Monday, January 31, 2011

All The Signs are There.....You Can't Ignore Distribution Selling

Here is part 2, the follow up to Chris Vermeulen's "Gold, Silver, and the Dollar....How Does Their Future Look?" article from a couple of weeks ago......

We have seen some exciting moves in the market and with the market sentiment so bullish it should make for a sharp selloff in the coming weeks. Meaning everyone is overly bullish and owns a lot of stocks and commodities therefore the market should top and leave them holding the bag while the smart money runs for the door. The market will not bottom until all of these individuals holding the bag finally cannot take the pain of losing any more money and once we see them panic and sell them all at once only then will we be looking to go long again.

The past couple weeks I have been bombarded with emails asking if gold and silver have bottomed and if they should be buying more on these pullbacks. Those of you reading my work for the past few months know that my analysis clearly has shown how both gold and silver have been topping out. There have been strong distribution selling and price patterns on the charts are also clearly signaling a top was near.

A couple weeks ago I posted an important report covering gold, silver and the US Dollar and where the next big moves will be. Well it’s time for another update on Gold, Silver and the Dollar as they have come a long way from my last report.

Ok let’s move on to today’s charts…

Silver Daily Chart
Silver has formed a very nice looking top and it is now trading under its key moving averages. It is also currently testing a key resistance level after Friday’s bounce on the back of fears in Egypt. Unless something happens internationally I figure silver sill continue its trend down.


Gold Daily Chart
Gold futures are doing the same as its little sister (silver). I feel the general public is still very bullish on metals and before we see higher prices (new highs) the market will have to shake the majority out of their positions first. At this time gold looks like it should test the $1285 level. Depending on how long it takes to get there and the price action it forms in the following days that outlook could change but expect sellers to step in at the $1350-1355 area.


US Dollar 2 Hour Chart
The dollar has been grinding lower the past two weeks forming a falling wedge reversal pattern. It’s also important to note that on the daily chart the dollar tested a key support level last week. This should be an interesting week for the dollar and the rest of the market simple simply because when the dollar makes sharp movements it pushes the price of stocks and commodities around in a big way.

I am looking for a multi week rally in the dollar possibly longer but with small pauses or corrections along the way.


Pre-Week Metals and Dollar Trend Analysis:
In short, I feel gold and silver are nearing a short term resistance level and will find selling pressure in the coming days only to continue on their journey down for a few weeks. The dollar on the other hand broke out of its falling wedge on Friday and could have a strong rally for 2-3 days. I feel most traders and investors have been shorting the dollar for two weeks straight, so once they realize it’s going higher there will be a ton of short covering and the dollar should rip higher.

This shift in the Dollar from down to up has a direct effect on the SP500 and subscribers of my newsletter are going to take full advantage of these next big moves in the market. Just Click Here if you would like to get my daily newsletter and trading analysis and trade exactly what I am trading.

Chris Vermeulen



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Let Them Eat Cake....That Might Be Tough With These Wheat Prices

After an initial pull back crude oil gained some strength overnight as investors seem to consider the Egypt unrest as little threat to the flow of oil through the Suez canal. It is great to play the threat of disruption in our trades but there is little proof that oil and energy is ever effected by these tense situations.

Still, many hedge funds and commercial traders got stuck on the wrong side of the trade last week as the Egypt fiasco unfolded right as many fund managers were peeling back their long crude positions. But maybe the trade we should be talking about is wheat. Wheat is the cause of the tension in Egypt as the population faces food shortages and other governments around the globe are increasing their wheat and rice inventory. Jordan bought 150,000 metric tons of wheat last Thursday and is in the market for more. And Libya did the same, buying 100,000 metric tons of wheat. Many companies in the middle east are selling gold reserves just to fund these massive purchases of wheat and rice.

Have we missed this trade and is a short on wheat in order? Stochastics and the RSI are overbought and are turning bearish hinting that a double top with last August's high might be forming. Closes below the 20 day moving average crossing at 8.03 3/4 are needed to confirm that a short term top has been posted. With everything else that has gone on in wheat in the past year it would take a lot of nerve to sit on a short position in wheat at this point. This may only be the beginning.

Here's your pivot point, support and resistance numbers for Monday morning......

Crude oil was slightly lower overnight before gaining some strength as it consolidates some of last Friday's rally. However, 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 90.12 are needed to confirm that a short term low has been posted. If March extends this month's decline, the 50% retracement level of the May-January rally crossing at 83.06 is the next downside target. First resistance is the 20 day moving average crossing at 90.12. Second resistance is this month's high crossing at 93.46. First support is the 38% retracement level of the May-January rally crossing at 85.51. Second support is the 50% retracement level of the May-January rally crossing at 83.06. Crude oil pivot point for Monday morning is 88.06.

Natural gas was higher due to short covering overnight as it consolidates some of the decline off last Monday's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends last week's decline, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. Closes above the 10 day moving average crossing at 4.506 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.492. Second resistance is the 10 day moving average crossing at 4.506. First support is last Friday's low crossing at 4.252. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Monday morning is 4.315.

Gold was lower overnight and remains poised to extend this month's decline. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 1363.20 are needed to confirm that a short term low has been posted. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is the 10 day moving average crossing at 1343.7. Second resistance is the 20 day moving average crossing at 1363.20. First support is last Friday's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Monday morning is 1332.70.

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Sunday, January 30, 2011

How to Trade Last Weeks Market Panic in the S&P 500 & Gold Futures

From guest analyst J.W. Jones of Options Trading Signals.Com.......

After taking a quiet ride upward for some time, the markets finally reminded us what it can do in a flash as precious metals and crude oil have been selling off while the U.S. Dollar Index futures were consolidating. Additionally, the volatility index has been very choppy and was indicating that we could be seeing a potential change in the underlying trend with regards to future price action. In previous articles that I have proffered, I was warning about a likely correction in gold and equities as prices were extremely overbought and both asset classes were due for pullbacks.

Precious metals have been selling off for much of the month of January while equities worked their way higher as technology stocks continued to outperform. Last week we saw major selling in equities while gold, oil futures, and Dollar Index futures rally. What is Mr. Market trying to tell us? Why are the U.S. Dollar Index futures rallying with gold and oil simultaneously? However, the most important question that most traders want an answer to is whether this is a top in equities or if we are just going to have a mild correction and power higher?

Risk is excruciatingly high and Friday’s price action appears to be extremely emotional. I am watching to see if we get the Friday afternoon grind higher in equities that generally is accompanied by light volume. If equity prices are held down today, we may see lower prices in the not-so-distant future. The daily chart of the S&P 500 E-Mini futures contract listed below illustrates the key price levels that traders are likely watching closely:


I remain neutral at this point on stocks as I want to see how the market digests today’s prices before taking a serious position. With short term prices at the current oversold levels, I am expecting a light volume drift higher before Mr. Market tells us which direction he may be headed in the longer term time frame. For right now, I will continue to remain in cash and will wait patiently for low risk, high probability setups to emerge.

Gold
Gold futures suffered from a relatively serious pullback in the month of January. At the close on Thursday, gold was trading around $1,315 per troy ounce. As of the writing of this article gold was trading over 15 points higher on Friday and panic buying was taking place. Gold was extremely oversold on the short to intermediate time frame so a relief rally was expected. However, gold rallying 15 points in the face of an increase in the Dollar Futures on Friday is rather perplexing. The U.S. Dollar Index futures are illustrated below:


There have been times when both gold and the dollar have rallied together in the past, however at this point it is too early to determine what the market is trying to tell us. On one hand, it is obvious that gold needed to bounce to work off oversold conditions. On the other hand, it is rather odd that gold and the U.S. Dollar Index futures are rallying together. My best guess is that traders are trying to game where future money flows are going to be placed if selling persists in the future. It is hard to say for sure if gold will roll over or if this rally is trying to tell us something else.

Currently it is too early to tell, so I will continue to sit on the sidelines and watch the price action. I do not have an edge and the whippy price action in gold futures recently has not offered a solid risk / reward setup. Longer term I expect gold prices to work higher, but in the interim I am unsure of price direction and if selling pressure sets in, how low prices might go. Key support levels in gold futures would be around the 1270-1280 range based on the gold futures chart illustrated below:


For right now, I expect that gold prices could drift higher but the decline may or may not be over. There are extraneous events that could trigger another powerful rally in gold, particularly if panic selling in equities continues and/or an unforeseen event occurs in Europe or the Middle East. I do not currently have a position in gold futures or GLD, but I will be watching the price action closely awaiting a possible trade entry. I will likely look to get long GLD at some point in the future as I expect another rally to transpire in coming months that might push gold to new highs. It is too early to tell what price action is going to do, but for right now I’m going to sit in cash and wait for a solid low risk, high probability setup.

Conclusion
Right now I am sitting in cash and will likely remain that way until we get further confirmation in both the S&P 500 and the gold futures market. It remains to be seen if this is the beginning of a new trend or a possible topping formation in the S&P 500, but what is known for sure is that we have seen heavy volume distribution set in on Friday and panic selling levels have been reached. The marketplace is charged with emotion and the VIX is up more than 20%. This type of environment is not conducive to my style of trading, so I will sit on the sidelines in cash and wait for an entry to take shape.

Gold is also at a rather tricky point on its chart as we have seen a significant rally so far today, but it remains to be seen whether this is the beginning of another powerful rally or whether we are just working off the oversold condition. Sometimes it pays to be patient as a trader and wait for setups which offer a high probability of success while risk levels are mitigated. Right now I’m going to go into this weekend entirely in cash with a smile on my face.

Next week however could offer some interesting trading setups on the S&P 500 and gold futures. Should a quality setup arrive, I will most certainly accept risk and put my trading capital to work. I hate losing trading capital, and price action today is far too emotional to get me involved. I would rather enter positions when the crowd is either sleeping or looking the other direction than invest my hard earned trading capital with them. You can call me a contrarian, but please do not make me hang out with the crowd!

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Friday, January 28, 2011

Crude Oil Trades Flat as U.S. GDP Numbers Take Center Stage

If you put your ear to the street it seems every one is expecting Fridays GDP report to show that the U.S. probably grew at a faster pace in the fourth quarter of 2011 on the biggest gains in consumer spending in four years and rising exports. So why has crude oil only stabilized overnight as traders look to the U.S. GDP report today to give them guidance? Are the fundamentals in crude oil that weak?

The threat of further tightening in China and the possible reigning in of QE 2 in the first half of 2011 is starting to "loom large" in trader chatter on the street. But maybe, just maybe it's OPEC to the rescue. Farouk al-Zanki, the head of Kuwait Petroleum Corp, told Reuters at the World Economic Forum in Davos, Switzerland, he was concerned high oil prices might contribute to the start of another global downturn as they did in 2008. "The first signs are emerging that OPEC is responding, with a thinly veiled call for an emergency OPEC meeting by a Kuwaiti official and indications others are unilaterally raising output," JPMorgan analysts led by Lawrence Eagles said.

Crude oil rebounded to 85.9 after plunging to as low as 85.11 on Thursday. Heating oil and gasoline prices also stabilized while natural gas fell for a second day even though inventories in the U.S. took a dip. Gold got some support above 1300, near the critical 1296.40 level, but most traders maintain a near term bearish outlook and a further decline in gold prices.

It's Friday and here is your pivot, resistance and support numbers for crude oil, natural gas and gold. And rise or fall we'll be on the sidelines well before the close.....

Crude oil was slightly higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 50% retracement level of the May-January rally crossing at 83.06 is the next downside target. Closes above the 20 day moving average crossing at 90.08 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 88.82. Second resistance is the 20 day moving average crossing at 90.08. First support is the 38% retracement level of the May-January rally crossing at 85.51. Second support is the 50% retracement level of the May-January rally crossing at 83.06. Crude oil pivot point for Friday morning is 86.17.

Natural gas was lower overnight as it extends the decline off Monday's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends this week's decline, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. Closes above the 10 day moving average crossing at 4.513 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.492. Second resistance is Monday's high crossing at 4.823. First support is the overnight low crossing at 4.272. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Friday morning is 4.376.

Gold was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1366.50 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1344.20. Second resistance is the 20 day moving average crossing at 1366.50. First support is the overnight low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Friday morning is 1325.20.


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Thursday, January 27, 2011

Market Manipulation.....Our Video Analysis and How You Can profit From It!

This week the market just happened to gap above key resistance level and we all know that once we are above resistance becomes support. After the gap up the SP500 pulled back to this new support level which happens to be Friday’s, Mondays and Yesterdays high then it bounced, actually rallied up on solid volume almost like someone was making a point that this market is going up today and not to mess with it.....

Personally we don’t get worked up over market manipulation because of two reasons:

1. There is Nothing you can do about it
2. If you see it and understand the idea behind it, then you can make really good money day trading it.

So let's watch our latest video, Just click here to watch "Market Manipulation.....Our Video analysis and How You Can profit From It!"


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Is This Just Where Crude Oil Prices Belong?

Yes, this just may be where oil prices belong for some time to come. The oil, energy and commodities markets just can't trade on emotion for long, fundamentals matter. And despite stronger than expected U.S. economic and housing data bearish fundamentals will continue to dominate Nymex oil prices. Futures declined 1.2 percent to trade more than $11 a barrel below the Brent oil price. U.S. crude supplies climbed four times more than analysts forecast. All of this is making many traders question NYMEX oil pricing and it's continued ability to reflect world oil demand and pricing.

Brent’s premium over West Texas Intermediate crude oil spiked to a record $11.27 a barrel. Inventories at the Cushing Oklahoma storage facility rose 2.3 percent in the week ending Jan. 21st. The highest inventory increase since August 2010, according to the Energy Departments statistics report released on Wednesday. But Brent's future pricing is likely to follow NYMEX pricing south after failing a the critical 200 day moving average.

This in a week that many traders expected more of a boost from their friends at the FOMC. Their unanimous vote this week to maintain the current short term interest rates at near zero and more importantly  continued support of the QE 2 program was expected to support higher oil and commodity prices through the weakening of the U.S. Dollar. So why didn't crude oil push through the $100 dollar level? It is possible that traders are already eyeing the end to QE2 as the FOMC has already set a target date for QE 2 and it's current purchase of $600 billion in longer term treasury securities by the end of the second quarter, 2011. Then what?


But we are trading the U.S. market TODAY and here is the pivot, resistance and support numbers we'll be using......

Crude oil was lower overnight and remains poised to extend this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 38% retracement level of the May-January rally crossing at 85.51 is the next downside target. Closes above the 20 day moving average crossing at 90.38 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 89.57. Second resistance is the 20 day moving average crossing at 90.38. First support is Wednesday's low crossing at 86.03. Second support is the 38% retracement level of the May-January rally crossing at 85.51. Crude oil pivot point for Thursday morning is 87.05.

Natural gas was lower overnight as it extends the decline off Monday's high and is trading below the 20 day moving average crossing at 4.503. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.503 are needed to confirm that a short term top has been posted. If March renews the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. First resistance is Monday's high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is Thursday's low crossing at 4.397. Second support is the reaction low crossing at 4.302. Natural gas pivot point for Thursday morning is 4.476.

Gold was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1372.10 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1353.35. Second resistance is the 20 day moving average crossing at 1372.10. First support is Tuesday's low crossing at 1323.50. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Thursday morning is 1334.60.

Make sure to watch "The Real Reason For Gold's $100 Pull Back"

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Wednesday, January 26, 2011

The Real Reason For Gold's $100 Pull Back

So all of the talking heads and pundits are coming out with their own reasons for gold taking a big fall. And if we look at history we would think that all of the credit woes of Europe have magically disappeared. Or China has found the cure for it's inflation problems. But no, none of the above has happened, but gold has still plummeted $100.

It's all about market perception and timing, two things we've talked about many times before on the Trader's Blog. I don't know about you, but I remember when gold was over $1,400 an ounce and all I could see on TV where ads from gold companies extolling the virtues of buying gold as it is real money. Since the fall, I expect we'll see fewer of these advertisements on TV and in print. So what did happen to gold?

Well, for starters there were some key technical levels broken. If you're a gold trader, but not a technical trader, you really need to learn how to read charts and see what other traders are doing. A good way to understand that is by taking advantage of our free technical trading course from MarketClub....Just Click Here to get those 10 free lessons.

Secondly, there did not appear to be any other news to drive this market higher. When that happens, markets tend to fall under their own weight, and as many retail investors purchased gold, there was nobody on the other side of the market to support gold.

So the question is, is the move over in gold? That's a tricky one. I want to show you in today's video exactly how we're looking at this very emotional market. Every time we have created a video indicating that there would be some pullback in gold, we were bombarded by the gold bugs saying that we're crazy. When you see a market pullback as much as gold has, you have to have some respect for the market itself.

If we look at the price of gold today at approximately $1,330, it pretty much equates to what happened in the last 30 years when gold was trading at a high of $850 an ounce. If you factor in inflation over the last 30 years, gold is probably lower now than it was 30 years ago. So how good an investment is gold? I think gold is more of a barometer of fear than anything else. Clearly there are other investments in the marketplace that have better returns.

Let's get back to gold and what we think will happen. In this short video we analyze the market using our "Trade Triangles", the Williams%R, and the MACD indicator.

As always our videos are free to watch and there are no registration requirements. If you like what you see please comment on our blog and feel free to Tweet or email your friends. I think there's an important takeaway message in this video, what goes up, must come down. Enjoy the video.

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India Interest Rates, UK and Spain News Weighing on Crude Oil Bulls

I know we are guilty from time to time of making it sound like it's all about China. But let's not forget Chinas partner in massive growth, India. And this week it looks like the U.S. consumer seems to be getting a bit of help from a rate increase in India that is weighing on the commodity bulls. And India's central bank warns that inflation risks will remain a problem for some time.

And from across the pond contributed to the pull back with worse than expected GDP data out of the United Kingdom and renewed worries popping up in Spain's bond market. A plan supported by their finance minster does not seem to be convincing investors that Spain can get a handle on their financial woes. All of this appears to be weighing investors and crude oil and commodity prices.

And this just supports our continued predictions for a mid January pull back. And if you look at recent years the facts support our theory. In seven of the past 10 years imports expanded during January. And the street agreed on Tuesday taking March oil futures down $1.68 to $86.19 a barrel, the lowest settlement price since Nov. 30.

But the long oil crowd seems to be holding it's ground as many commercial traders are feeling that it will take a downside break in crude oil of 80.06 support to be the first sign of medium term reversal and break of 64.23 to confirm it. Otherwise a good majority of these traders outlook will remain bullish. This same "bull camp" see a further rise could still be in the cards all the way to the 61.8% retracement at 103.70 and possibly above.

But we are trading today and it appears crude oil is still rolling over. Here is your pivot, support and resistance numbers for Wednesday morning......

Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 38% retracement level of the May-January rally crossing at 85.51 is the next downside target. Closes above the 20 day moving average crossing at 90.61 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 90.61. Second resistance is this year's high crossing at 93.46. First support is Tuesday's low crossing at 86.12. Second support is the 38% retracement level of the May-January rally crossing at 85.51. Crude oil pivot point for Wednesday morning is 86.72.

Natural gas was lower overnight as it extends the decline off Monday's high and is trading below the 20 day moving average crossing at 4.494. 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 4.494 are needed to confirm that a short term top has been posted. If March renews the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. First resistance is Monday's high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is the 20 day moving average crossing at 4.494. Second support is the reaction low crossing at 4.302. Natural gas pivot point for Wednesday morning is 4.494.

Gold was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1376.10 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1358.70. Second resistance is the 20 day moving average crossing at 1376.10. First support is Tuesday's low crossing at 1323.50. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Wednesday morning is 1330.70.


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Tuesday, January 25, 2011

It's Not All About The U.S. Dollar......Here is Some Other Ways to Make Money in the Forex Market

In today's short video from MarketClubs Adam Hewsion he brings up the question of why the dollar is so focused on by traders in the Forex markets. Is it because of it's being considered the strongest currency in the world?

Sadly, the main reason is its declining value against the other major currencies. There are several ways to look at the foreign exchange markets and one of them is to compare other major currencies. For example, you could be looking at the euro against the Japanese yen or any number of combinations in between.

In today's video we will be looking at the Swiss franc versus the Japanese yen over the past 12 months. I'm going to be showing you a very simple, yet very effective, approach that has proven to be 72% accurate in 2010-2011 when trading this particular cross rate.

In fact, using this easy to understand approach, you would have made just seven trades in approximately 12 months. As you can see, this is not a hyperactive approach. However, it will put the odds of making money on your side if you stick to the game plan. As in all trading, having a game plan in foreign exchange is extremely important.

If after watching this video you would like to know more about our trading system and the indicators we use just take us up on our FREE two week trial of MarketClub.

We hope you find this video informative and educational. As always our videos are free to watch and there are no registration requirements. All we ask is that you let us know what you think by leaving a comment, talk about us on your blog, Tweet to a friend or share us on Facebook.


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Inflation Woes Take Center Stage in the Commodity Futures Trade

It's not a matter of if inflation woes will hit us in the U.S. but when. The old cliche that the current QE and QE2 money printing programs will be on the backs of our great children is just a myth. The sad results will be painfully laid upon the American people whenever the communist regime in China says it will be. And some very smart people think it's coming sooner then we think.

With the Chinese slowly allowing the Yuan to inflate it is obvious they know it's currency has to eventually be allowed to increase in value. And it won't be our great grand children who will feel that, it will be us. Few Americans seem to understand that all of our Quantitative Easing will then be felt by every one of us when we fill our gas tanks or pass through the grocery store check out line. That is where you will be expected to pay your share of all of this money being printed in Washington. And our "friends" in China will decide exactly when and how that will happen.

In an interview with The Wall Street Journal ahead of this week's annual meeting of the World Economic Forum in Davos, Switzerland, even Jean-Claude Trichet warned that inflation pressures in the euro zone must be watched closely, and urged central bankers everywhere to ensure that higher energy and food prices don't gain a foothold in the global economy.

Sure, markets don't move in a straight line. We will have many pull backs and corrections in commodity prices. But don't think for a second that the long term trend in commodities is any thing but up. So lets pay for them higher food prices in the future by making money today. And here is the pivot, resistance and support numbers we'll be using for todays trading.....

Crude oil was lower overnight as it extends last week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 38% retracement level of the May-January rally crossing at 85.51 is the next downside target. Closes above the 20 day moving average crossing at 90.91 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 90.91. Second resistance is this year's high crossing at 93.46. First support is the overnight low crossing at 86.33. Second support is the 38% retracement level of the May-January rally crossing at 85.51. Crude oil pivot point for Tuesday morning is 88.26.

Natural gas was lower overnight following Monday's key reversal down following a test of the 50% retracement level of the June-October decline crossing at 4.802. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.488 are needed to confirm that a short term top has been posted. If March extends the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. First resistance is Monday's high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is the 10 day moving average crossing at 4.553. Second support is the 20 day moving average crossing at 4.488. Natural gas pivot point for Tuesday morning is 4.465.

Gold was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1377.40 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1361.30. Second resistance is the 20 day moving average crossing at 1377.40. First support is the overnight low crossing at 1321.90. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Tuesday morning is 1342.90.


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Monday, January 24, 2011

Chris Vermeulen: If Things Work Out Like They Have in the Past This Market is Putting in a Top

Chris Vermeulen has been telling us for a couple of weeks that the major indexes are giving mixed signals. While the Dow and SP500 are still bullish, he is seeing tech and small cap stocks breakdown. And Vermeulen says that if things work out like they have in the past then the market is truly starting to put in a top. It could still take 5-10 days to play out. And usually the market will get choppy with large up and down days back to back and volatility will rise which can be seen by watching the VIX.

Make sure to follow Chris at The Gold and Oil Guy.Com. Here is his bi-weekly post for Monday morning.....

Depending what type of trader you are and what you focus on the most for trading you could be either bullish or bearish on the stock market right now. The charts below show how the Dow Jones Industrial Average is bullish while the Small-Cap Russell 2K is bearish. Options expiration last week really mixed the market up as the market makers and the big money players manipulate stock prices in their favor.

Let’s take a look at the charts.....

DIA – Dow Jones Industrial Average Daily Chart
Crude oil has been holding up very well the past couple weeks and that has had an impact on the Dow. Additionally IBM had a huge move up which accounts for almost 10% of the DJIA’s price action. Both these factors have skewed the Dow index to look bullish.

Currently the price is trading above the 5 period moving average after briefly tagging it on Friday and then bouncing higher. Volume has picked up indicating more people are exchanging positions because of a shift in sentiment. Remember the Dow represents only 30 stocks so it does not provide a solid view of the overall market strength.


SPY – SP500 Daily Chart
This index closed below the 5 period moving average with rising volume once again indicating a shift in trader sentiment. The SP500 is heavily weighted with financial stocks and with the financial sector under pressure last week it helped to pull this index down. The fact that it closed below the 5 period moving average is just a warning sign to be cautious. Overall trend is still up in this index.


QQQQ – NASDAQ Daily Chart
As you can see the technology heavy index (Nasdaq), there has been more selling going on. The Nasdaq closed below both key moving averages and is now testing the 20 period moving average which is the line in the sand before I’m bearish on this sector. Tech stocks are typically a good indicator for the overall health of the market and if it does not recover this week or if it forms a light volume bear flag then watch out below.


IWM – Russell 2K Small Cap Stock Index
Small cap stocks are usually the first to pullback in the market. As you can see there is a big difference between this chart and the Dow Jones…

Small caps has broken key moving averages and are now nearing the 50 period moving average which I figure will provide a small bounce or pause before crashing through it. But with the amount of selling volume happening in the small caps it could just drop through that level and keep on going. Only time will tell and its best to wait for a low risk entry point before taking a position.


Weekend Trading Conclusion:
In short, the major indexes are giving mixed signals. While the Dow and SP500 are still bullish, we are seeing tech and small cap stocks breakdown. If things work out like they have in the past then the market is truly starting to put in a top. It could still take 5-10 days to play out. Usually the market will get choppy with large up and down days back to back and volatility will rise which can be seen by watching the VIX. I am currently neutral on the market and waiting for a low risk setup to unfold.

You can get my trading videos, analysis and trade alerts by subscribing to my newsletter The Gold and Oil Guy.com

Chris Vermeulen


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Can David Banister's "State of the Markets" Prediction Hold Up?

We have been watching David Banister closer then ever this winter. Banister has kept our interest by repeatedly being ahead of the street on so many trades. His easy to understand explanations of his use of the Elliott Wave theory combined with his calls on the indexes and commodities has made our readers a lot of money. So what is Banister saying this week? He just sent over this article and it's a good one.....

I have been forecasting a Mid January top in the SP 500 (Us Markets) for multiple weeks now well in advance. My work had looked for 1285 as a minimal upside rally from the 1173 4th wave lows. The range was 1285-1315, we have been to 1296 but that pretty much should have capped off the rally. Here are some further thoughts:

Copper, Gold, Silver- All topping and rolling over for now. A few weeks ago I began to go bearish on Gold (And with it of course Silver), and the Elliott Wave patterns became very muddy and unclear. This was a warning signal. Also, the inability of Gold to pierce through the 1425-30 highs for a 3rd attempt indicated a triple top failure which I eluded to in an Email bulletin a few weeks back. The Gold, Copper, Silver topping and rollover movements are warning signals to be more cautious. Gold should work down to 1270-1280 eventually, and Silver to 25-26.50 ranges likely.

Small Cap Index- The TZA ETF I suggested on TMTF recently had a huge 2 day reversal rally on Thursday and Friday of this trading week. TZA Closed just over 16 and I see it moving to 19-20. We are long also in my ATP advisory service for insurance and gains potential. The Russell 2000 is rolling over first, which makes sense because the sentiment and strong economic rebound from the summer lows has peaked out. Small Caps are likely to correct the hardest in this wave pattern down, and so we shorted them instead of shorting the large caps or SP 500. To wit, this week the small caps dropped 3.5% and the SP 500 only 0.8%.

IBD 100 - The Investors Business Daily top 100 fell 5.4% this week collectively. A quick scan of the charts on those 100 reveals a lot of topping and weakness patterns to me. These would be considered leader small cap and mid cap growth stocks, and suggests further evidence of continuing correction in the markets.

Elliott Wave theory is scoffed at by many investors because they have been led to believe that Robert Prechter is apparently the only person on earth who has a license to use them. I’ll reserve my comments on his abilities, but you can gather that I tend to often disagree with his views and leave it at that. EWT works extremely well in the right hands, and that is why I launched TMTF last year, to share my views and my methods. This has allowed me to confirm summer bottoms at 1040 this year based on the movement from 1120 to 1040 (Which we also forecast). This allowed me to call a top on November 5th at 1225 after going just over my 1220 predictions made weeks in advance. This allowed me to call a bottom 4th wave at 1173-75 and a resulting rally to 1285 in advance. Not to mention April 2010 and January 2010 tops within days. Still think EWT is bunk? Try ignoring those who are biased and trade their biases. I dont trade Gold, Silver, or the SP 500 futures or indexes… that allows me to remain 100% objective and not force wave counts into my personal opinions.

EWT is not perfect, but nor is any forecasting methodology or technical analysis strategy. They all have their flaws. However, I try to blend in a few elements to back up my EW forecasts, so as to eliminate too many mistakes. Sentiment readings for one, and Fibonacci sequences for another.

Bottom line: I continue to be cautious on the markets and believe the SP 500 will drop to 1170-1180 on the LOW END, with 1210-1229 possible as the shallower end of a correction. The Russell 2000 will take the hardest hit, and probably has another 8-9% downside left before a bottom pivot. We remain long TZA to short that index at 3x multiple over at my ATP service. I have not shorted the SP 500 or large Caps on purpose, because I think the best place to short is small caps. I continue to recommend high cash positions for now (Im about 40%) so that you have money to buy into an oversold wave 2 bottom in the markets when it occurs. Gold will continue to correct with a bounce at 1310-1320 areas likely. I see it getting to 1270-1280 though as most likely.

Large Caps are likely to outperform small caps in 2011, as the bulk of the economic trough and rebound have now occurred and been priced in. Gold may struggle for several months but has a shot at hitting $1500-$1515 by years end, but one month at a time. That said, selective stock picking will always have the ability to trounce the index averages, and that is what I do over at Active Trading Partners.com.

Stay tuned!

If you would like to benefit from learning more about my methods, which have been historically accurate, please check us out at Active Trading Partner.com where you can sign up for free occasional reports.

David Bansiter


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OPEC to Increase Production, Oil Services Companies Show a Jump in Profits

It appears we will start the week with a pull back in crude oil prices as Saudi Arabian Oil Minister Ali al-Naimi released a statement that OPEC will increase supply to meet what seems to be inevitable increased demand coming out of China and India. Our "friends" at Goldman Sachs are saying this only indicates that OPEC is using it's spare production supply and should only further the bulls story.

We personally have learned to not let Goldman Sachs lead the way in our oil trading but you also can't ignore it. While retail investors have less effect on oil markets then some other sectors, Goldman Sachs can increase that interest with their apparent media attention grabbing abilities.

But it's North American demand that is making most hedge funds and commercial buyers take a bigger interest in the "crude oil bull story" this week as a report from Commodity Futures Trading Commission showed that these investors have ramped up their net long positions 0.4 percent in crude contracts in the week ended Jan. 18th.

The oil services sector is giving traders additional confidence as Schlumberger reported better than expected quarterly profit on Friday followed by Haliburton releasing fourth quarter reports showing their net profit rose to $605 million, or .66 cents per share, from $243 million, or 27 cents per share, a year earlier. Revenue jumped 40 percent to $5.16 billion in the quarter after analysts had expected revenues to be $4.88 billion.

So do we open Monday morning selling the news on these companies? It's the numbers we trust and here's what we are using for Mondays trading......

Crude oil was lower overnight as it extends last week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 88.45 would confirm that a short term top has been posted. If March renews this winter's rally, weekly resistance crossing at 93.87 is the next upside target. First resistance is this year's high crossing at 93.46. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 88.45. Second support is the reaction low crossing at 88.07. Crude oil pivot point for Monday morning is 89.40.

Natural gas as it extends the rally off October's low. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If March extends the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. Closes below the 20 day moving average crossing at 4.478 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is the 10 day moving average crossing at 4.554. Second support is the 20 day moving average crossing at 4.478. Natural gas pivot point for Monday morning is 4.719.

Gold was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1380.40 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1366.30. Second resistance is the 20 day moving average crossing at 1388.40. First support is last Friday's low crossing at 1337.00. Second support is the reaction low crossing at 1331.10. Gold pivot point for Monday morning is 1342.60.


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Friday, January 21, 2011

Inventories and Threats of Chinese Tightening Give Commodity Bears The Advantage

Crude oil inventories spiked for a 2nd consecutive week, while on hand crude dropped in 3 out of 5 PAD districts the big gains in the Gulf Coast region created the net gain. Gasoline demand even fell for a 3rd consecutive week as gasoline inventories also made considerable gains. And oil prices showed the effects on Thursday touching a two week low of $88.00. But it wasn't all about inventories, commodities in general took a beating as traders seem to put more into the concerns over Chinese attempts to reel in their inflation worries with new rounds of tightening.


In a great article from Phil Flynn he reminds us "The Chinese, to keep up this charade, will have to buy more and more commodities from the global market to keep it going. The more artificially cheap commodities they feed to their ravenous marketplace will only leave the country wanting more and more. This of course would lead to an eventual monster bubble that if popped could take China’s economy down. The market already realizes what the Chinese should do".


Are the crude oil bulls in trouble here? According to Petromatrix GmbH yesterday’s crude oil's drop put it’s five day rolling mean below the nine day for the first time since Jan. 4. The decline of a short term indicator of momentum before a longer term measure is described as a “dead cross” and may be a sign that prices may correct lower. Olivier Jakob of Switzerland based consultant Zug reported “Brent and WTI are now suffering from a negative cross-over of the five to nine day moving average, and bulls will need to close today above the five day".

All the woes of Brent and the WTI as OPEC is increasingly facing calls to boost oil production as crude prices in Asia and Africa surpass $100 a barrel for the first time in two years. Nigeria’s Bonny Light grade, from which traders gauge the cost of West African oil, rose to $100.12 a barrel on Jan. 17, passing $100 for the first time since October 2008, according to data compiled by Bloomberg.

Our regular readers know how we feel about Fridays. The closing price on Friday will always tell us what traders are feeling comfortable about leaving on the table. As we go to press markets indicate that yesterdays sell off was a bit over done as prices have touched 90.22 before pulling back. Better top off your coffee, here's our numbers for Fridays trading.....


Crude oil was higher due to short covering overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 88.45 would confirm that a short term top has been posted. If March renews this winter's rally, weekly resistance crossing at 93.87 is the next upside target. First resistance is this year's high crossing at 93.46. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 88.45. Second support is the reaction low crossing at 88.07. Crude oil pivot point for Friday morning is 90.10.


Natural gas was higher overnight and trading above the previous reaction high crossing at 4.707 thereby renewing the rally off December's low. Stochastics and the RSI are diverging but have turned bullish signaling that sideways to higher prices are possible near term. If February extends the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 20 day moving average crossing at 4.448 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.747. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 10 day moving average crossing at 4.514. Second support is the 20 day moving average crossing at 4.448. Natural gas pivot point for Friday morning is 4.641.


Gold was lower overnight as it extends this month's decline. Stochastics and the RSI are becoming oversold but remain bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1382.20 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1368.80. Second resistance is the 20 day moving average crossing at 1382.20. First support is the overnight low crossing at 1340.20. Second support is the reaction low crossing at 1331.10. Gold Pivot point for Friday morning is 1353.30.


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Thursday, January 20, 2011

Apple and Goldman Crash, But is the High Still Coming?

On Wednesday the equities market poured out a sea of red candles. Leaving most traders and investors feeling that most all of their recent gains had disappeared in one short session. And we have warned repeatedly that strong selling volume sessions like this is typically an early warning that distribution selling is starting to enter the market.

Distribution selling is when the big money players start unloading large positions in anticipation of a market top. They do try to hide it by selling into good news or earnings when the average investors are buying into all the hype of better than expected earnings on the news. As average investors jump into the market because of the good news, this extra liquidity helps the big money players (banks, hedge funds, etc..) sell large amounts of their positions to the eager buyers. This is why the “buy on rumor and sell on the news” saying is kicked around wall street.....

To me, panic selling is typically seen as a bullish sign to enter the market simply because if everyone is/has rushed to the door to sell what they own, then really most of the down side risk has been taken out of the market. That being said after an extended multi month rally and higher than selling volume I look at it more like distribution selling and a shift in momentum.

I feel the precious metals sector will be starting something like this in the near futures, and possibly it has already started as seen in the rising volume on the down days.

Let’s take a look at the charts…

AAPL – Apple Stock 10 Minute Chart
Two days ago AAPL shares took big hit because of some medical issues with the CEO, the shares did float back up. But what is important here is the distribution selling which took place after Apple came out with much better than expected earnings. The general public loves to buy good news especially when it’s for a famous company. But large sellers stepped in unloading as much of their position as they could before making it look to obvious.

The average investor listening on the radio or catching snippets on the news do not pick up on these things which is why the big money players can get away with this over and over again.


GS – Goldman Sachs 10 Minute Chart
Goldman came out with average earnings being just above estimates and the share price took a beating with very strong volume.

Distribution selling looks to be entering the market and this is a bearish sign. I would not be surprised if we see the market top out in the next 5-10 trading sessions.


SPY – SP500 10 Minute Chart
Here you can see my green panic selling indicator spiking up much higher than normal dwarfing the past sell off spikes. This makes me think the big money is now starting to unload which will shift the current upward momentum to more of a sideways whipsaw type of price action. Eventually it will roll over and a new down trend will start.

As you can see from this chart the SP500 is trading down at a support level so a bounce is likely going to take place. If in fact today was the first distribution day then the big money should let the price inflate back up to the recent highs and possibly make a new high to help keep investors bullish before the hit their SELL BUTTON again… They like to play these games and understanding them is a key part of trading. Expect choppy price action for a week or two…...


Silver Daily Chart – The Next Wave of Selling?
I look at silver and gold as one… so what I show here is the exact same for gold.

As you can see silver is trading under 3 of its key moving averages and Wednesdays bounce was sold into after testing the 14 and 20 period moving averages.

Take a looking at the bottom of the chart and you can see distribution selling volume as the spikes are all down days. If silver breaks below the $28 level then we could easily and quickly see the $26 and maybe even the $24 level.


The Mid-Week Market & Metals Trading Conclusion:
In short, the financial power players are pulling out all the tricks to shake traders out of their positions. A lot of people shorted the market in the past 2 weeks only to get hung out to dry and most likely stopped out of their short positions for a loss. Fortunately we did the opposite taking another long position in the SP500 ETFS because my market internal indicators, market breadth and simple trading strategy clearly pointed out that the average investor was trying to pick a top by shorting the market. As we all know, the market is designed to hurt the masses which is why I focus on the underlying trends, price action, volume and market sentiment for timing trend changes.

That being said, I still think the market could grind higher and make another new high. But any rally or new high will most likely get stepped on with heavy selling. Expect strong selling days followed by a couple days of light volume sessions where the price drifts back up into resistance levels. This could take a week or two to unfold so don’t jump the gun and short yet. It’s best to see more distribution selling before picking a top.

If you like these trading reports or if you would like to get my daily pre-market trading videos, intraday charts, updates and trade alerts be sure to join my newsletter. Visit The Gold and Oil Guy.Com

Chris Vermeulen


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Crude Oil Really is Our New World Currency

This weeks visit to the U.S. by Chinese leader Hu Jintao is making it painfully obvious for crude oil traders that crude oil is the new world currency. And while President Hu is apparently furious at the U.S. QE and QE2 actions of printing money, give them credit for trying to print or control all of the "new world currency" they can. The Chinese are replacing American companies in Costa Rica, expanding projects in the middle east and Africa and starting new projects off the coast of Cuba while U.S. companies still look for approval to drill within eye site of the China/Cuba projects. And it's paying off for them as reports show Chinas oil production increased 6.9% in 2010.

With pipelines plugged and European debt crisis slinking their way out of the news all eyes are back to inventory levels and the Euro/Dollar trade. Enjoy the temporary return of the quiet, peaceful, easy trade. Our future lies in Chinese GDP numbers, inflation and currency manipulation news. On that subject, China's National Bureau of Statistics Thursday also reported that fourth quarter gross domestic product grew 9.8% from a year earlier, above economists' expectations for a 9.2% expansion. So much for the poor guys and their attempt at gradually imposing lending restrictions to prevent runaway inflation.

With looming inventory numbers and the dollar falling along side crude oil overnight, let's take a run at it today using these pivot, support and resistance numbers.....

Crude oil was lower overnight as it consolidates some of last week's rally. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 87.25 would confirm that a short term top has been posted. If February extends last week's rally, this year's high crossing at 92.58 is the next upside target. First resistance is this year's high crossing at 92.58. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Thursday morning is 92.10.

Natural gas was slightly higher overnight as it extends the short covering rebound off last week's low. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.414 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is this month's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.414. Second support is December's low crossing at 3.985. Natural gas pivot point for Thursday morning is 4.517.

Gold was lower overnight signaling a possible end to a two day short covering bounce off Monday's low. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1385.20 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1385.20. Second resistance is this month's high crossing at 1424.40. First support is the reaction low crossing at 1352.70. Second support is the reaction low crossing at 1331.10. Gold pivot point for Thursday morning is 1371.50.


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Wednesday, January 19, 2011

Five New Ideas for Energy Markets to make Money With in 2011

2010 was an amazing year for commodity traders so we have to ask ourselves is the top in? Are we now in "bubble territory" when it comes to commodities like oil? And what about energy, do we still have room to run in the energy sector?

In today's short video we are going to show you some of the markets that we are looking at in the energy complex. We're going to be looking at coal, oil, solar and some other large energy companies and ETF's.

As this is a short video, be sure to check in and watch our webinar this Thursday, January 20th at 4pm EST/9pm GMT. You will need to reserve a spot as tour webinars typically reach capacity quickly. Just click here to register for this weeks webinar. As always all webinars are free to attend.

Take a look at what we will be covering in the webinar and check out our new portfolio manager which we will be using extensively throughout today's video. We also have a big surprise which will be announced at the webinar and I have no doubt that you will like. Today's video requires no registration and is free to watch:

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OPEC Quietly Raising Output Overshadowed By Chinese Macroeconomic Data

Positive Chinese macroeconomic data gave the crude oil and commodity bulls the advantage in the European session overnight even as traders digest news that OPEC has quietly been increasing production. OPEC seems to keep finding ways to make themselves irrelevant as OPEC's own report revealed that compliance level for the "OPEC 11" dropped to 54.0% in December 2010. Looks like OPEC as quietly been raising production while sending their cheerleaders out to the press to call for higher oil prices for some of their ailing economies as they themselves fight to contain food prices in some of their own countries.

And this may not make the nightly news but I am sure the visit to the White House by Chinese President Hu Jintao will have the leaders focusing on world food prices as China has made a priority out of bringing new energy sources online at all cost. And Washington will be playing catch up again, but there is hope for the new "Clintonized" Obama agenda as the attitude towards business coming from the administration is changing quickly. Does this mean we have some new permits being approved for Nuclear power plants right around the corner? We won't be holding our breaths for that but we can still dream.

Oil futures are up this morning as far out as February 2012 but well below the the critical 92.58 level. Is it all aboard the bull bus this morning? Here's your pivot, resistance and support numbers for Wednesdays trading.......

Crude oil was higher overnight and remains poised to extend last week's rally. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends last week's rally, this year's high crossing at 92.58 is the next upside target. Closes below the reaction low crossing at 87.25 would confirm that a short term top has been posted. First resistance is this year's high crossing at 92.58. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Wednesday morning is 92.21.

Natural gas was slightly higher overnight as it consolidates above the 20 day moving average crossing at 4.385. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.385 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is this month's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.385. Second support is December's low crossing at 3.985. Natural gas pivot point for Wednesday morning is 4.450

Gold was higher due to short covering overnight as it consolidates some of last week's rally. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1386.70 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1386.70. Second resistance is this month's high crossing at 1424.40. First support is the reaction low crossing at 1352.70. Second support is the reaction low crossing at 1331.10. Gold pivot point for Wednesday morning is 1367.00.


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Tuesday, January 18, 2011

Crude Oil Bears Gain Momentum on Pipeline Opening and Weaker Euro

Hopes of a stronger Euro were dashed this week as European leaders have made a surprise move of putting off any real rescue plan until March. Giving a new round of strength to the U.S. Dollar and putting pressure on the crude oil bulls at least for the near term. The reopening of the Alyeska Pipeline has also given the crude oil bears reason for hope as the pipeline operators officially announced that repairs are complete. In its monthly report on Tuesday, the IEA, said world oil demand growth in 2011 would be slightly higher than it had previously expected, although it would not reach the "exceptional levels" of last year.

Expect a bit more "noise" from OPEC in 2011 as the current OPEC President will be Iran's Oil Minister Massoud Mirkazemi. And in a news conference Mirkazemi stated "None of the OPEC members find $100 concerning or irrational. Some of the OPEC members see no need for an emergency meeting even with prices at $110 or $120". All that really matters to the west is if the more moderate producers like Saudi Arabia, Gulf allies Kuwait and the United Arab Emirates will make a move to prevent prices from escalating further.

The 3 day weekend is over for us here in the U.S. so let's trade, here is your pivot, support and resistance numbers for Tuesday.......

Crude oil was slightly lower overnight as it consolidates some of last week's rally. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends last week's rally, this year's high crossing at 92.58 is the next upside target. Closes below the reaction low crossing at 87.25 would confirm that a short term top has been posted. First resistance is this year's high crossing at 92.58. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Tuesday morning is 91.22.

Natural gas was slightly higher overnight as it consolidates above the 20 day moving average crossing at 4.393. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. Closes below the 20 day moving average crossing at 4.393 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is this month's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.393. Second support is December's low crossing at 3.985. Natural gas pivot point for Tuesday morning is 4.510.

Gold was higher due to short covering overnight as it consolidates some of last week's rally. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1386.10 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1386.10. Second resistance is this month's high crossing at 1424.40. First support is the reaction low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. gold pivot point for Tuesday morning is 1361.10.


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