Friday, December 30, 2011

Simple 2012 Trends to Profit from Next

Happy New Year, from everyone here at The Crude Oil Trader!

We hope this week's price action didn't catch you off guard? It was profitable but you really had to be on the ball to pocket the gains.....

Anyways, we just wanted to wish you a New Year and thank you for being part of our success in 2011 before it’s too late.

Have you heard of Chris Vermeulen? He is one of our partners here and he has been hitting the cover off the ball when it comes to trading the indexes, commodities and the dollar. His daily pre-market technical analysis videos are interesting, timely, educational and traded with amazing accuracy every week.

Chris is doing his onetime new year’s special offer giving his premium trading & education service away at half price until Dec 31st at midnight. At that price you just cannot go wrong.

Just Click Here to read Chris’ Trade Ideas for 2012

Have a happy and safe New Year's!
Ray @ The Crude Oil Trader

Thursday, December 29, 2011

Five Best Trade Ideas for the Next Two Weeks

The last week of the year volume tends to be light due to the fact that big money traders are busy enjoying the holidays and waiting for their yearend bonuses.

I was not planning on doing much this week because of the low volume but after reviewing some charts and risk levels on my top 5 trading vehicles I could not help but share my findings with everyone last Friday.

You can see what I talked about on Friday here > Holiday Short Squeeze & Crude Oil Trade Idea

This Wednesday turned out to be an exciting session with all 5 of my trade ideas moving in our favour right on queue.

Charts of the 5 investments moving in the directions we anticipated …
- Dollar bounced off support

- Stocks are topping and selling off today

- Oil looks to have topped and is selling off

- Gold and Silver are moving lower

- VIX (Volatility Index) just bounced


Many of my readers took full advantage of my recent analysis and trade ideas which is great to hear.  All the different ways individuals used to make money from Friday’s analysis is mind blowin......

The most common trade is the oil one with most traders adding more to Tuesday when the price reached its key resistance level on the chart. Also many traders took partial profits Wednesday locking in 3% or more in two days using the SCO ETF.

It’s amazing how many people like to trade the vix using ETFs. The best trade from followers thus far was an 8% gain in TVIX which was bought 4 days ago anticipating the pop in volatility which I had been talking about last week. Keep in mind ETFs for trading the vix are not very good in general. I stay away from them, but TVIX is the best I found so far.

Currently stocks are oversold falling sharply from the pre-market highs. Meaning stocks have fallen too far too fast and a bounce is likely to take place Thursday.

Also we saw some panic selling hit the market today with 14 sellers to 1 buyer. That level tells me that the market needs some time to recover and build up strength for another selloff later this week or next. We will see this pause unfold when the SP500 drifts higher for a session or two with light buying volume. This will confirm sellers are in control and give us another short setup.

In my Wednesday morning video I explained how/where to set stops when using leveraged ETFs because I know 90% of traders using them do not have a clue as to how to do this and they get shaken out of their trades just before a top or bottom. 

I hope this helps you understand things more...... Over time you will pickup on a lot of new trading tips, tools and techniques with this free newsletter so just give it time and keep trades small until you are comfortable with my analysis.


Chris Vermeulen

Wednesday, December 28, 2011

Market Looks Poised to Reverse Hard to Downside Within Days

The market has been in the process of a near 13 Fibonacci week corrective rally since the October 4th 2011 lows at 1074 on the SP 500. So far the highs reached on the initial rally of 218 points were in October at 1292. That has remained the high water mark as we have consolidated over the last many weeks. I expect the market to complete this counter trend ABC bounce during the Dec 27th-29th window, followed by a good sized correction into Mid-January ahead of the earning season.

The patterns that I am seeing are based on crowd behavioral “Elliott Wave” analysis that I perform at my TMTF and ATP services, and this analysis now favors a 70% probability of a bearish decline beginning very shortly to the 1150’s area on the SP 500 index. To wit, Investment Advisors in recent surveys have over 45% Bulls and only 30% bears with typical tops forming around 47-48% Bulls in surveys. In addition, the rally has been on light volume and recent action seems to be forming a rising “bearish wedge” pattern at the same time.

Reversals in the market often come when few expect it whether they come near bottoms or tops. My most recent forecasts called a bullish turn after Thanksgiving Day when most were bearish in the 1160’s on the SP 500 index. We then rallied 109 points to a 1267 high, which we are retesting now. As we recently pulled back into the low 1200’s, I again said to watch for a major market turn on Dec 20th. We then immediately rallied so far into the 1270 area from the 1203 lows.

Below is a chart I sent to my subscribers on Dec 24th, having projected a continuing rally into the 27th-29th window of trade. If you’d like to benefit from our market turn calls and crowd behavioral based pattern analysis on the SP 500 and Gold and Silver, check us out at Market Trend Forecast to sign up for our free forecast or get 33% holiday discount on our premium gold and silver forcecast.




David A Banister

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Tuesday, December 27, 2011

Merry Christmas Crude Oil Bulls.....From Iran to You!

Crude oil bulls get a Christmas gift from our friends in Iran, but will it hold? Oil closed above $100 a barrel for the first time in nearly two weeks on geopolitical news out of Iran along with the perception of U.S. consumer confidence. The higher close extended the rally off last week's low. This high range close sets the stage for a steady to higher opening on Wednesday.

Stochastics and the RSI remain bullish signaling that sideways to higher prices in crude oil are possible near term. If February extends last week's rally, the reaction high crossing at 102.56 is the next upside target. If February renews the decline off November's high, the 50% retracement level of the October-November rally crossing at 89.46 is the next downside target.

First resistance is the reaction high crossing at 102.56. Second resistance is November's high crossing at 103.28. First support is the 38% retracement level of the October-November rally crossing at 92.73. Second support is the 50% retracement level of the October-November rally crossing at 89.46.

A Play on SCO This Week.....a Short Squeeze & Crude Oil Trade Idea

Saturday, December 24, 2011

Holiday Short Squeeze & Crude Oil Trade Idea

Typically, the week before Christmas, stocks and commodities drift higher due to the lack of participants.  Light volume favours higher prices, which is why stocks want to rise going into the holiday season.
The big money players, like hedge fund managers, are finished for the year. They’re sitting on the sidelines enjoying the holiday season while waiting for their year-end bonus checks.


Friday was an interesting session as stocks and oil reached some key resistance levels.  Below are my thoughts, charts, and a possible trade idea for next week.

Gold & Silver Thoughts:

Looking at the long term charts of gold and silver, I feel they could head much lower in the first quarter of 2012.  The inverse relationship between the dollar index and gold makes me think this is a high probability scenario.

The weekly dollar index chart remains strong at this point and could start another very strong rally any day. Once the dollar starts heading higher, expect precious metals to move down along with equities.

SP500, Dollar and Volatility Index

Below are three charts stacked on top of each other.  They are marked with my analysis and thoughts for next week.  Personally, I don’t feel shorting stocks is a safe play.  The last week of the year, we can see the volatility index (VIX), and the dollar, rise without putting pressure on stocks.  So be aware of that.


TRADE IDEA – View Chart:

Crude oil looks like a great low risk opportunity (a real “Christmas” present!) from Mr. Market. SCO would be the ETF for US based traders.  HOD, which is listed on the TSX, is good for Canadians.  I favour this setup because I don’t feel that oil will be as affected from the holiday bulge as will American equities.

Pre-Holiday Trading Conclusion:

I was planning on avoiding the market Friday, but the charts were calling my name......  The session ended with what looked to be a short squeeze. The remaining short positions didn’t get their expected drop in price.  Consequently, when the traders all started to cover their shorts (buy) just before the close, it caused a strong surge higher.

I do not recommend shorting stocks next week because of the light volume.  However, oil looks good to me.

Just thought I would share my end of the week thoughts, and wish you a Merry Christmas!
Cheers!



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Wednesday, December 21, 2011

Gold and Silver on the Verge of a Big Move

The past few months have been tough for those holding precious metals stocks, PM futures contracts or physical bullion. With silver is trading down 41%, precious metals stocks down 30% and gold 15%. It has people scratching their head.

The question everyone keeps asking is when can I buy gold and silver?

Unfortunately that is not a simple answer. With what is unfolding across the pond and the bullish outlook for the US Dollar index the next move is a coin toss. That being said, I do feel a large move brewing in the market place so I am preparing for fireworks in the first quarter of 2012.

If you step back and look at the weekly trend charts of the dollar index and the SP500 index you will see the strength in the dollar along with a possible stop in equities forming. What these charts are telling is that in the next 3 months we should know if stocks and commodities are going to start another multi month rally or roll over and start a bear market sell off.

With the holiday season nearing, hedge fund managers sitting on the sidelines just waiting for their yearend performance bonuses, I cannot see any large selloff start until January. Selloffs in the market require strong volume and the second half of December is not a time of heavy trading volume. This leaves us with a light volume holiday season, major issues overseas and no big money players willing to cause waves.

So let’s take a quick look at the charts as to where the line in the sand it for the dollar index, gold and silver.

Dollar Index Daily Chart

This week we have seen a strong shift of money out of risk off assets (Bonds) and into risk off (Stocks). This shift is happening before the dollar has broken down indicating the dollar may be topping and could be an early warning of higher stocks prices going into year end. Also note that light volume market conditions also favour higher prices.


Gold Price Daily Chart

Gold could still head lower but at this point it is holding a key support level. If we see the dollar breakdown below its green support trendline then I expect gold to have a firm bounce to the $1675 – $1700.


Silver Price Daily Chart

Silver continues to hold a key support level. If the dollar breaks down the silver should bounce to the $31.50 – $32 area. But if the dollar continues to rally then silver and gold may drop sharply.


Mid-Week Trend Conclusion:

In short, I think the best thing to do is enjoy the holiday season with family and friends. Trading right now is not that great and with the market giving mixed signals. I am keeping my eyes on the market in case it flashes a low risk setup and I will keep you informed if we get one.

Be aware that Monday is a holiday and once January arrives the market could go crazy again. If you want all my swing trades that I personally do be sure to join my alert service The Gold & Oil Guy.Com

Happy Holidays to you and your loved ones!

Cheers,
Chris Vermeulen

ONG: Crude Oil Daily Technical Outlook For Wednesday Dec. 21st

The strong rebound in crude oil and break of 95.99 minor resistance argues that the correction pattern from 103.37 might be completed with three waves down to 92.52 already. Intraday bias is back on the upside for 102.44/103.37 resistance zone first. Break will confirm resumption of the whole rise from 74.95 and should target a test on 114.83 key resistance. On the downside, though, below 92.52 will invalidate this bullish case and bring further pull back towards 89.16/7 support zone.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another low below 74.95.

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

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Tuesday, December 20, 2011

Geopolitical Worries Boost Crude

Crude oil futures jumped nearly 3.6 percent Tuesday, driven by worries that geopolitical tensions could impede global supplies, as well as encouraging U.S. economic data that boosted the stock market as well.

Light, sweet crude for January delivery ended the day up $3.34, at $97.22 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange settled up $3.09, or 3 percent, to $106.73 a barrel. The January Nymex contract expired at the end of trading Tuesday; the February contract, which becomes the front month contract Wednesday, settled up $3.19 to $97.24. Volume was light in both contracts, at about half the average because of the holiday week.

Iranian news dominated the oil market. Leaders of 11 nations including the U.S. and Saudi Arabia were scheduled to meet Tuesday to discuss sanctions of Iranian oil exports. Iran is the world's third largest oil exporter, supplying 2.2 million barrels per day to the world. Though the U.S. does not buy crude from Iran, the fear is that an already tight global supply portfolio would be further pinched. The U.S. and other western countries are targeting Iran's oil and financial sectors in response to Iran's nuclear ambitions. Meanwhile, the Pentagon sought to downplay comments by U.S. Defense Secretary Leon Panetta saying Iran could have a nuclear weapon in a year or less. Separately, Iran invited UN weapons inspectors into the country.

Concerns were also rising over an apparent breakdown in Iraq's central government, just as the oil industry there is beginning to show signs of progress in its recovery from the war. And in Kazakhstan, the government declared a state of emergency in the Caspian oil town of Zhanaozen after clashes between laid-off oil workers and security forces during an anti-government protest, and at least 11 people were reported killed. Kazakhstan exported 1.5 million barrels of oil a day in 2010.

"There is an undercurrent in crude oil with the issues happening in the Middle East, and the massacre in Kazakhstan," said Bill O'Grady, chief market strategist for Confluence Investment Management in St. Louis. "It's just further evidence that you've got unrest in energy producing areas...It's just like, 'Oh my God, another energy producer. What's next, are we going to start having riots in Texas?"

Crude oil was also boosted by a report from the Commerce Department saying housing starts increased to the highest level in 19 months. Stocks soared as well, with the Dow Jones Industrial Average up 325 points in mid-afternoon. Front month January reformulated gasoline blendstock, or RBOB, rose 8.96 cents, or 3.6 percent, to $2.5787 a gallon. January heating oil was up 6.9 cents, or 2.5 percent, to $2.8494 a gallon.

Posted courtesy of Rigzone

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Phil Flynn: The Hopes and Fears!

The Hopes and fears of oil traders are met in the Euro Zone tonight! There is nothing like a good Spanish bond auction and a strong German consumer confidence number to get our minds off Mario Draghi. German confidence unexpectedly gained and Spain sold 7.4 billion dollars in T-bills in a successful bond auction with a reasonable yield of 1.735% on the three-month T-bills, down from 5.11% at the previous sale on Nov. 22, and it paid an average yield of 2.435%, down from 5.227%.

It is all about hopes and fears and that has been the dominate force driving oil this year and in recent days. The hopes that the Euro zone would step up to the table with a big bazooka to put the Euro break up fears to rest were dashed. Mario Draghi is a drag and is making it clear that a Euro bond is highly unlikely. Yet the German consumer confidence is showing that Europe might be more resilient than thought and downgrade fears might not be coming as fast and furious as previously thought .Dow Jones reports that Fitch Ratings says the 'AAA' rating on debt issues of the European Financial Stability Facility (EFSF) largely depends on France and Germany retaining their 'AAA' status.

The revision of the rating outlook on France to negative last Friday implies that the risk of a downgrade of EFSF debt has increased. We affirmed France's 'AAA' status but warned that that there is a slightly greater than 50% chance of a downgrade within the next year or two. This is therefore also the case for the 'AAA' ratings assigned to the EFSF's debt issues, unless additional credit enhancement mechanisms are introduced. The 'AAA' ratings assigned to EFSF debt issues rely on the EUR726bn of irrevocable and unconditional guarantees provided by the euro member states, and on the conservative guidelines the EFSF sets itself regarding debt management and liquidity risk.

Of the guarantees and over guarantees from 'AAA' rated member states, France and Germany provide EUR369.6bn, or over 80%. Although the EFSF could potentially remedy a downgrade of a small 'AAA' guarantor by increasing the size of its cash reserve or through additional credit enhancements, this would be far more challenging if a larger guarantor like France or Germany were downgraded. The primary source of ratings risk for EFSF debt issues is therefore the possibility that one or more of its largest 'AAA' guarantors is downgraded.

Oil may be also getting a boost from the Dow Jones report that, “Saudi King Abdullah is urging neighboring states to join in a formal Gulf union to confront what he called rising threats to their security and stability, as Gulf leaders convened to discuss regional uprisings and growing Arab worries over Iran. You must realize that our security and stability are threatened and we need to live up to our responsibilities," King Abdullah told the leaders of the five other nations of the Gulf Cooperation Council, gathered in Riyadh in their first annual GCC meeting since the Arab uprisings began. "

The Gulf's monarchies, emirates and sheikhdoms risked losing all if they failed to combine their efforts, Abdullah said. "So I ask you to go beyond the stage of cooperation, to a union in a single entity. King Abdullah gave no immediate public details of how he envisioned such a union taking shape, or operating. Gulf officials had said earlier that the two day meeting launched Monday would address greater cooperation in the military realm and others. The GCC comprises Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Oman and Bahrain.” Stay tuned.


Make sure you are getting Phils daily trade levels! Just call him email me at pflynn@pfgbest.com to get your trial and to open your account.

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Monday, December 19, 2011

Crude Oil, Natural Gas and Gold Market Commentary For Monday Evening Dec. 19th

Crude oil closed slightly higher due to short covering on Monday as it bounces off support marked by the 38% retracement level of the October-November rally crossing at 92.68. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If January extends this month's decline, the 50% retracement level of the October-November rally crossing at 89.37 is the next downside target. Closes above the 20 day moving average crossing at 98.10 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 98.10. Second resistance is last Tuesday's high crossing at 101.25. First support is the 38% retracement level of the October-November rally crossing at 92.68. Second support is the 50% retracement level of the October-November rally crossing at 89.37.

Gold closed lower on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If February extends this month's decline, September's low crossing at 1543.30 is the next downside target. Closes above the 20 day moving average crossing at 1688.70 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 1695.50. Second resistance is the 20 day moving average crossing at 1688.70. First support is last Thursday's low crossing at 1562.50. Second support is September's low crossing at 1543.30.

Natural gas closed lower on Monday as it extends this year's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If January extends this year's decline, monthly support crossing at 2.409 is the next downside target. Closes above the 20 day moving average crossing at 3.425 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.271. Second resistance is the 20 day moving average crossing at 3.425. First support is today's low crossing at 3.050. Second support is monthly support crossing at 2.409.

How To Trade Market Sentiment

Crude Oil Bears Take a Clear Near Term Advantage

Crude oil was higher due to short covering in overnight trading as it bounces off the 38% retracement level of the October-November rally crossing at 92.68. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, the 50% retracement level of the October-November rally crossing at 89.37 is the next downside target. Closes above the 20 day moving average crossing at 98.11 are needed confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 98.11. Second resistance is last Tuesday's high crossing at 101.25. First support is the 38% retracement level of the October-November rally crossing at 92.68. Second support is the 50% retracement level of the October-November rally crossing at 89.37. Crude oil pivot point for Monday morning is 93.83.

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Sunday, December 18, 2011

ONG: Crude Oil Weekly Technical Outlook For Sunday Dec. 18th

Crude oil dropped to as low as 92.52 last week as correction from 103.37 resumed. Further decline is expected this week as long as 95.99 minor resistance holds. Current fall should extend to 138.2% projection of 103.37 to 94.99 from 102.44 at 90.86. On the upside, above 95.99 will indicate that a temporary low is at least formed and should flip bias back to the upside for rebound back to 100 psychological level and above.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another low below 74.95.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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


Precious Metals, Equities and Crude Oil Long Term Outlook

Saturday, December 17, 2011

"Murder Cross" in Silver [SLV] is Starting to Get Some Serious Attention

Silver is not looking good here long term, sure we can get a few bounces upwards but an event occurred two days ago that put the nail in this precious metal coffin for at least a few months and possible a 15% decline, that event is the "Murder Cross".   The murder cross is similar to the "Death Cross" of the 50 ma crossing below the 200 ma but the "Murder Cross" is the 70 ema crossing the 200 ema.  This cross eliminates many of the false signals that the "Death Cross" can give.  Here is a link to a post explaining it more.

SLV or  the Silver ETF has been on a steady decline from its high of 50.  The decline has wiped out almost all of the gains from the 10-11 run up with SLV retracing more the 61.8% of its move and it looks like more of a decline can be instore.  The "Murder Cross" on SLV happened 3 times in the last 20 years in 06, 07 and 08.  In 06 SLV dropped 23% before it bounced, in 07 it dropped 10% and in 08 in dropped 25%.  If we use this historical information it is possible for more of a decline in SLV.   In fact a drop of around 18% or 17% would put SLV right at support and its long term trend line a logical support level. ( see second chart below)


Below is a chart of SLV and it highlights the muder cross.  Right now SLV has been able to find support at the low 28's and high 27's.  This was a crucial level for SLV this level of support lead to the breakout to the high 50's.  The more important support is at 26, this was the swing low before the run up and the last support level for a while.  Resistance for SLV is at 30.06 and 32.50, a retrest of 30 is likely but it will be hard to get above that.   The trendline from 2010 should be the final resting spot for SLV as it would be a price target for the murder cross and is a strong established uptrend for SLV.  SLV is not looking health for a long term buy on a technical level and with the occurrence of the "Murder Cross" there is even more bearish sentiment to this metal.


check out more great post from the Pike Trader at  Pikertrader.com


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Friday, December 16, 2011

EIA: Market Changes Contribute to Growing Marcellus Area Spot Natural Gas Trading

Marcellus-area spot natural gas trading (InterContinentalExchange (ICE) day-ahead transactions) has more than doubled from under 1 billion cubic feet per day (Bcfd) to almost 2 Bcfd on average since 2005 (see chart). The largest gains in Marcellus area trading volumes were at the Tetco M3 trading point, up 178% to 0.5 Bcfd and at the Dominion South trading point, up 168% to 0.7 Bcfd since 2005. Key factors likely contributing to increased natural gas spot trading in the Marcellus area include: rapid increases in Marcellus shale gas production; direct deliveries of Wyoming gas to the Ohio/Pennsylvania border through the Rockies Express Pipeline; and increased use of natural gas for power generation.

graph of Spot annual natural gas traded in the marcellus area, 2005-2011, as described in the article text
Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite.
Note: New Marcellus in the graph includes the Leidy, TGP 219, TGP 313, and TGP Zone 4 Marcellus trading points. 2011 includes data through November.

 Several factors are likely contributing to increased natural gas spot trading in the Marcellus area:
  • Marcellus production gains. Bentek Energy, LLC estimates that Marcellus natural gas production now exceeds 4 Bcfd, up significantly in recent years.
  • New trading points. In addition to several new Marcellus production area trading points, the extension of the Rockies Express Pipeline (REX) to Clarington, Ohio led to new natural gas trading points formed to facilitate commercial transactions. REX deliveries to Clarington, Ohio averaged over 1 Bcfd from January through December of 2011.
  • Greater reliance on natural gas for electricity generation. Falling natural gas prices coupled with historically high spot coal prices created incentives for generators to use more natural gas to fuel their plants. Pennsylvania is one state that has seen significant growth in natural gas-fired electric generation.
map of Marcellus area spot natural gas trading points, as described in the article text
Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite. 

Crude Oil? Bah Humbug!

Oil traders need to get visited by the ghosts of Christmas oil trading past, present and future to get that holiday risk taking sprit. Remember those famous Christmas spikes on Iran rumors or when Russia cut off gas supplies to Europe? Yesterday oil traders acted like someone told them there was no Santa Claus the way they pulled in their bull horns and hid from risk.

This is despite the fact that all of the economic data that was released such as weekly jobless claims, the Empire State and Philly Fed Manufacturing numbers and good numbers from FED-EX, should have got the bullish juices flowing, yet after the blood bath the day before, kept traders cautious and fearful. Oh, some Scrooge may point out that the Industrial Production number had a lot to be desired but the preponderance of the evidence suggests that the US economy is indeed improving.

Of course we know what the problem is. The problem is Europe. Europe continues to miss opportunities to try to set the market straight as their aversion to stimulus and euro bonds is holding us back. You can be pro quantitative easing or anti quantitative easing but based on the US data, compare the US debt with record low yields against Europe with record high yields, at least for now quantitative easing seems to be working better than the European inflation aversion. Ben Bernanke may be smiling......Read the entire article.

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Adam Hewison: Five Ways to Improve Your Trading During “Silly Season”

About a year ago I wrote a blog on the “silly season,” as I call it. The silly season starts on December 15 and extends through the first week of January. The silly season has nothing to do with telling jokes and laughing at funny things, but everything to do with trading.

Trading is a serious business. If you want to be successful you have to practice, just like an athlete would. I don’t think there is an athlete out there who just woke up and said I’m going to be a world class athlete and achieved that goal without practicing.

After December 15 most successful traders who made their money during the year are headed to either Florida, Palm Springs, or just taking a break to spend time with family. What makes the silly season, silly?

It has everything to do with the lack of volume in trading. When you have very little volume it is easy for markets to be, forgive me because I am about to say the M word – manipulated – by just a few traders. You do not want to be ending your year at the mercy of markets that are erratic at best. You may as well just head out to Las Vegas and take a shot at the roulette wheel.

So how can you avoid this trading trap? Here’s what I do every year.....

After the 15th I close out all of my positions win, lose, or draw, and say thank you very much for another good year. Once I have cleared my trading book I’m free to enjoy the silly season without falling prey to the big M. I let the markets be the markets, because I know they will be there next year and I want to be prepared physically and mentally to take advantage of them.

That being said, here are my five key recommendations for you during silly season.....

1. Enjoy time with your family and friends.

2. Be appreciative what you have, not what you don’t have. There are a lot more folks that have a whole lot less than you than folks who have more.

3. Give something back. It doesn’t matter what it is, or how small, give something back; it will make you feel good.

4. Enjoy the season. Forget about the markets they will be there next year.

5. Take some quiet time for yourself to regenerate your spirit.

For me, number 5 means sitting in a quiet room by myself and thinking about all of the different things that have happened in the past year. Doing this keeps me grounded and prepares me for the year ahead. This quiet time helps me put everything into perspective and gets me in the right frame of mind for trading in the New Year. This quiet time restores your inner strength, which is something you need in trading.

So there you have it. That is how I avoid silly season and prepare myself for the new trading year.

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Thursday, December 15, 2011

Bears Maintain Near Term Technical Advantage Going Into Fridays Session

Crude oil closed lower on Thursday as it extends Wednesday's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If January extends this week's decline, the 38% retracement level of the October-November rally crossing at 92.68 is the next downside target.

Closes above Tuesday's high crossing at 101.25 would confirm that a short term low has been posted. First resistance is Tuesday's high crossing at 101.25. Second resistance is November's high crossing at 102.44. First support is the 38% retracement level of the October-November rally crossing at 92.68. Second support is the 50% retracement level of the October-November rally crossing at 89.37.

Precious Metals, Equities and Crude Oil Long Term Outlook

Wednesday, December 14, 2011

Precious Metals, Equities and Crude Oil Long Term Outlook Part II

It’s that time of year again and I’m not talking about the holiday season...... What I am talking about is another major market correction which has been starting to unfold over the past couple weeks.

I have a much different outlook on the markets than everyone else and likely you as well. However, before you stop reading what I have to say hear me out. My outlook and opinion is based strictly on price, volume, inter market analysis, and crowd behavior and you should put some thought as to what I am saying into your current positions.

Two weeks ago I sent my big picture outlook to my subscribers, followers, and financial websites warning of a major pullback. You can take a quick look at what the charts looked like 2 weeks ago...... 

Since my warning we have seen the financial markets fall:
SP500  down 2.6%
Crude Oil down 4.4%
Gold down 9.6%
and Silver down 12.2%

If you applied any leverage to these then you could double or triple these returns through the use of leveraged exchange traded funds. The amount of followers cashing in on these pullbacks has been very exciting to hear. The exciting part about trading is the fact that moves like this happen all the time so if you missed this one, don’t worry because there is another opportunity just around the corner.

While my negative view on stocks and precious metals will rub the gold and silver bugs the wrong way, I just want to point out what is unfolding so everyone sees both sides of the trade. I also would like to mention that this analysis can, and likely will change on a weekly basis as the financial markets and global economy evolves over time. The point I am trying to get across is that I am not a “Gloom and Doom” kind of guy and I don’t always favor the down side. Rather, I am a technical trader simply providing my analysis and odds for what to expect next.

Let’s take a look at some charts and dig right i........

Dollar Index Daily Chart:
 

SP500 Futures Index Daily Chart:

Silver Futures Daily Chart:

Gold Futures Daily Chart:

Crude Oil Futures Daily Chart:

Mid-Week Market Madness Trend Analysis Conclusion:

In short, stocks and commodities are under pressure from the rising dollar. We have already seen a sizable pullback but there may be more to come in the next few trading sessions.

Overall, the charts are starting to look very negative which the majority of traders/investors around the world are starting to notice. With any luck they will fuel the market with more selling pressure pushing positions that my subscribers and I are holding deeper into the money.

Now that the masses are starting to get nervous and are beginning to sell out of their positions, I am on high alert for a panic washout selling day. This occurs when everyone around the world panics at the same time and bails out of their long positions. Prices drop sharply, volume shoots through the roof, and my custom indicators for spotting extreme sentiment levels sends me an alert to start covering my shorts and tightening our stops.

Hold on tight as this could be a crazy few trading session........

If you want to get these free weekly reports just  click here to join my free newsletter! 

Chris Vermeulen

OPEC Agrees to 30 Million Barrel Output Limit

OPEC decided to increase its production ceiling to 30 million barrels a day, the first change in three years, moving the group’s supply target nearer to current output. “We have an agreement to maintain the market in balance and we’re going to adjust the level of production of each country to open space for Libyan production,” Venezuelan Energy Minister Rafael Ramirez said after the Organization of Petroleum Exporting Countries meeting ended today in Vienna.

The group won’t set individual quotas for each member nation, a person with knowledge of OPEC policy said earlier today while the ministers were still in talks. The 30 million barrel a day limit is for all of OPEC’s 12 member nations, including Iraq and Libya, United Arab Emirates Oil Minister Mohamed al-Hamli said after the meeting ended.

OPEC is raising its quota to more closely match actual production while at the same time gauging the possibility of a slowing global economy and rising Libyan supply. Its last meeting in June broke up without consensus when six members including Iran and Venezuela opposed a formal push to pump more oil by Saudi Arabia and three.....Read the entire Bloomberg article.


The Currency War Big Picture Analysis for Gold, Silver & Stocks

Tuesday, December 13, 2011

Crude Jumps On False Iran Rumor, But Holds Onto Gains

Crude oil futures leapt more than three percent in just minutes Tuesday on a market rumor that Iran closed a major oil shipping channel, but then pared gains as the rumor proved untrue.

According to the rumor, the Iranian government closed the Strait of Hormuz. The strait, located between Iran and Oman, is the most important oil shipping channel in the world, handling about 33% of all ocean borne traded oil, according to the U.S. Energy Information Administration.

The rumor was picked up on financial blogs and a handful of news web sites, and sent Nymex crude futures rocketing as high as 3.6% over Monday's settlement, to $101.25 a barrel.

An Iranian official later dismissed the rumor, and a spokeswoman for the U.S. Navy's 5th fleet in Bahrain said shipping traffic in the strait was flowing normally. The rumor appeared to be founded on a news item from Monday afternoon, in which a member of the Iranian parliament said its military was preparing to practice closing the straight......Read the entire Rigzone article.


How to Trade Using Market Sentiment & the Holiday Season

Dennis Gartman: The Gold Bull Run is Dead

Calling the death of gold's bull run, and the beginning of a gold bear market, with Dennis Gartman, The Gartman Letter.



Is This December Similar to 2007 & 2008 for Gold & Stocks?

ONG: Crude Oil Daily Technical Outlook For Tuesday Dec. 13th

Crude oil continues to stay in tight range above 97.36 temporary low and intraday bias remains neutral for the moment. As noted before, more consolidative trading would likely be seen below 103.37 high. Below 97.36 minor support will flip bias to the downside for 94.99 and possibly below. But in such case, downside is expected to be contained by 89.16/17 cluster support (50% retracement of 74.95 to 103.37) and bring rebound. On the upside, break of 103.37 will confirm resumption of recent rally and should target 114.83 resistance next.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another below 74.95.

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


Gold’s 4th Wave Consolidation Nears Completion and Breakout

Monday, December 12, 2011

Crude Oil Stochastics and RSI Turn Bearish, Sideways or Lower Prices Likely

Crude oil closed lower on Monday due to concerns over the global economy and the prospect for falling demand near term. A short covering rally tempered early session losses and the high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.

Closes below the reaction low crossing at 94.99 are needed to confirm that a short term top has been posted. If January renews the rally off October's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target.

First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the reaction low crossing at 94.99. Second support is the reaction low crossing at 89.05.

Look for the $100.00 area basis the January contract to offer stiff resistance for any rallies in this market. We would not be surprised to see this market move down to the lower band of its Donchian Trading Channel, around the $95 level.

With two of our Trade Triangles green, giving us a +65 Chart Analysis Score, it still appears as though the under lying elements of this market remain bullish. Long term, and intermediate term traders should be long this market with appropriate money management stops.


Gold’s 4th Wave Consolidation Nears Completion and Breakout

Residual Fuel Consumption in the U.S. Continues to Decline

After reaching a high point of over three million barrels per day (bbl/d) in the late 1970s, demand for residual fuel oil in the United States has steadily declined (product supplied as seen in the chart above is a proxy for demand). Residual fuel is used as fuel for large ships and for electricity generation, industrial process and space heating, and other industrial purposes. Between 2000 and 2010, average annual residual fuel use fell from approximately 900,000 bbl/d to 500,000 bbl/d. It averaged nearly three times that in the 1940s and 1950s. As its name implies, residual fuel oil is the remaining fraction resulting from the crude oil refining process. Because residual fuel is a heavy product, it has limited uses and relatively high emissions.


graph of Residual fuel, U.S. product supplied, as described in the article text
Source: U.S. Energy Information Administration, Petroleum Supply Monthly.
Note: Product supplied is a proxy for demand.
Download CSV Data

Changes on both the residual fuel supply and demand side of the equation are contributing to the downward trend.
Demand The demand-side landscape for residual fuel has changed over the course of the past few decades, particularly in the electric power sector. From 2000 to 2005, natural gas and oil prices tracked closely. Since 2006, the prices of these two fuels decoupled, as rapidly increasing supply drove natural gas prices down. As a result, the power sector began relying more on natural gas and less on residual fuel, except in circumstances where spot natural gas prices soared due to weather-related constraints. Other exceptions include Hawaii, which relies on residual fuel for much of its power generation (58% in 2010). To a lesser degree, Alaska and Florida use residual fuel, and in-city generators in New York City must use a minimum of residual fuel to meet reliability requirements. Other factors accounting for declining generation at residual-fired plants include: the availability of more efficient natural gas combined-cycle units, increased stringency of air emissions, and at times rising sulfur dioxide emissions costs.
Aside from the electricity sector, other major demand sectors, such as transportation, have not seen much change in residual demand over the same period. Residual fuel, often called bunker fuel in this context, continues to power large ships.
graph of U.S residual fuel oil deliveries by end use, as described in the article text
Source: U.S. Energy Information Administration, Fuel Oil and Kerosene Sales.
Download CSV Data

Supply The supply of residual fuel oil from domestic refining has also declined. U.S. refinery yield for residual fuel oil dropped from 5.8% in 1993 to 3.8% in 2010. Refinery yield represents what finished petroleum products are made from crude oil run through refineries' crude distillate units and other downstream processes. Lighter petroleum products, such as motor gasoline and ultra low sulfur distillate, command higher market prices. Therefore, refineries focus their operations to maximize production of those products. By investing in more sophisticated downstream unit capacity, refineries can increase the amount of lighter products from each barrel of crude, and, as a result, lessen the production of heavier products such as residual fuel oil.
Due to rising gross exports and falling gross imports, the United States became a net exporter of residual fuel oil in 2008 (see chart below). U.S. gross exports of residual fuel oil increased steadily since the early 1990s. Additionally, after a sharp decline in gross imports from a high of more than 1,800 thousand barrels per day in 1973 to a low of less than 200 thousand barrels per day in 1995, gross imports have averaged about 350 thousand barrels per day over the last 10 years.
graph of U.S residual fuel oil deliveries by end use, as described in the article text
Source: U.S. Energy Information Administration, Petroleum Supply Monthly.
Download CSV Data

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