent amid concern weaker growth in the U.S., the world’s largest energy consumer, may slow the recovery in demand. Futures for January delivery on the New York Mercantile Exchange was at $76.01 a barrel in electronic trading, down 1 cent, at 11:57 a.m. Singapore time. Prices, which fell yesterday after the Commerce Department said the U.S. economy expanded less than estimated in the third quarter, are approaching a technical support area and may soon test its resilience, Aymes said.....Read the entire article.

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Crude Oil and Natural Gas Technical Outlook For Wednesday Morning


Nymex Crude Oil (CL)

Crude oil's remains soft today and is struggling around 75.57 support. As noted before, with 80.51 resistance intact, short term risks remain on the downside, below 75.57 will bring deeper decline towards 61.8% retracement of 65.05 to 82 at 71.52 next.

In the bigger picture, we'd continue to slightly favor the bearish case as long as 80.51 resistance holds. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.60) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!

Nymex Natural Gas (NG)

Near term outlook in natural gas is quite mixed for the moment. But after all, with 5.318 resistance, we'd slightly favor the case that it has topped out already and favor another fall. Below 4.157 will target 61.8% retracement of 2.409 to 5.318 at 3.52 first.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The break of 55 days EMA, even though it's brief so far, suggests that rebound from 2.409 is possibly just a corrective rise only and may have completed after failing to sustain above 55 weeks EMA. Deeper decline could now be seen for a retest of 2.409 support first. On the upside, break of 5.318 resistance is needed to revive the case that Natural gas has bottomed in medium to longer term.....Here are the charts!

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Tuesday, November 24, 2009

Land Rig Count Recovery Continues: What Goes Down Must Come Up


Driven by a confluence of factors including the credit crunch, commodity price collapse and widespread economic malaise, the U.S. land rig count decline witnessed between August 2008 and June 2009 was by far the most devastating downturn of the last 20 years. On a percentage basis, the recent downturn was similar to the 1998-1999 downturn, it just occurred in half the time. In absolute terms, more than twice as many rigs fell out of the rig count in the 2008-2009 downturn than in each of the last two major collapses.

However, the recovery so far has been promising, and in the five months since the downturn, the rig count has recovered by 241 rigs or 29%. In absolute terms, this is more than in the first five months of either of the prior two recoveries. On a percentage basis, the current rebound is unfolding faster than the 2001-2002 recovery but not as quickly as the 1998-1999 recovery. The table below summarizes the last three downturns and the five month periods following the troughs.



Rig Count Likely Headed Higher, but Risks Abound
Although a general consensus has formed that the land rig count will continue to increase during 2010, it would be wise to balance optimism with a sense of caution in the current recovery. While the recovery periods in each of the last two cycles generally exhibited an up and to the right pattern (for two and six years respectively), the present upturn is occurring in a noisy environment where multiple variables could take a course that would result in a plateauing rig count or possibly even a second bottom.....read the entire article.

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Oil Falls as Economic Growth Revised Lower, Supplies May Gain


Crude oil fell after a report showed that the U.S. economy grew at a slower level than previously estimated, and on forecasts that supplies gained. Oil retreated after the Commerce Department said that the economy expanded at a 2.8 percent annual rate in the third quarter, down from a 3.5 percent increase initially stated. The U.S. Energy Department will probably report tomorrow that crude oil supplies grew by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg News survey. “As long as there are tepid headlines about the economy, oil is going to be under pressure,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “We seem to be attracted to the lower end of the recent range and will probably test it before long.”

Crude oil for January delivery declined $1.48, or 1.9 percent, to $76.08 a barrel at 10:59 a.m. on the New York Mercantile Exchange. Futures have gained 71 percent this year. Transactions may be lighter than normal because of this week’s U.S. Thanksgiving holiday. There will be no trading on Nov. 26 and floor trading will end early on Nov. 27. “I’m not getting excited about anything I see this week as far as price action is concerned,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Volume and liquidity are down, so volatility is going to be through the roof”.....Read the entire article.

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New Video: Finding the Trend in Forex


Here is the fastest and easiest way to tell the trend in the foreign exchange markets.

In today’s video we are going to share with you a wonderful way to look at the forex markets and determine which way they are headed in a matter of seconds. We’ll be looking at three different cross rates and how they all correlate together in a way that I think may surprise you.

The forex markets are the biggest markets in the world and MarketClub not only covers all of them, but also covers them in real time with pricing and charts. I hope you learn from this video and take the time to post your comments on our blog.

Just click here to watch the video and as always there is no charge and no registration to watch this educational trading video.

Good trading,
Ray C. Parrish
President/CEO Crude Oil Trader

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Oil Little Changed Before Report Forecast to Show Supply Gain


Crude oil traded little changed around $77 a barrel before a report forecast to show that higher than normal crude inventories grew last week in the U.S. The U.S. Energy Department will probably report tomorrow that stockpiles grew by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg survey. Analysts were split over the change in supplies of distillate fuels such as heating oil and diesel, which are 28 percent above the seasonal average.

“At least until the end of the year we see $80 as the top of the range,” said Tobias Merath, a commodity analyst at Credit Suisse Group in Zurich. “What’s limiting the potential in the short term is the supply glut in the distillate market.” Crude oil for January delivery traded for $77.52 a barrel on the New York Mercantile Exchange, 4 cents lower, as of 11:16 a.m. London time. Oil, which rose as high as $79.92 yesterday, has failed to close above $80 since Nov. 4. Futures have gained 73 percent this year. Oil was capped by strengthening in the U.S. dollar, which often limits the appeal of commodities for hedging inflation. The dollar traded at $1.4946 per euro at 11:15 a.m. in London, from $1.4961 yesterday in New York.....Read the entire article.

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Monday, November 23, 2009

Crude Oil Rises on Weaker Dollar, Iranian Military Exercise


Crude oil rose as a weaker dollar heightened the appeal of commodities to investors and an Iranian military exercise bolstered concern that Middle Eastern supplies may be disrupted. Oil climbed as much as 3.2 percent and gold reached a record as the greenback dropped on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain at virtually zero. Iran is testing an air defense system this week, in a military exercise to assess the vulnerability of its nuclear plants.

“The primary reason for today’s move is that the dollar is in steady retreat,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drumbeat from Iran seems to also be giving prices a boost.” Crude oil for January delivery rose $1.64, or 2.1 percent, to $79.11 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Prices are up 77 percent this year. The December contract expired on Nov. 20 at $76.72 a barrel. Oil traded between $74.79 and $82 the past five weeks after surging in early October.....Read the entire article.

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Sunday, November 22, 2009

ETF Update - Gold, Silver and Oil Out Perform their Equities?

Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.

Let’s examine the monthly charts of gold, silver, oil and natural gas, and observe how they have traded in comparison to their mining equities

Gold – Monthly Chart
Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.

As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.

Investors around the world are buying gold because it is a physical product which has been proven to hold its value.


Silver & Precious Metal Stocks – Monthly Chart
Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections.
Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.


Oil – Monthly Chart
Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.


Natural Gas – Monthly Chart
Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.


Commodity Trading Conclusion:
Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.

We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.

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Saturday, November 21, 2009

New Video: A Look at the Dollar Index


The markets are always interesting, but they are particularly interesting right now.

Today we’re looking at the dollar index and some important elements that we see building in this market and want to bring to your attention. In this short video we outline the key areas to watch for and one important component that you may not have seen. We think this factor could, in fact, be a short term game changer for this market.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register. Please take a moment to let our readers know where you think the U.S. Dollar is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Friday, November 20, 2009

New Video: Crude Oil Market Update


In our new video on crude oil we update some of the thoughts we have recently published, but also some important elements that are still in play and could push this market significantly higher.

In this new video we outline the key support zone that we see and also highlight some other technical elements could come into play to push this market higher.

Just click here to watch the video, and as always our videos are free to watch and there is no need to register. Please take a moment to leave a comment and let our readers where you think oil is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Crude Oil Falls a Second Day as Dollar Gains, Equities Drop


Crude oil fell for a second day as the dollar strengthened against the euro and global equity markets declined. Oil slipped as much as 1.6 percent as the U.S. currency advanced for the third time in four days. Stocks and equity futures retreated after European Central Bank President Jean-Claude Trichet said policy makers will withdraw emergency cash gradually to avoid fueling inflation, and Dell Inc.’s earnings trailed analysts’ estimates.

“We will take oil prices down another notch because of the strengthening dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “Things are bearish everywhere you look.” Crude oil for December delivery fell $1.20, or 1.6 percent, to $76.26 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices are little changed this week and 71 percent higher this year. The December contract expires today. The more actively traded January contract fell $1.09, or 1.4 percent, to $76.96 a barrel. Oil dropped 2.7 percent yesterday as the greenback gained and on concern the rally in commodities and equities has outpaced the prospects for economic growth.....Read the entire article.

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Thursday, November 19, 2009

Crude Oil Closes Lower Amid a Rebound in The U.S. Dollar

Crude oil closed down $1.87 at $77.71 a barrel today. Prices closed nearer the session low today amid a rebound in the U.S. dollar index and solidly lower U.S. stock index futures prices. Crude oil bulls still have the overall near term technical advantage. However, the bulls do not want to see a bearish weekly low close on Friday.

Unleaded gasoline (RBOB) closed down 381 points at $.19733 today. Prices closed nearer the session low today. Bulls still have the overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

Natural gas closed up 8.9 cents at $4.343 today. Prices closed near the session high after hitting a fresh contract low early on today. Short covering in a bear market was seen today. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage.

The U.S. dollar index closed up 14 points at 75.40 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand.

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EIA Natural Gas Weekly Update


Overview for the week ending Wednesday, November 18, 2009

Since Wednesday, November 11, natural gas spot prices rose at nearly all market locations in the lower 48 States, with increases of up to 55 cents per million Btu (MMBtu). Prices at the Henry Hub climbed $0.15 per MMBtu, or about 4 percent, to $3.74 per MMBtu.

At the New York Mercantile Exchange (NYMEX), the futures contract for December delivery at the Henry Hub settled yesterday, November 18, at $4.254 per MMBtu. The price of the near month contract decreased by 25 cents or about 6 percent during the report week.

Natural gas in storage was a record setting 3,833 billion cubic feet (Bcf) as of November 13, which is about 12 percent above the 5 year average (2004-2008). The implied net injection for the week was 20 Bcf.

The spot price for West Texas Intermediate (WTI) crude oil increased by $0.39 per barrel since Wednesday, November 11, to $79.55 per barrel or $13.72 per MMBtu.



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Is the S&P 500 About to Fall Out of Bed or is it Headed Higher?


In our latest video we hope to answer those questions and show you what we think could happen to this market in the near term.

There is a fascinating cycle at work that we want to share with you. If this cycle remains in effect, we could be looking at the beginning of a turn down for this index.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register.

Please take a moment to leave a comment and let us know what you think about the direction of the market.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

Phil Flynn: The End of Panic


Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.

Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in.

He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.....Read the entire article.

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Crude Oil Declines for First Time in Four Days as Dollar Gains


Crude oil fell for the first time in four days as the dollar gained against the euro, dulling the appeal of commodities as a currency hedge. Oil fell after reaching a one week high yesterday as the U.S. Department of Energy said crude stockpiles dropped unexpectedly last week. Stock markets fell today across Europe on concern that this year’s rally has outpaced the prospects for economic growth.

“When the dollar is strong and equities are lower, then the oil market goes lower too,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “It’s unusual to be stuck so long in a range” between $75 and $80. Crude oil for December delivery dropped as much as 82 cents, or 1 percent, to $78.76 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.22 a barrel at 2:05 p.m. London time. The contract expires tomorrow.....Read the entire article.

Wednesday, November 18, 2009

Energy ETF Trading Report - USO and UNG

So far this week has been generous with our commodity ETFs moving higher, other than natural gas which is clearly in a bear market. Each of the commodity ETF trading charts below is at a different stage and it will be interesting to see how things unfold in the coming weeks.

Trading ETFs is very rewarding when done properly and using multiple time frames for timing your entry and exit points is crucial. My main focus is on the weekly and daily charts but I use a 30 minute intraday chart when the time comes to actually pick an exact buy or sell point. Below I have provided both the weekly and daily chart so you can see how the same ETF looks completely different on the two time frames.

USO Fund Trading – Weekly & Daily Trading Charts
While gold and silver have been moving higher oil has been flagging sideways taking a breather. Both the weekly and the daily charts are aligned for a nice move higher if the trend and charts follow through on their patterns. We could get some tradable action in the next couple days.


UNG Fund Trading – Weekly & Daily Trading Charts
Natural gas is really starting to slide. Wednesday UNG dipped below the Sept low of $8.94 by a couple cents then moved up into the close. Overall it’s not bullish. This could be the start of a waterfall sell off which is a sharp heavy volume sell off that lasts 3-5 days.


Commodity ETF Trading Conclusion:
To sum everything up the gold and silver ETFs are on fire as they continue to surge higher. Being ready for a sharp reversal is important if you want to lock in gains on a portion of your position.

Crude oil is taking its time but looking ripe for a breakout higher. We continue to watch for some action.

Natural gas continues to get pushed down and it’s not looking good for higher prices anytime soon. We are waiting for a shorting opportunity or an oversold condition to play a 1-5 day bounce.

Quick Trading Tip: If you have a position which has done well and has moved up for an extended period of time be sure to draw some trend lines and tighten your stop, or set a stop, under a tight trend line. Sell some of your position (25-50%) to lock in gains and let the core position continue to mature. If you get a pullback to a support level (previous breakout level) you can buy back your other part of your position at a lower price.

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Weaker U.S. Dollar Supports Buying Interest in Crude Oil

Crude oil closed up $0.49 at $79.63 a barrel today. Prices closed near mid range again today. A weaker U.S. dollar supported buying interest in crude today. Crude oil bulls have the near term technical advantage in crude oil. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $75.57.

Natural gas closed down 26.9 cents at $4.26 today. Prices closed near the session low and hit a fresh contract low today. Serious near term chart damage has occurred recently, including more today. Bears have the solid near term technical advantage.

Unleaded gasoline (RBOB) closed up 100 points at $2.0149 today. Prices closed nearer the session low today. Bulls still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

The U.S. dollar index closed down 29 points at 75.17 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand. Bulls' next upside price objective is to close prices above solid technical resistance at 77.00.

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Trader’s Blog Holiday Giveaway


The Crude Oil Trader has teamed up with INO.com to invite you to enter the “Trader’s Blog Holiday Giveaway”. Enter for your chance to win one of twelve prizes, worth over $5,000.00 total to be given away.

INO will be selecting one winner every Monday, Wednesday, and Friday starting on November 30th through December 25th. The winner will select their choice of prize and the remainder of the prizes will be available for the next winner picked.

Just click here to read all about the prizes that are up for grabs!

Good Luck and Happy Holidays,

Ray C. Parrish
President/CEO Crude Oil Trader



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Crude Oil Falls on Speculation U.S. Supplies to Rebound on Delayed Cargoes


Oil rose above $80 a barrel after the government reported that U.S. crude and fuel supplies dropped as refineries idled units and imports declined. Oil inventories dropped 887,000 barrels to 336.8 million last week, the Energy Department said. Stockpiles were forecast to increase by 300,000 barrels, according a Bloomberg News survey of analysts. Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, also declined.

“There were draws in crude oil, gasoline and distillates, so the initial numbers looked very bullish,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. Crude oil for December delivery rose 43 cents, or 0.5 percent, to $79.57 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures have traded between $74.79 and $82 since Oct. 15. Prices are up 78 percent this year.....Read the entire article.

Weekly EIA Petroleum Status Report


U.S. crude oil refinery inputs averaged 13.8 million barrels per day during the week ending November 13, 31 thousand barrels per day below the previous week’s average. Refineries operated at 79 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.1 million barrels per day. Distillate
fuel production decreased last week, averaging 4.0 million barrels per day. U.S. crude oil imports averaged 8.6 million barrels per day last week, down 77 thousand barrels per day from the previous week.

Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.5 million barrels per day below the same four week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 584 thousand barrels per day. Distillate fuel imports
averaged 152 thousand barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the previous week. At 336.8 million barrels, U.S. crude oil
inventories are slightly above the upper limit of the average range for this time of year.

Total motor gasoline inventories decreased by 1.7 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories increased while blending components decreased last week. Distillate fuel inventories decreased by 0.3 million barrels, and are above the upper boundary of the average range for this time of year.....Read the entire report.

Some OPEC Nations Charge Ahead Despite Slow Oil Demand


Energy forecasters increasingly predict slowing growth in global oil demand in the years ahead, but some OPEC nations are heading in the opposite direction and ramping up their capacity to pump oil. Qatar, for example, is set to raise its oil production capacity early next year from an existing field known as Al Shaheen. The more than $6 billion expansion project brightens the revenue prospects of the Mideast state but highlights a bigger problem brewing for its partners in the Organization of Petroleum Exporting Countries.

After keeping a tight tether on supply in recent years by cautiously investing, the 12 nation cartel finds itself battling an untimely convergence of lackluster consumption that magnifies its own rising supply capacity, which may in turn reignite old battles between members over market share and ultimately push oil prices lower.....Read the entire article.

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Tuesday, November 17, 2009

Stronger Dollar Limits Buying Interest in Crude Oil

Crude oil closed up $0.21 at $79.11 a barrel today. Prices closed near mid range today. A stronger U.S. dollar limited buying interest in crude today. Bulls have the near term technical advantage in crude oil. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $75.57.

Natural gas closed down 7.3 cents at $4.541 today. Prices closed nearer the session low. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $5.00.

The U.S. dollar index closed up 47 points at 75.39 today. Prices closed near mid range today and were supported on tepid short covering in a bear market. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 77.00.

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Oil Supply Set to Grow Through 2030 with No Peak Evident


Global oil productive capacity will grow though 2030 with no evidence of a peak of supply before that time, according to a new report by IHS Cambridge Energy Research Associates based on analysis of more than 10,000 projects around the globe. The report, The Future of Global Oil Supply: Understanding the Building Blocks extends IHS CERA's global oil outlook through 2030 and expects global oil productive capacity to grow to as much as 115 million barrels per day (mbd) through that period from the current level of 92 mbd, a 25 percent increase. Post 2030 supply could struggle to meet demand but this would take the form of a decades long "undulating plateau" rather than a sharp fall, the report says.

"There is more than an adequate inventory of physical resources available to increase supply to meet anticipated levels of demand through 2030," said Peter Jackson. "It would be easy to interpret the market and oil price trends from 2003 through 2009 in isolation to support the belief that a peak in global supply has passed or is imminent. But this only illustrates that the market continues to act as the shock absorber of major volatility".....Read the entire article.

Oil Gains as Dollar Strengthens, Fuel Supplies Forecast to Drop


Crude oil rose in New York as the dollar climbed and before a report that will probably show that U.S. fuel supplies declined. Oil rebounded after slipping as much as 1 percent as the U.S. currency rose against the euro for the first time in three days. An Energy Department report tomorrow will probably show that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week, according to a Bloomberg News survey.

“Everything we have been seeing can be pegged to what’s happening in the equities and the dollar,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Attention is now shifting to the weekly supply reports, he said.
Crude oil for December delivery rose 31 cents to $79.21 a barrel at 12:24 p.m. on the New York Mercantile Exchange after dropping as low as $78.14. Prices are up 78 percent this year.....Read the entire post.

Crude Oil Bulls Appear to Regain The Momentum


Crude oil was lower overnight as it consolidates some of Monday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 78.95 would signal that a short term low has been posted. If December renews last week's decline, the 50% retracement level of this fall's rally crossing at 73.76 is the next downside target.

Tuesday's pivot for crude oil is 78.23

First resistance is the 20 day moving average crossing at 78.95
Second resistance is this month's high crossing at 81.06

First support is last Friday's low crossing at 75.57
Second support is the 50% retracement level of this fall's rally crossing at 73.76

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Natural gas was lower due to profit taking overnight as it consolidates some of Monday's rally but remains above the 10 day moving average crossing at 4.571. Stochastics and the RSI are oversold and are turning bullish signaling that additional short covering gains are possible near term.

Closes above the 20 day moving average crossing at 4.901 are needed to confirm that a short term low has been posted. If December extends the decline off October's high, monthly support crossing at 3.996 is the next downside target.

Natural gas pivot point for Tuesday is 4.551

First resistance is Monday's high crossing at 4.656
Second resistance is the 20 day moving average crossing at 4.901

First support is last Friday's low crossing at 4.287
Second support is monthly support crossing at 3.996

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The U.S. Dollar was higher due to short covering overnight as it consolidates some of Monday's decline. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 75.75 would temper the near term bearish outlook in the market. If December extends this month's decline, monthly support crossing at 73.39 is the next downside target.

First resistance is the 10 day moving average crossing at 75.45
Second resistance is the 20 day moving average crossing at 75.75

First support is Monday's low crossing at 74.75
Second support is monthly support crossing at 73.39

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