Monday, December 13, 2010

World Commodity Markets Find Strength in Delayed Chinese Inflation Response

Looks as though the bears are being held off as early Monday Asia trading indicates commodity traders view the Chinese tightening threats as just that for now. Despite the most recent data on inflation showing it has raised at its fastest pace in two years. Is this our future in crude oil trading as the world hinges on every word coming out of the leaders in Beijing?

Traders confidence in crude oil and gold continued to improve last week as net long positions increased. While net short positions increased in natural gas signaling the possibility that the natural gas bulls are losing their commitment. Looking at our Smart Scan Chart Analysis the natural gas etf UNG is now rated a +55 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating a short term top appears to be in.

Biggest news this week should be the FOMC meeting on Tuesday. But of course this promises to be a non event as the street looks for the committee to leave policy unchanged. Here is your trading numbers for Monday morning......

Crude oil was higher overnight as it consolidates some of last week's decline. However, stochastics and the RSI have turned bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 85.46 would confirm that a short term top has been posted. If January extends the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is last Friday's low crossing at 87.10. Second support is the 20 day moving average crossing at 85.46. Crude oil pivot point for Monday morning is 87.96

Natural gas was higher overnight as it consolidates some of the decline off last Thursday's high. However, stochastics and the RSI are diverging and have turned bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.326 would confirm that a short term top has been posted. If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is last Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the 10 day moving average crossing at 4.395. Second support is the 20 day moving average crossing at 4.326. Natural gas pivot point for Monday morning is 4.413

Gold was higher due to short covering overnight as it consolidates above the 20 day moving average crossing at 1377.70. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1377.70 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 last Tuesday's high crossing at 1432.50. First support is the 20 day moving average crossing at 1377.70. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is 1383.50.


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