Tuesday, November 30, 2010

Debt Contagion Spreads to Italy, Belgium. Global Markets Tumble

Financial markets remained under pressure with Wall Street tumbling and the dollar soaring to a 2 1/2 month high against the euro. Debt contagion accelerated further in the European periphery. In bond markets, US Treasuries and German bunds strengthened while Spanish and Italian yield spreads widened to record highs. In the commodity sector, oil prices plummeted as bourses weakened. Moreover, industry report showed that oil inventories rose last week. The front month contract for WTI crude oil slipped to as low as 83.55 before closing at 84.11, down -1.89%. Precious metals rose across the board with the benchmark gold contract surging +1.47% to settle at 1386.1. Benchmark contracts for silver, platinum and palladium also gained +3.91%, 1.33% and 1.17% respectively.

Sovereign concerns about debt-ridden European countries remained elevated even though a bailout program of 85B euro for Ireland has been approved. The rescue program's impacts on easing worries were short-lived and the market soon began speculating Portugal as the next country following Ireland to seek help from EU/IMF. Look at bond markets, yield spreads between peripheral European bonds and German bunds continued to widen. While Greek and Irish spreads were the widest, Spanish and Italian spreads accelerated and reached record highs. A similar picture was seen in CDS spreads and we find it particularly interesting that Italian and Belgium spreads were widening fast.

In Asia, China reported the Purchasing Managers' Index (PMI) expanded to 55.2 in November from 54.7 a month ago. This is the strongest reading in 7 months and signaled the country's manufacturing activities have been growing robustly despite the government measures. Asian shares fluctuated after the report. While investors were encouraged by the strong growth, it also fueled tightening concerns as the government may accelerate measures to control inflation.

Gauges for manufacturing activities will also be released in Europe and the US later. In the US, ISM manufacturing index probably eased to 56.5 in November from 56.9 a month ago. We will also get some employment data in the NY session. ADP will probably report +65K addition of payrolls last month while Challenger's estimates for job cuts may have been lowered from 31.8% in October.

We will also get EIA's weekly oil inventory report. The market forecasts crude and distillate inventories fell while gasoline stockpiles gained in the week ended November 26. The industry-sponsored API estimated crude inventory drew -1.4 mmb while both gasoline and distillate recorded stock builds.

Let's Look at The Charts....5 Year Sovereign CDS Spread and 10 Year Yield Spreads

New Video: Where is Gold Headed and How Can You Prepare?

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Commodity Corner: Crude Oil Tumbles on Lingering Debt Concerns

Light, sweet crude futures fell Tuesday as concern over the European debt crisis resurfaced after the euro plummeted to its lowest level in 10 weeks. Led by declines in heating oil and gasoline futures [which expired at close] and crude oil tumbled more than a dollar a barrel in the last half hour of Tuesday's trading session. Oil prices for January delivery settled at $84.11 a barrel, 1.9 percent lower than Monday.

Fear lingers as investors worry that other countries, such as Spain, Portugal, or Italy, might also need financial assistance after Ireland’s massive bailout package earlier this week. The euro lost 0.9 percent Tuesday, hitting a two month low against the dollar. The greenback rose 0.5 percent on the U.S. dollar index, which gauges the dollar to an array of six other currencies. As the dollar strengthens, crude becomes more expensive for foreign buyers and dollar denominated commodities lose their appeal.

The intraday range for crude futures was $83.55 to $85.90 Tuesday. Front month December gasoline settled nearly two cents lower at $2.26 a gallon on the New York Mercantile Exchange. The December contract for gasoline expired at Tuesday's settlement. In spite of the global economic crisis, gasoline gained 6.3 percent this month the largest since September. Gasoline fluctuated between $2.23 and $2.28 Tuesday.

Natural gas futures also tumbled Tuesday, as stockpiles exceeded expectations of an increase in heating demand due to the forecasted colder than normal temperatures. Although natural gas prices typically correlate with heating demand in the winter, analysts predict that the surplus in supplies has limited rallies; however, they remain uncertain about long term predictions. January Natural gas traded lower for the second consecutive session at $4.18 per thousand cubic feet. It peaked at $4.25 and bottomed out at $4.13 Tuesday.

Posted courtesy of Rigzone.Com

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Sharon Epperson: Where is Crude Oil and Gold Headed on Wednesday?

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



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Stock Market and Commodities Commentary For Tuesday Evening Nov. 30th

The S&P 500 index closed lower on Tuesday and the low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If December renews the decline off this month's high, the 25% retracement level of the July-November rally crossing at 1169.37 is the next downside target. Closes above last Monday's high crossing at 1206.00 would temper the near term bearish outlook. First resistance is last Monday's high crossing at 1206.00. Second resistance is this month's high crossing at 1224.50. First support is the reaction low crossing at 1175.20. Second support is the 25% retracement level of the July-November rally crossing at 1169.37.

Crude oil closed lower due to profit taking on Tuesday as it consolidates some of last week's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If January extends the aforementioned rally, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 82.88 would temper the friendly outlook. First resistance is today's high crossing at 85.90 Second resistance is November's high crossing at 89.10. First support is the 10 day moving average crossing at 82.88. Second support is last Tuesday's low crossing at 80.28.

Natural gas closed lower on Tuesday as it consolidates some of the rally off November's low. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Multiple closes below the 20 day moving average crossing at 4.211 are needed to confirm that a short term top has been posted. If January extends the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.654 is the next upside target. First resistance is last Wednesday's high crossing at 4.515. Second resistance is the 38% retracement level of the June-October decline crossing at 4.654. First support is today's low crossing at 4.126. Second support is November's low crossing at 3.853.

Gold closed higher on Tuesday as it extends the rally off November's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off November's low, November's high crossing at 1424.30 is the next upside target. If December renews the decline off November's high, the reaction low crossing at 1315.60 is the next downside target. First resistance is today's high crossing at 1390.10. Second resistance is November's high crossing at 1424.30. First support is the reaction low crossing at 1329.00. Second support is the reaction low crossing at 1315.60.

The U.S. Dollar closed higher on Tuesday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends this month's rally, the 50% retracement level of this year's decline crossing at 82.18 is the next upside target. Closes below the 20 day moving average crossing at 78.69 would confirm that a short term top has been posted. First resistance is today's high crossing at 81.53. Second resistance is the 50% retracement level of this year's decline crossing at 82.18. First support is the 10 day moving average crossing at 79.73. Second support is the 20 day moving average crossing at 78.69.


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ConocoPhillips Is Cheaper Than Rivals but Has Plenty to Prove

From Y Charts.Com......

Oil prices are creeping back up, mirroring the expanding (if still sickly) global economy, and so one wonders: which major oil company to buy?

Exxon Mobil (XOM) and Chevron (CVX) are well managed, diversified and trading at bargain prices, according to YCharts Pro Ratings. But ConocoPhillips (COP), which lags behind its bigger rivals, is by some measures even cheaper. All the company has to do is make good on its many promises, which, of course, is easier said than done.

On a price to sales basis, ConocoPhillips looks like a steal. Its p/e ratio is also super low. And if you’re making comparisons to bond yields, ConocoPhillips’ earnings yield puts most junk bonds to shame. All that disrespect by investors means ConocoPhillips’ dividend yield is pretty rich, too. Why so cheap? Well, ConocoPhillips carries a higher debt load than its bigger rivals. And it holds less cash, though recent sales of LUKOIL shares have fattened the cash account.

And even though the company is eight years into the merger of Conoco and Phillips, there are signs it’s still working to get its act together. CEO James J. Mulva, though he’s nearing age 65, swept much of top management out the door in early October, bringing in some outside talent. And Mulva is pushing a financial strategy, reduced capital expenditures, debt reduction, rising buybacks and dividends, that seems like the right idea, but perhaps a little late in arriving.

ConocoPhillips has more oil and gas properties around the world than it can reasonably develop, so it is selling some to raise cash and pay down debt. Super, though the assets might have fetched more when oil prices were sky high a few years back. And like all major oil companies, ConocoPhillips faces the daunting task of replacing the oil and gas it pumps and sells each year, a task that is growing ever riskier and more expensive.

So, when oil prices surge, and they will, you might get a little extra bounce with shares of unloved ConocoPhillips, though Exxon and Chevron will certainly rise, as well. Warren Buffett bought ConocoPhillips in the low $70s, so you can buy it more cheaply. The Berkshire Hathaway (BRK.A) CEO overpaid because oil prices soon fell. But relative to other major oil companies, did he see a bargain?

Here's the Y charts showing the comparison to Exxon and Chevron


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Crude Oil Retreats amid Rate Hike Concerns in China

Heightened speculations on rate hikes in China have weighed on financial markets. Asian equities plunged amid worries that slowdown in Chinese growth will affect corporate profits while European bourses fluctuated between gains and losses. In the commodity sector, the front month contract for WTI crude oil fell after faltering below 86. Gold, however, climbed for another day to as high as 1377. Sovereign woes in the European periphery remained under the spotlight.

The market focus has once again turned to China. Zhong Jiyin, an economist with the Chinese Academy of Social Sciences wrote in China Daily that the country needs to raise interest rates by another 200 bps to curb inflation, given existing excess liquidity. Although the government has implemented a series of measures, including increasing RRR and raising margins for certain commodity futures, the impacts on inflation are not significant and CPI rose to 4.4% y/y in October, The market has been speculating that a rate hike can come over the next few weeks. According to Zhong, raising RRR may help ease the situation but is 'not enough to reverse it. The increase in the required reserve ratios for banks can prevent the rise of excess liquidity and ensure that the situation does not deteriorate further'. It will 'do little to get rid of the existing excess liquidity. Increasing interest rates is a common measure taken to check inflation'.

In Europe, it's obvious that the bailout for Ireland failed to stem contagion. The market currently expects the EU will need to rescue more peripheral European countries with Portugal being the one after Ireland. Indeed, apart from Portugal, CDS spreads and yield spreads between Spanish/Italian bonds and German bunds have continued to soar. According to Bloomberg news, Spain's banks may struggle to refinance about 85B euro in debt in 2011 and this may trigger the country to seek a bailout from EU/IMF.

China' rate hike and European sovereign concerns have dominated the headlines, overshadowing macroeconomic data. Germany's unemployment fell -9K to 3.14M, the lowest level since December 1992, in November. Unemployment rate stayed unchanged at 7.5%. We will have housing, manufacturing and confidence data in the NY session. Growth in S&P/Case-Shiller Composite 20 index may have eased to +1% in September. Chicago Fed will report its manufacturing PMI which probably dipped -0.7 to 59.9 in November. Consumer Confidence is expected to have improved to 52.7 in November from 50.2 in the prior month.

Posted courtesy of Oil N'Gold

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New Video: Where is Gold Headed and How Can You Prepare?

The gold market has been pushing out its normal level of frustration and anxiety for the past several weeks.

So the question becomes, is the gold market pausing to move higher, and of course the Bulls would argue this, or is it forming the head and shoulders top that many technicians are looking for? Of course, this would be a bearish sign for gold if this technical formation is completed.

We've just finished a short video that shows you what we're looking at right now in gold and how I think it is going to be resolved. The video is a little over 2 minutes. It's quick and to the point while supplying you with what you need to take your place in or out of this market.

Just Click Here to Watch today's video "Where is Gold Headed and How Can You Prepare?"

You may also wish to attend our gold webinar which we are holding on the 2nd of December at 4 PM EST. The webinar is free of charge, but you need to register in order to attend. This is no hype, but we have limited space and it will be on a first come first served basis. The important thing is that you register as soon as possible.

Here is the link to register for the webinar

While you do need to register to attend our gold webinar, in order to watch today's short video no registration is required nor is there any charge.

We hope to see you at this week's Gold webinar so don't forget to register.

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Crude Oil, Natural Gas and Gold Market Commentary For Monday Morning Nov. 30th

Crude oil was lower due to profit taking overnight as it consolidates some of last week's rebound off the 50% retracement level of the August-November rally crossing at 81.14. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off last week's low, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 83.00 would temper the near term friendly outlook.

First resistance is the overnight high crossing at 85.90
Second resistance is November's high crossing at 89.10

Crude oil pivot point for Tuesday morning is 85.07

First support is the 10 day moving average crossing at 83.00
Second support is last Tuesday's low crossing at 80.28

Natural gas was higher overnight as it consolidates some of Monday's decline. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.213 are needed to confirm that a short term top has been posted. If January renews this month's rally, the 38% retracement level of the June-October decline crossing at 4.654 is the next upside target.

First resistance is last week's high crossing at 4.515.
Second resistance is the 38% retracement level of the June-October decline crossing at 4.654.

Natural gas pivot point for Tuesday is 4.288

First support is Monday's low crossing at 4.166.
Second support is November's low crossing at 3.853.

Gold was higher overnight as it continues to rebound off the mid-November low. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rebound off the mid-November low, the reaction high crossing at 1388.10 is the next upside target. If December renews this month's decline, the reaction low crossing at 1315.60 is the next downside target.

First resistance is last Tuesday's high crossing at 1382.90
Second resistance is this month's high crossing at 1424.30

Gold pivot point for Tuesday morning is 1,362.60

First support is the 25% retracement level of this year's rally crossing at 1330.20
Second support is the reaction low crossing at 1315.60



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Monday, November 29, 2010

Commodity Corner: Crude Oil Begins Week Much Higher

A weaker equities market and a stronger dollar failed to place downward pressure on crude oil Monday. Crude oil for January delivery gained $1.97 to settle at $85.75 a barrel during a trading day influenced by factors ranging from oil products demand to the release of politically sensitive information attributed to U.S. State Department officials. In the latter case, ongoing fallout from the widespread leaks has heightened perceived geopolitical risks.

Exacerbating the geopolitical situation have been escalating tensions between North and South Korea as well as continued speculation about Europe's debt crises. Although the European Union approved a EUR85 billion bailout for Ireland over the weekend, there are fears that other heavily indebted countries such as Spain and Portugal will be next in line for massive financial aid packages. In addition, tightening inventories of gasoline contributed to oil's rally Monday. December gasoline ended the day seven cents higher at $2.28 a gallon

Oil traded within a range from $83.59 to $85.54. Gasoline, meanwhile, peaked at $2.29 and bottomed out at $2.21. Despite a chillier than normal forecast for the Northeast, January natural gas fell 19 cents to settle at $4.21 per thousand cubic feet. The natural gas futures price fluctuated from $4.17 to $4.49.

Posted courtesy of Rigzone.Com


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Matt Nesto: Where is Crude Oil and Gold Headed on Tuesday?

CNBC's Matt Nesto discusses the day's activity in the commodities markets, and looks at where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Monday Evening Nov. 29th

The S&P 500 index closed higher due to short covering on Monday as it consolidated some of last Friday's decline. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are neutral to bullish signaling that a short term low might be in or is near. Closes above last Monday's high crossing at 1206.00 would temper the near term bearish outlook. If December renews the decline off this month's high, the 25% retracement level of the July-November rally crossing at 1169.37 is the next downside target. First resistance is last Monday's high crossing at 1206.00. Second resistance is this month's high crossing at 1224.50. First support is the reaction low crossing at 1175.20. Second support is the 25% retracement level of the July-November rally crossing at 1169.37.

Crude oil closed higher on Monday as it extends last week's rebounds off the 50% retracement level of the August-November rally crossing at 81.14. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If January extends today's rally, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 82.97 would temper the friendly outlook. First resistance is today's high crossing at 85.83 Second resistance is November's high crossing at 89.10. First support is the 10 day moving average crossing at 82.97. Second support is last Tuesday's low crossing at 80.28.

Natural gas closed sharply lower due to profit taking on Monday as it consolidates some of the rally off November's low. Stochastics and the RSI are overbought and turning bearish signaling that a short term top is in or is near. Closes below the 20 day moving average crossing at 4.206 are needed to confirm that a short term top has been posted. If January extends the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.654 is the next upside target. First resistance is last Wednesday's high crossing at 4.515. Second resistance is the 38% retracement level of the June-October decline crossing at 4.654. First support is the 20 day moving average crossing at 4.206. Second support is November's low crossing at 3.853.

Gold closed higher due to short covering on Monday as it consolidates some of last Friday's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If December renews the rally off November's low, the reaction high crossing at 1388.10 is the next upside target. If December renews the decline off November's high, the reaction low crossing at 1315.60 is the next downside target. First resistance is last Tuesday's high crossing at 1382.90. Second resistance is the reaction high crossing at 1388.10. First support is the reaction low crossing at 1329.00. Second support is the reaction low crossing at 1315.60.

The U.S. Dollar closed higher on Monday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends this month's rally, the 50% retracement level of this year's decline crossing at 82.18 is the next upside target. Closes below the 20 day moving average crossing at 78.47 would confirm that a short term top has been posted. First resistance is today's high crossing at 81.22. Second resistance is the 50% retracement level of this year's decline crossing at 82.18. First support is the 10 day moving average crossing at 79.53. Second support is the 20 day moving average crossing at 78.47.


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Crude Oil Prices Rise to Two Week High on U.S. Retail Sales, Irish Bailout

Crude oil rose to a two week high as U.S. consumers spent more over the Thanksgiving weekend than last year, a sign confidence in the economy is strengthening. Oil climbed above $85 a barrel as the average U.S. shopper increased purchases by 6.4 percent from the 2009 period, a report from the National Retail Federation showed. Crude also advanced amid speculation that colder than normal weather may boost demand for heating fuel in the eastern U.S. and Europe.

“People are looking at a pretty decent retail environment, and that’s giving oil a boost,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Cold weather is more bullish earlier in the season than later. If people turn on their heaters early and they stay on, that’s good for the season.” Oil for January delivery climbed $1.97, or 2.4 percent, to $85.73 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 11. Futures have gained 13 percent in the past year.

Brent crude for January settlement rose $1.76, or 2.1 percent, to $87.34 a barrel on the ICE Futures Europe exchange in London. About 212 million shoppers went to stores and websites over the holiday weekend in the U.S., on average spending $365.34, the Washington based National Retail Federation reported. Temperatures in the eastern half of the U.S. will be below normal from Dec. 7 to Dec. 13, according to a forecast issued today by the U.S. Climate Prediction Center in Camp Springs, Maryland......Read the entire article.


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Gold's Trading Range

Jeff Friedman, senior market strategist at Lind-Waldock reveals why he thinks gold prices will reach for $1,380 an ounce.



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In these free webinars you'll learn directly from Adam Hewison the methods he uses to succeed in his trading, you'll be able to interact with MarketClub in way you never were able to before, and you'll have access to Adam and his top support staff. Sign up below to register for the webinar series and receive three (3) bonuses as a thank you!




Between these valuable trading tips and daily market commentary from MarketClub's Traders Blog... you will have all the tools you need to achieve your trading goals.


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Phil Flynn: Bailout Bounce

There is nothing like a big bailout to get energy traders' minds off of the dangerous world we live in. Oil prices are defying a stronger dollar as the market is rallying on the news that Europe finalized a 67.5 billion Euro bailout of Ireland and created a plan that could have bondholders taking haircuts to help pay for their solvency.

Yet oil may also be getting a geo-political bounce as tension rise in the world and I am not just talking about the Korean Peninsula. A revelation from Wiki-Leaks may add to tensions in the Middle East and perhaps even threaten the delicate peaceful balance that sort of exits there. Reuters News reported that, “Saudi King Abdullah has repeatedly urged the United States to attack Iran’s nuclear programs, according to a vast cache of diplomatic cables released on Sunday in an embarrassing leak that undermines U.S. diplomacy.

The more than 250,000 documents, given to five media groups by the whistle blowing website Wiki Leaks, provide candid and at times critical views of foreign leaders as well as sensitive information on terrorism and nuclear proliferation filed by U.S. diplomats, according to The New York Times. The White House condemned the release by Wiki Leaks and said the disclosures may endanger U.S. informants abroad.” It could also create tension in the OPEC cartel as Iran may try to retaliate against Saudi Arabia in some way.

The Saudis already have their hands full fighting Al-Qaeda and other terrorist rightfully fear a nuclear armed state sponsor of terror like Iran. The Saudi King in the leaked memo said that the US should, “cut off the head of the snake”. It’s good to be back! Make sure you are signed up for Phil's daily trade levels! He can be reached at pflynn@pfgbest.com. Also make sure you catch Phil on the Fox Business Network where you can see him every day!


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Crude Oil , Gold and Natural Gas Technical Outlook For Monday Nov. 29th

Crude oil was higher overnight as it extends last week's short covering rebound off the 50% retracement level of the August-November rally crossing at 81.14. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 84.69 are needed to confirm that a short term low has been posted. If January renews this month's decline, the 62% retracement level of the August-November rally crossing at 79.24 is the next downside target.

First resistance is the 20 day moving average crossing at 84.69.
Second resistance is the reaction high crossing at 85.75.

Crude oil pivot point for Monday morning is 83.69

First support is last Tuesday's low crossing at 80.28.
Second support is the 62% retracement level of the August-November rally crossing at 78.56.

Gold was lower overnight as it continues to correct some of the rally off the mid-November low. Stochastics and the RSI are turned neutral signaling that sideways to lower prices are possible near term.

If December renews this month's decline, the reaction low crossing at 1315.60 is the next downside target. If December extends the rebound off the mid-November low, the reaction high crossing at 1388.10 is the next upside target.

First resistance is last Tuesday's high crossing at 1382.90.
Second resistance is this month's high crossing at 1424.30.

Gold pivot point for Monday morning is 1,362.30

First support is the 25% retracement level of this year's rally crossing at 1330.20.
Second support is the reaction low crossing at 1315.60.

Natural gas was higher overnight and is poised to extend this month's rally. Stochastics and the RSI are overbought, diverging but are turning neutral signaling that sideways to higher prices are possible near term.

If January extends the aforementioned rally, the 38% retracement level of the June-October decline crossing at 4.654 is the next upside target. Closes below the 20 day moving average crossing at 4.234 would confirm that a short term top has been posted.

First resistance is last week's high crossing at 4.515
Second resistance is the 38% retracement level of the June-October decline crossing at 4.654

Natural gas pivot point for Monday morning is 4.411

First support is the 10 day moving average crossing at 4.318
Second support is the 20 day moving average crossing at 4.234




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Sunday, November 28, 2010

Gold/Silver – Controlling Your Trades, Money & Emotions

Last week we had typical pre-holiday light volume trading going into US Thanksgiving. The previous week I warned every one to trade with extreme caution because of the light volume and the fact that the market is on the verge of a sizable drop for both stocks and commodities. Any price action could not be taken seriously because of the light volume. We will not know until later this coming week what the big money wants to do… Buy or Sell, also what the manipulators will do… Seems like there are a lot of wild cards out there with Europe issues and both unemployment and payroll numbers out on Friday morning.

Below are a few charts showing my intermediate term outlook for gold and silver.

Gold & Silver Futures – Daily Chart
You can see both metal are showing a possible reversal head and shoulders pattern. While they have yet to confirm and close below the neck line we must be aware of this pattern and the risk/potential it provides us with. Both metals are still in an uptrend but showing signs of weakness.


US Dollar Index – Weekly Chart
This chart is not really that helpful for trading stocks, commodities or options right now but I wanted to post it because it allows me to show you how I analyze the market and my trades.

As you can see, the past 3 weeks have been in a strong uptrend reaching the first resistance level. The point of this chart is to show you that if you step out to the next longer time frame you can get a solid feeling of where an investment will find major support and resistance levels. Any investment not matter if it’s a stock, commodity or currency, if the price is trading in the middle of a large range like this chart you should not be taking large positions because it almost becomes a 50/50 bet on the market which is not a good winning strategy unless you are very experienced at managing your trades and money.

If you are going to trade then you want to focus on the underlying trend and you do that by looking at the next larger time frame. For example: if you focus on trading the daily chart, then you must step back each week and review the weekly chart to be sure you are trading with the underlying trend which is up for the dollar right now.


Weekend Trading Ideas:
Tuesday morning we saw the SP500 gap lower and continue to sell off. Traders started panicking out of their long positions and we could see it using the intraday market internals charts, which I cover each morning in the pre-market trading videos. Me being a contrarian (buying into market fear, selling into market strength) I used that high level of fear in the market along with the expected light volume holiday week ahead as an excuse to book profits near the lows on SP500 using the SDS bear fund allowing us to profit from the falling market. I feel we are going to have some crazy moves on the markets going into year end and it should be a lot of fun if done correctly.

Trading in general is a very difficult task especially if you are doing it for a living and planning on using your monthly income to pay bills, salaries etc… We all know the stress which comes with trading and if do not have a solid trading strategy, rules and cannot properly manage yourself (emotions) then you are most likely running into problems like over trading, getting shaken out of trades easily, and taking bigger risks than your account can handle. Each of these cause more traders to blow up their accounts and big up on trading.

I am giving away my book on how you can control your trades, money and emotions. This short and to the point guide is full of my trading techniques, tips and thoughts which will help you get a handle of your emotions turning the market noise into music.

Make sure to Download the book and sign up for Chris Vermeulen's Daily ETF Trading Newsletter



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Reuters: Crude Oil Approaches Two Week High on Ireland Rescue

Crude oil rose past $84 on Monday after the European Union approved a rescue for Ireland and outlined a permanent system to resolve the euro zone's debt crisis, providing some confidence that energy demand growth will remain resilient next year. U.S. crude for January rose as much 0.8 percent to $84.46 a barrel, nearing Friday's peak of $84.53, the highest intraday price since November 16, and was up 52 cents at $84.28 by 9:09 p.m. EST. Prices reached a two year high of $88.63 on November 11.

ICE Brent for January rose 57 cents to $86.15, returning to positive territory as the dollar pared gains. Finance ministers from the 16 nation euro zone, anxious to prevent market contagion engulfing Portugal and Spain, unanimously endorsed an emergency loan package of 85 billion euros ($115 billion) to help Dublin cover bad bank debts and bridge a huge budget deficit.

"The southern European sovereign debt crisis would have to take a severe turn for the worse to derail positive commodity price trends that are finding strong support from improving fundamentals and positive market sentiment toward growth assets" following the second wave of U.S. expansionary monetary policy, Barclays Capital analysts, including Kevin Norrish, said in a report on Monday.

Still, some market participants were wary that the package for Ireland would fail to end Europe's credit problems, citing the Greek crisis as a precedent of how markets intially reacted positively to a bailout and then slumped. "It is just a relief rally, but there are still so many structural problems that people are already targeting other dominoes like Portugal and Spain," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

Currency and bond traders doubted the deal was enough to prevent fiscally pressured Portugal and Spain from being next in line to suffer a debt crisis. "Markets are not believing measures will be enough to contain the crisis, and that also combines with the tensions in Korea. You wouldn't want to be punting on anything," Kwek said.......Read the entire article.


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6 Natural Gas Stocks for 2011

Dan Dicker argues why he thinks 2011 will be the year for natural gas and reveals his top stock picks.



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Bloomberg: Talk of $100 Oil Returns as Options Jump Most in 3 Months

Oil’s return to $100 has become the biggest bet in the crude options market.

The price of options to buy December 2011 futures at $100 a barrel jumped 14 percent on Nov. 24, the largest one day gain in three months, according to data compiled by Bloomberg. So called open interest for the contract has risen 51 percent this year to 45,424 lots, the highest for any crude option on the New York Mercantile Exchange.

The increase in trading of $100 options shows some investors anticipate oil will rise at least 19 percent to levels last reached in 2008. While crude is up 5.5 percent this year as the economy recovers, Morgan Stanley said Nov. 1 that prices will reach $100 next year as spare production capacity shrinks. At the same time, BNP Paribas SA said Nov. 18 further price gains “will be difficult” as the Federal Reserve seeks to revive the U.S. economy through an extended stimulus program and Europe struggles to contain its sovereign debt crisis.

“The tug of war in oil prices continues as the short term debt market concerns obscure improving oil market fundamentals,” Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York, said in a Nov. 26 report.

Futures for January delivery on the Nymex snapped two weeks of declines last week, rising 2.8 percent to $83.76 a barrel as of Nov. 26. Options contracts that give investors the right to buy December 2011 futures at $100 a barrel rose to $5.55 on Nov. 24, from $4.87 the day before, the largest increase since Aug. 27, Bloomberg data show. They have averaged $6.40 this year and ended last week at $5.46.......Read the entire article.


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Seeking cash, Venezuela's Chavez looks to sell Citgo

President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long neglected Caracas subway, and he needs money. The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S. based oil company, Citgo Petroleum Corp.

For Chavez, it's an idea driven both by hard money realities and by politics. Getting rid of the company and its refineries in the U.S. would give Chavez billions of dollars for domestic spending as he approaches his 2012 re-election bid and seeks to remedy problems including an acute shortage of affordable housing. A sale would also fit with the leftist leader's interest in distancing Venezuela from the U.S. while building stronger ties with allies such as Russia, China and Iran.

Citgo has delivered oil to Venezuela's No. 1 client for two decades, but judging by Chavez's complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found. "Citgo is a bad business, and we haven't been able to get out of it," Chavez said in a televised speech late last month. He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company's assets in the United States.

Chavez says the Houston based company could be worth at least $10 billion, but analysts say it would likely fetch much less, perhaps half that, and it might be hard to find a buyer in a difficult economic climate.......Read the entire article.


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Saturday, November 27, 2010

Oil N' Gold Focus Reports: Crude Oil, Natural Gas and Gold Weekly Technical Outlook

Nymex Crude Oil (CL)

Crude oil's recovery was limited at 84.53 last week and the outlook remains basically unchanged. Price actions from 80.06 is still being treated as correction to fall from 88.63 only. With 4 hours MACD staying below signal line, initial bias is neutral this week. On the downside, below 80.06 will indicate that fall from 88.63 has resumed and should target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. However, note that break of 84.53 resistance dampen this view and argue that fall from 88.63 might be completed already. In such case, stronger rebound should be seen to retest 88.63 high instead.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

Nymex Natural Gas (NG)

Natural gas rose further to as high as 4.411 last week and closed strongly. Initial bias remains on the upside for further rally this week. Current rise from 3.255 should now be targeting next key resistance at 5.194. On the downside, below 4.115 minor support will turn intraday bias neutral again. But after all, we'd still favor another rise as long as 3.71 support holds, even in case of deep retreat.

In the bigger picture, break of the falling trend line from 6.108 add some credence to the case that decline from there is completed with three waves down to 3.22 already. That is, it's merely a correction to rebound from 2.409 and such medium term rally is possibly resuming. Break of 5.194 resistance will solidify this case and target another high above 6.108 to 100% projection of 2.409 to 6.108 from 3.255 at 6.954 next. On the downside, break of 3.71 support is needed to invalidate this view. Otherwise, we'll stay bullish.

Nymex Natural Gas Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts


Comex Gold (GC)

Gold's recovery from 1329 was limited at 1382.9 and reversed. The structure of such recovery suggests that it's merely a correction to fall from 1424.3. Initial bias remains cautiously on the downside this week for 1315.8/1329 support zone. Decisive break there will complete a head and shoulder top reversal pattern and should turn outlook bearish for deeper fall. On the other hand, strong rebound from 1315.8/1329 will indicate that gold is merely in sideway consolidation and another high would still be seen before topping.
In the bigger picture, rise from 1155.6 is treated as the fifth wave of the five wave sequence from 1044.5, which should also be fifth wave of the rally from 681 (2008 low). There is no confirmation of topping yet. However, note that 1424.3 record high was close to two important projection target, 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 and 100% projection of 253 to 1033.9 from 681 at 1462. Reversal should be imminent. Break of mentioned 1315.8/1329 will signal that 1424.3 is an important top and gold should have started a sizeable medium term correction that should dip back into 1044.5/1227.5 support zone at least.
In the long term picture, rise from 681 is treated as resumption of the long term up trend from 1999 low of 253. 100% projection of 253 to 1033.9 from 681 at 1462 is almost met and a sizeable correction should be around the corner. Though, even in case of deep fall, 55 months EMA (now at 931 level) should present strong support to contain downside and bring another up trend.



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Commodity Corner: Crude Oil Ends Lower on Stronger Dollar

Crude oil lost ground Friday, dogged by a weaker euro resulting from continued fears that Europe's spate of debt crises will spread from Ireland to Portugal and Spain.

Oil for January delivery fell 10 cents to end the day at $83.76 a barrel. The euro declined 0.9 percent against the greenback Friday. Thanks to Ireland's debt woes, along with those elsewhere in the bloc, the EU currency has slipped by more than seven percent in less than a month. A stronger dollar makes oil less of a value for those holding other currencies. Oil traded from $82.78 to $83.87 Friday.

Buoyed by predictions of colder temperatures in December for much of the country, January natural gas rose by a penny Friday to settle at $4.40 per thousand cubic feet. The December contract, which expired Wednesday, settled at $4.27.

The January natural gas futures price fluctuated from $4.35 to $4.48 Friday. December gasoline was unchanged Friday, again settling at $2.21. It traded within a range from $2.20 to $2.23.

Posted Courtesy of Rigzone.Com

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Friday, November 26, 2010

Crude Oil Futures Decline on Concern Ireland Crisis May Spread, Tension in Korea

Crude oil fell from a one week high on concern Ireland’s debt crisis will spread to Portugal and Spain, reducing economic growth and fuel demand, and as tensions in Korea mounted. Oil dropped as the euro declined to a two month low against the dollar, curbing investor demand for commodities. Euro area finance ministers plan to complete an agreement on an Irish bailout on Nov. 28, a European Union official said on condition of anonymity. North Korea warned its confrontation with South Korea could lead to war.

“Concerns that the European debt crisis will spread pushed the euro to a new two month low against the dollar,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. The oil market is down “primarily on European debt worries.” Crude oil for January delivery slipped 10 cents to settle at $83.76 a barrel on the New York Mercantile Exchange. The January contract gained 2.2 percent this week. The front month contract added 2.8 percent for the week and has increased 7.4 percent in the past year.

Brent crude oil for January settlement declined 52 cents, or 0.6 percent, to end the session at $85.58 a barrel on the London based ICE Futures Europe exchange. Brent added 1.5 percent for the week. Shoppers crowded U.S. stores for Black Friday, the biggest shopping day of the year and a bellwether for the holiday season. Analysts’ estimates for holiday sales vary from little changed to increases of 4.5 percent. The National Retail Federation has forecast November-December holiday sales will rise by 2.3 percent from a year ago, the most since 2006.......Read the entire article.

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Bruce Pile: Oil....Beyond the Barrel - And Over the Cliff

From guest analyst Bruce Pile of  Good Stock Investing......

As the price of oil climbs through $85 a barrel, it reminds me of the explanations flying around a little over two years ago as oil went to this level for the first time. "It's all the funds chasing the hot commodity, the only game in town" was the refrain. It's all a bubble and we will have stable oil at $35 soon - that's what Steve Forbes and many others said. But now, as oil goes through $85, it's not the only game in town. In fact, it's been the dog underperforming just about everything. No desperate performance chasing mania is driving the price of oil today as we threaten $100 again. Could those peak oil nuts be right? Could the Great Recession be camouflaging a real supply peaking process?

There is an interesting article out just yesterday over at The Post Carbon Institute by Tom Whipple. He states:

For two weeks now the peak oil portion of cyberspace has been abuzz with commentary on the International Energy Agency’s (IEA) newly released World Energy Outlook 2010. Without missing a beat and without much explanation, the world’s leading compiler of everything about energy has gone from denying that conventional oil production will peak in our lifetime to saying it happened four years ago.

What? A conventional oil peak happening in late 2005? That's what nuts like Ken Deffeyes and me were saying back then. Overall barrels of what is classified as "oil" isn't peaking. But conventional oil was peaking then, and that's where all the net energy is. As Tom Whipple's article points out, it's net energy that is missing from the equation of energy planners. And, as I wrote in an article about back in April, this miscalculation is a potential nightmare waiting to engulf us. CNBC had just started showing their "Beyond The Barrel" story, and this prompted me to post "Beyond The Barrel - And Over The Cliff" on my blog where I look at this whole conventional vs nonconventional, net energy peak thing. This is the post:

CNBC premiered "Beyond the Barrel - the Race to Fuel the Future". This is a look at the alternatives to the crude oil bursting forth from the ground that has spoiled us for decades with cheap, abundant energy. One thing that will probably be missing in the discussion is the major issue EROEI. What is EROEI? How do you pronounce it? Well, I don't concern myself with pronouncing it, but I do get vexed by how much attention is being paid to it.......Read the entire article.


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Musings: Separating Wheat from The Chaff of Unconventionals

Increasingly, petroleum industry executives are speaking out about the significance of the unconventional hydrocarbon resources in this country, although they do not always agree about the longer term outlook for the resources. In some cases we question the extrapolations speakers are making about the importance of unconventional resources in the nation’s long range energy mix and, for that matter, the world’s mix.

Recently, several senior energy executives spoke at industry meetings about their views of these trends. One presentation that received media attention was by Mark Papa, CEO of EOG Resources, Inc. (EOG). His presentation was to a joint meeting of the Houston chapters of the IPAA and TIPRO. With respect to the success of unconventional drilling and production, Mr. Papa called it a “game changer” for the industry, something about which most industry participants would readily agree.

Horizontal drilling and hydraulic fracturing technologies have dramatically altered the near term supply picture and have forced energy prognosticators to recast their forecasting models. Most of them now are calling into question the need for the U.S. to import as many hydrocarbons as previously thought. Optimism is fine, but euphoria can be dangerous as it tends to create blind spots that become our downfall.

According to Mr. Papa, “There is clearly sufficient North American gas supply to last for a bunch of years; 50 years at least. And there is clearly no need for us to import LNG (liquefied natural gas) for multiple years to come.” At the present time, natural gas supplies are swamping the market due to the drop in demand associated with an overall decline in energy consumption due to the lasting effects of the recession and the surge in unconventional supply due to accelerated drilling dictated by the need for producers to hold leased acreage for which they have offered huge bonuses.......Read the entire article.


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ONG Focus: Crude Oil and Gold Daily Technical Outlook For Friday Nov. 26th

Crude Oil Daily Technical Outlook


Crude oil jumped to as high as 84.53 but was limited by mentioned 85.42 resistance and weakens again. With 4 hours MACD crossed below signal line, intraday bias is turned neutral. As noted before, decline from 88.63 is still in favor to continue with 84.52 resistance intact. Break of 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.53 will now flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

Nymex Crude Oil Continuous Contract 4 Hour and Daily Charts


Gold Daily Technical Outlook


With 4 hours MACD crossed below signal line, Gold's recovery from 1329 should have completed at 1382.9 already. Intraday bias is now cautiously on the downside for 1315.8/1329 support zone. Decisive break there will complete a head and shoulder top reversal pattern and should turn outlook bearish for deeper fall. On the other hand, strong rebound from 1315.8/1329 will indicate that gold is merely in sideway consolidation and another would still be seen before topping.

In the bigger picture, rise from 1155.6 is treated as the fifth wave of the five wave sequence from 1044.5, which should also be fifth wave of the rally from 681 (2008 low). Such rally might still continue towards 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 before completion. Though, we're aware of long term projection target of 100% projection of 253 to 1033.9 from 681 at 1462 and we'd anticipate strong resistance from there to bring medium term correction finally. On the downside, however, break of 1315.8 support will be an early alert of medium term reversal and will turn focus back to 1155.6 support for confirmation.

Comex Gold Continuous Contract 4 Hour and Daily Charts


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Flurry of Rig Orders Marks End of Two Year Drought

Since the start of October, drilling companies have ordered at least 17 new rigs, a wave of spending that signals optimism that oil prices will remain high and that producers will continue to demand the latest advances in equipment as they tap increasingly hard to reach offshore reservoirs. Largely built "on spec", that is, without an existing contract from an oil and gas explorer,those orders mark a clear ending to a two year drought in rig purchases as drillers like Transocean, SeaDrill and Atwood Oceanics look to update and bolster their fleets.

The move also indicates how the global enthusiasm for exploiting offshore oil and gas continues, despite the slowdown in U.S. drilling that came as a result of the Deepwater Horizon oil spill.
Of the 17 orders so far this quarter, 13 are for jackup rigs, which stand on legs and typically operate in water depths up to 400 feet. By comparison, only eight jackups were ordered in the two years that ended Sept. 30, according to Tom Curran, senior analyst with Wells Fargo Securities' Oilfield Services & Drilling team.

The quarter's four orders for floating deep-water rigs, which can take three years or more to construct, are the first shipyards have seen since 2008, Curran said. The orders primarily have gone to yards in Southeast Asia......Read the entire article.



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