Monday, December 27, 2010

Who's Your Daddy Energy and Oil Traders?

We knew it was coming, China had already surpassed the U.S. [in some people's eyes] as the largest energy user in the world. But China's "surprise" rate hike over the holiday weekend [niiiice guys] was just a friendly reminder who is in charge of determining the price we pay for energy, commodities, food....really anything in the west and the rest of the world now.

Traders expected a rate rise coming out of China, but the timing caught them off guard. After taking loses early in the Sunday evening session markets recovered as traders expected the rate increases would do little to put a halt to China's appetite for commodities.

The news out of China combined with the last week of 2010 signaling an end to tax break season for refiners in the U.S. has most investors calling a top in crude oil.

While mostly bad news has been coming out of Europe, oil and energy traders have been given some holiday cheer in the form of horrible weather. Worst then normal conditions have energy needs across Europe spiking.

Here's Monday's trading numbers to get your week started......

Crude oil was lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are diverging but are turning bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.89 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.67. Second support is the 20 day moving average crossing at 88.89. Crude oil pivot point for Monday morning is 90.29.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.189. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Monday morning is 4.17. With a score of -85 our "Smart Scan Chart Analysis" of natural gas etf UNG confirms that a short term counter trend move is underway. When this action is over look for the longer term negative trend to resume.

Gold was steady to slightly higher overnight as it consolidates some of last Thursday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is


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1 comment:

Laurens said...

Good article.
Crude oil is now setting news highs due to the war.

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