Wednesday, February 29, 2012

Let's Take a Look at Why Gold and Silver Collapsed

Did our Trade Triangle Technology get it right on these two metals?

With a Score of -60 on gold this market remains in a trading range. We would not rule out a pullback in gold to the $1,650 level. With our long term monthly Trade Triangle still in a negative red mode, we cannot get 100% excited about this market at the moment. We are not super bearish on this metal, we just need further confirmation with the tools we know are successful in trading gold. Long term term traders should be in short positions in gold with appropriate money management stops.

Gold closed sharply lower on Wednesday [April contract] and below the 20 day moving average crossing at 1745.50 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are diverging and turning bearish signaling that sideways to lower prices are possible near term.

If April renews the rally off December's low, the 75% retracement level of the September-December decline crossing at 1825.20 is the next upside target. First resistance is Tuesday's high crossing at 1792.70. Second resistance is the 75% retracement level of the September-December decline crossing at 1825.20. First support is today's low crossing at 1704.50. Second support is the reaction low crossing at 1652.20.

A possible outside negative engulfing line for silver today, which is surprising given the market action yesterday. We want to be patient and wait to see if this actually happens on Thursday and Friday. Our long term monthly Trade Triangle remains positive on silver. This particular indicator has done extremely well in the past. Long and intermediate term traders should be holding long positions in silver with appropriate money management stops.

Silver posted a key reversal down [May contract for silver] on Wednesday as it consolidates some of the rally off December's low. The low range close set the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 34.306 would confirm that a short term top has been posted.

If May extends the rally off December's low, the 75% retracement level of the August-December decline crossing at 39.521 is the next upside target. First resistance is today's high crossing at 37.580. Second resistance is the 75% retracement level of the August-December decline crossing at 39.521. First support is the 20 day moving average crossing at 34.306. Second support is the reaction low crossing at 32.715.

Just click here for your FREE trend analysis of gold ETF GLD

Why Has Crude Oil Stalled?

Let's take look at crude oil with a critical eye and find out why this market has stalled.

The crude oil market is now getting into an oversold condition, which may be setting the stage for a perfect buying opportunity. We remain positive on this market. We are expecting oil to regroup over the $105 level and generate enough energy to push it to new highs over the $110 area. We are looking for crude oil to make its highs probably somewhere in the May period.

With a Score of +75, this market is in an emerging trend to the upside. We remain longer term positive on this market. With our monthly and weekly Trade Triangles in a positive mode, we expect we will see further gains in crude oil. All traders should be long this market with appropriate money management stops.

Crude oil closed higher on Wednesday ending a two day correction off last week's high. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 102.52 would confirm that a short term top has been posted.

If April extends this winter's rally, the 2011 high crossing at 114.09 is the next upside target. First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 106.05. Second support is the 20 day moving average crossing at 102.52.

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Musings: Did The Oil Sands Win Over Europeans With Report?

Last week the battle over the "dirty" oil from the oil sands reached a crescendo with the release of a study claiming that on a global scale, oil sands carbon emissions are not as bad as those that would be released by burning all the world's coal resources. Moreover, the study's conclusion shows oil sands emissions are actually less than those from other heavy crude oils being burned.

This report came merely days before a decision requiring greater environmental offsets for use of the fuel was to be rendered by the European Union (EU) Fuel Quality Directive Committee composed of experts from each of the 27 member countries of the EU. This committee was considering a proposal to revise the EU Fuel Quality Directive that has a mandatory target for fuel producers and suppliers to reduce greenhouse gas emissions (CO2) by 6% from 2010 levels by 2020.

The study's conclusion shows oil sands emissions are actually less than those from other heavy crude oils being burned.

While the proposal would not have banned the importation and use of oil sands bitumen, it would have assigned it a carbon footprint that is 23% greater than that of conventional crude oil. This would force users of oil sands bitumen to make significant improvements in their operations to offset the additional carbon emissions or buy green credits from others under the mandatory greenhouse gas reduction target.

For all practical purposes, the ruling would have been the equivalent of a ban. For Canada, this would be a problem as other governments around the world might use the EU determination as grounds to ban or restrict the use of this bitumen. That would shrink the markets available for this rapidly expanding output, with potentially significant implications for Canada's and Alberta's economy and employment.

The Committee failed to approve the policy as the vote was 89 for, 128 against with 128 abstentions. The Committee was using a qualified majority voting system that awards more votes to larger country members. Belgium, Germany, France, Cyprus, the Netherlands, Portugal and the U.K. all abstained. Had the proposal received 255 votes the ruling would have gone immediately into law. The proposal will now be considered in June by the Council of Europe, which is composed of the ministers from the 27 member countries in the EU.....Read the entire "Musings From the Oil Patch" article.

Explosive Small Cap Stock Trading Service

Tuesday, February 28, 2012

Is a Short Term Top in for Crude Oil?

Crude oil closed lower due to profit taking on Tuesday as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top might be in or is near.

If April extends this month's rally, the 2011 high crossing at 114.09 is the next upside target. Closes below the 20 day moving average crossing at 102.13 would confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 105.49. Second support is the 20 day moving average crossing at 102.13.

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Crude Oil Declines the Most in Five Weeks

Crude oil fell the most in more than five weeks as U.S. orders for durable goods dropped in January by the most in three years, signaling slower economic growth and lower fuel demand.

Futures declined 1.9 percent in New York as data from the Commerce Department showed bookings for goods meant to last at least three years slumped 4 percent. An Energy Department report tomorrow will show U.S. crude supplies rose to the highest level in five months last week, according to the median of analyst responses in a Bloomberg News survey.

“The durable goods numbers do not paint a picture of robust demand going forward,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re going to see builds in this week’s report, which is also putting downward pressure on prices.”

Read the entire Bloomberg article

Secrets of the 52 Week High Rule

Monday, February 27, 2012

Low Range Close in Crude Oil Gives The Bears Technical Advantage For Tuesday

Crude oil [April contract] posted an inside day with a lower close on Monday as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends this month's rally, the 2011 high crossing at 114.09 is the next upside target. Closes below the 20 day moving average crossing at 101.75 would confirm that a short term top has been posted. First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 104.95. Second support is the 20 day moving average crossing at 101.75.

Natural gas [April contract] 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 neutral signaling that sideways trading is possible near term. If April renews the multi year decline, monthly support crossing at 1.960 is the next downside target. Closes above the reaction high crossing at 2.942 are needed to confirm that a short term low has been posted. First resistance is the reaction high crossing at 2.942. Second resistance is January's high crossing at 3.210. First support is January's low crossing at 2.438. Second support is monthly support crossing at 1.960.

Gold [April contract] closed lower due to profit taking on Monday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends the rally off December's low, the 75% retracement level of the September-December decline crossing at 1825.20 is the next upside target. Closes below the reaction low crossing at 1706.40 are needed to confirm that a short term top has been posted. First resistance is last Thursday's high crossing at 1789.50. Second resistance is the 75% retracement level of the September-December decline crossing at 1825.20. First support is the reaction low crossing at 1706.40. Second support is the reaction low crossing at 1652.20.

What To Expect in the Final Week Of February for Precious Metals, Gold Stocks & Dollar

What To Expect in the Final Week Of February for Precious Metals, Gold Stocks & Dollar

This morning we are seeing the US Dollar index move higher retesting a short term breakdown resistance level. What this means is that the dollar fell below support and is not slowing drifting back up to test the breakdown level. As we all know once a support level is broken it then becomes resistance. So if that holds true with the current move in the dollar we should see stocks and commodities find a short term bottom and continue higher today or tomorrow from the looks of things.


Gold has been pulling back the past couple trading session on light volume which healthy price action. It has done the opposite of what the dollar did above. Gold broke through a key resistance level and is slowly drifting back down to test the breakout level to see if it is support. If so then gold should continue higher in the coming days.



Both silver and gold miner stocks are lagging the price of gold. They have yet to break through their key resistance levels. That being said it could happen an day now as they have both been flirting with that level for a couple trading sessions now.


Crude oil continues to hold up strong and is headed straight for its key resistance levels without any real pullback. Chasing price action like this is not something do often because risk reward is not in your favor. I am staying on the sidelines for oil until I see a setup that has more potential and less risk.


The equities market remains in a strong uptrend at this time. I do feel a 1-3 weeks pause/pullback could take place at any time but in the grand scheme of things we could be only half way through this runaway stock market rally as noted in the video.


The equities market is going to gap down this morning which is typical in a bull market. Remember. in an uptrend the stock market tends to gap lower at the open and close higher into the close. And it’s the opposite in a down trend with stocks gapping higher and sell off through the trading session.

Watch Chris Vermeulens detailed video analysis for this week at The Gold and Oil Guy Videos

Chris Vermeulen
The Gold and Oil Guy .Com

Sunday, February 26, 2012

EIA: Asia is the World's Largest Petroleum Consumer

animated map of World petroleum consumption by region, 1980-2010
2010

Asia surpassed North America as the largest petroleum consuming region in 2008. Asian demand surged nearly 15 million barrels per day from 1980 to 2010, an increase of 146%. North America's petroleum consumption increased 16% between 1980 and 2010. Global petroleum consumption increased 36%, nearly 23 million barrels per day, during the period.

Together, the Middle Eastern, Central & South American, and African share of total global oil demand grew from 11% in 1980 to 20% in 2010 (see chart below). European demand for petroleum decreased 5% from 1980 to 2010, while consumption in the Former Soviet Union fell 55% in the same period.

graph of World petroleum consumption by region, 1980-2010, as described in the article text

Source: U.S. Energy Information Administration, International Energy Statistics.

Note: Percents on graph represent that region's share of global petroleum production in that year. Percents do not sum to 100% for each year because the graph does not include Oceania, which only accounted for 1% of global consumption each year. 

Saturday, February 25, 2012

Just Released, 50 Top Movers in 2012

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Enjoy,
Ray @ The Crude Oil Trader

ONG: Crude Oil Weekly Technical Outlook For Saturday February 25th

From the staff at Oil N Gold......

Crude oil's rally continued last week as expected and reached as high as 109.95 so far. Initial bias remains on the upside this week and current rise should target a test on 114.83 key resistance next. On the downside, below 107.95 minor support will turn bias neutral and bring consolidations first before staging another rise.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

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.

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


Today’s Stock Market Club Trading Triangles

Friday, February 24, 2012

Is Crude Oil Topping Out or Resting to go Higher?

April crude oil was slightly higher overnight as it extends the rally off October's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends this month's rally, the 87% retracement level of 2011's decline crossing at 109.54 is the next upside target. Closes below the 20 day moving average crossing at 101.23 would confirm that a short term top has been posted.

First resistance is Thursday's high crossing at 108.74. Second resistance is the 87% retracement level of 2011's decline crossing at 109.54. First support is the 10 day moving average crossing at 103.83. Second support is the 20 day moving average crossing at 101.23. Todays pivot point for crude oil is 107.34.

After the recent run up in crude oil, we feel the market is now regrouping to gather strength to move higher. See our special report on crude oil. We are looking for crude oil to make it’s highs probably somewhere in the May period. With a Score of +100, this market is in a strong trend to the upside.

We remain longer term positive on this market. With our monthly, weekly and daily Trade Triangles in a positive mode, we expect we will see further gains in crude oil. Traders should be long this market with appropriate money management stops.


Make Sure to Check out today's 50 Top Trending Stocks

Thursday, February 23, 2012

Natural Gas Pipeline Capacity Additions in 2011

graph of Natural gas pipeline capacity expansions, 2011, as described in the article text

The U.S. Energy Information Administration estimates that U.S. natural gas pipeline companies added about 2,400 miles of new pipe to the grid as part of over 25 projects in 2011. New pipeline projects entered service in parts of the U.S. natural gas grid that can be congested: California, Florida, and parts of the Northeast (see map above). Only a portion of this capacity serves incremental natural gas use; most of these projects facilitate better linkages across the existing natural gas grid.

By convention, the industry expresses annual capacity additions as the sum of the capacities of all the projects completed in that year. By this measure, the industry added 13.7 billion cubic feet per day (Bcf/d) of new capacity to the grid in 2011. The six largest projects put into service in 2011 added 1,553 miles and about 8.2 Bcf/d of new capacity to the system. Much of this new capacity is for transporting natural gas between states rather than within states. Golden Pass, Ruby Pipeline, FGT Phase VIII, Pascagoula Expansion, and Bison Pipeline projects added 6.1 Bcf/d, or about 80%, of new state to state capacity.

Natural gas pipeline capacity additions in 2011 were well above the 10 Bcf/d levels typical from 2001-2006, roughly the same as additions in 2007 and 2010, but significantly below additions in 2008 and 2009 (see chart below). Capacity added in 2008 and 2009 reflected a mix of intrastate and interstate natural gas pipeline expansions, related mostly to shale production, liquefied natural gas (LNG) terminals, and storage facilities.

graph of Natural gas pipeline capacity additions, 2001-2011, as described in the article text


Just click here for your FREE trend analysis of FCG, the Natural Gas ETF

Crude Oil Bulls Maintain Advantage Inside New Trading Range

Crude oil Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends this month's rally, the 87% retracement level of 2011's decline crossing at 109.54 is the next upside target. Closes below the 20 day moving average crossing at 100.75 would confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 106.72. Second resistance is the 87% retracement level of 2011's decline crossing at 109.54. First support is the 10 day moving average crossing at 102.88. Second support is the 20 day moving average crossing at 100.75. Thursdays pivot point is 106.20.


Check out today's 50 Top Trending Stocks

Wednesday, February 22, 2012

Understanding The Basic Language of Option Trading

The peculiar vocabulary and concepts inhabiting an options trader’s thoughts are often the source of confusion to visitors to my world. I have often pondered that learning to understand options is a lot like learning a foreign language. When you arrive in the country whose language you seek to learn, you need a functional vocabulary immediately.

In order to be able to understand my world, I thought it would be helpful to discuss a bit of my language since it is helpful to grasp a few basics. I want to touch on some of the basic concepts necessary to form the basis for a functional language we can use to communicate concepts underlying a rational (hopefully) thought process leading to trade design and management.

In ruminations to come we will return to these fundamental concepts and begin to understand their function in the dynamic world of an options trader. The nuances of their specific structures are beyond the scope of this blog.  We will return to consider these factors in virtually every trade because they re-appear each and every day in my world. For today, just shake their hands and remember their names.

One point not often discussed is the way in which options are priced. The quoted option price is in reality the sum of two separate components. These are referred to as the intrinsic and the extrinsic portions of the premium. I think of these as steak and sizzle respectively.

As I type, AAPL has closed at around $395. The January 390 call has 41 days to expiration and could have been bought for $18.90. Of this sum, $5 represents intrinsic premium and $13.90 represents extrinsic or time premium.

This is an important distinction because it is the extrinsic premium which is subject to time decay and change due to variations in implied volatility. We will get to a discussion of implied volatility in next week’s missive.

The intrinsic premium is subject to change solely due to changes in the price of the underlying security. There is no sizzle in the intrinsic premium; you can buy the option today, exercise it to buy stock, sell the stock, and pocket the $5. Of course, your trading career will not last long with that sort of trade, but my point is that the intrinsic premium has an easily calculable true value.

The situation with the extrinsic premium is quite different. The value changes not only with time to expiration but also with the constantly changing implied volatility. It is for this reason that an option trader must be very careful with this extrinsic component. Depending on the specific option under consideration, extrinsic premium may represent all, a portion, or a trivial amount of the entirety of the option premium.

Another important concept is that of the “moneyness” of an option. An individual option can be classified in one of three categories of “moneyness:”
  • At the money
  • In the money
  • Out of the money
At the money options by definition consist of a single strike price. Both in the money and out of the money strikes usually contain several individual strikes within their groups.

In our example of AAPL, the at the money strike is the 395 strike. The in the money strikes consist of all calls with strike prices below 395 and all puts with strike prices above 395. The out of the money strikes consist of all calls above the 395 strike and all puts below the 395 strike.

Obviously since the price of the underlying defines the category into which an option is classified, the category into which an individual option fits is fluid and changes dynamically with the price of the underlying asset.

The reason for taking the time to discuss in some detail this classification of “moneyness” is that there are important reliable characteristics of each type of option.

At the money options characteristically contain the absolute greatest dollar amount of extrinsic premium. In the money options have the least amount of extrinsic premium. Out of the money options consist entirely of extrinsic premium, and therefore only contain sizzle......no steak can be found there.

Because the functional characteristics of these three categories of options differ, it is a basic strategy to combine options of different “moneyness” to achieve trades with the best probability of success and the highest risk/reward scenarios.

For example, buying an in the money call and selling an at the money call gives birth to a call debit spread, a high probability trade structure for the trader who is bullish in the underlying.

Next week we will cover the stealth concept of option trading, implied volatility. Failure to understand the impact of this variable is the most common cause of beginning options traders’ failure to succeed.

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Tuesday, February 21, 2012

The Long Term Fundamental Case for Gold

A quick glance at most of the headlines over the weekend and the primary focus seemed to be either calling a near term top in domestic equity indices or a focus on the Greek debt situation. Why is anyone even paying attention to what is going on over there? Until the ISDA declares a default where the underlying Credit Default Swaps (CDS) are triggered, it is all just noise.

The ECB has broken the rule of law by placing itself as the senior creditor ahead of private creditors, the Greek government is trying to pass retroactive legislation to trap private sector creditors holding out of the PSI, and the leader of Greece was not even elected by the people of Greece – how much more manipulation and insanity do we need to monitor?

Similar to the price action since 2008, central banks around the world control everything from financial markets to the ascent of political leaders. These same political leaders help central bankers and planners control policy and decision making at the highest government levels in Europe and around the world. It would seem that the United States should change the motto from “We the People” to “We the Bankers.”

However, there is one particular asset class that even the central bankers have a hard time controlling. While they can impact short term price action through direct currency manipulation initiatives, in the longer-term gold is likely to move in only one direction, higher.

The price action on Tuesday reminded market participants that actions such as the Greek bailout come at a cost. Quantitative easing and/or printing money (depending on what one wishes to call the practice of producing fiat currency out of thin air) has a direct impact on the price of gold.

Many financial pundits argue that gold has no utility, but what they fail to recognize is that gold is the senior currency to all other fiat currencies. Silver is also a form of currency and is senior to all other fiat currencies as well. While one can draw the utility of gold into question, the idea that gold is the senior most currency to all other fiat currencies is not new.

The Constitution of the United States of America, which is over 200 years old, refers to gold and silver as forms of payment. Looking back thousands of years the Romans used gold coins as a form of currency. The idea that gold and silver are currencies is certainly not a grandiose thought or a stretch of historical concept. Trying to depict gold as a worthless asset depends on your view and consideration of fiat currency.

There are those that would argue that the Federal Reserve of the United States is not actively manipulating economic conditions domestically or abroad. For those that view gold as a poor investment or hedge against currency devaluation need to consider the charts illustrated below. The chart below was produced by Thomas Gresham of Gresham’s Law.

Total Asset Growth of the Federal Reserve System – 1915 – 2012

It is rather obvious by looking at this chart that the Federal Reserve has actively sought to enter domestic and foreign financial markets. The surge in balance sheet assets serves to prove how far the Federal Reserve Bank is willing to go to maintain markets which seemingly are only allowed to move higher over time.

This chart is bearish for nearly any form of paper backed assets. The above referenced chart is long term bearish for the Dollar and Treasuries and long term bullish for physical gold and silver. As the Federal Reserve continues to debase the U.S. Dollar in concert with other central banks’ monetary easing programs, gold and silver prices over time are destined to move higher in virtually every form of fiat currency.

During the same time frame that the Federal Reserve has seen its balance sheet grow exponentially, the rapid rise of M2 money supply is staggering. The long term chart of M2 is compared to gold futures in the charts presented below.

M2 Money Stock


Gold Futures Monthly Chart

It is rather obvious what has happened to the price of gold as the M2 money supply has grown. The idea that the Federal Reserve has not already destroyed a significant amount of the purchasing power of the Dollar can easily be refuted by the two charts shown above.

In the short term, gold and silver could suffer from a pullback, but in the intermediate to longer term it is unlikely that we have seen the highs of this bull market for either metal. As long as central banks around the world continue to print money and expand their balance sheets gold and silver will remain in a long term bull market. The daily chart of gold futures is presented below.

Gold Futures Daily Chart

As can be seen above, it is not out of the question that we could see gold pullback to test one of the key moving averages in coming days/weeks. However, I expect the key support area to hold in the event of a sharp selloff. Ultimately, I expect to see a breakout over the resistance zone in the days/weeks ahead. However, I would not be surprised to see gold consolidate or work marginally lower from current prices before breaking out to the upside. Right now the primary threat in this fledgling gold rally is a short term spike higher in the U.S. Dollar. The primary catalyst which could drive a flight to the Dollar involves the sovereign debt situation in Greece and the Eurozone as a whole.

While the short term price action may be bearish, the intermediate to longer term time frames are quite bullish for metals as central banks will continue to race to debase their currencies. Quantitative easing in the U.S. and around the world will become pervasive and gold prices could potentially soar in value. The data from the Federal Reserve Bank itself suggests that they are indeed increasing the money supply. As time has passed, the money supply and gold have seemingly grown in lockstep with one another. Surely inquiring minds do not consider this mutual relationship between gold and the money supply to be purely coincidental.

As further evidence that the Federal Reserve continues to use quantitative easing to manipulate asset prices through direct entry into financial markets, a chart of the velocity of M2 clearly depicts that the velocity of money is declining. I am not an expert regarding macroeconomic data, but if the velocity of money is declining to 1960’s levels would it be a stretch to say that we may be going through a period of stagflation? The chart below illustrates the Velocity of M2 Money Stock courtesy of the St. Louis Federal Reserve Bank.

Velocity of M2 Money Stock

For those unfamiliar with the term velocity of money, it is simply the rate of turnover in the overall money supply. The velocity of M2 is expressed as the number of times that a Dollar is used to purchase final goods or services which are included in the total gross domestic product.

Conclusion
The short term technical picture in gold is a bit suspect due to overhead resistance and recent U.S. Dollar strength. However, the longer term macro factors that impact the value of the U.S. Dollar and precious metals are all telling us the same thing.

As time wears on and central banks do even more to prop up the broader economy and failing financial institutions, it is without question in my mind that gold and silver will both benefit handsomely from these decisions being made by central bankers from around the world.

Ultimately, I am very bullish of gold and silver in the intermediate to longer-term, but in the immediate short term frame gold could consolidate or pullback before breaking out to the upside.


Global Jitters Send Crude Oil Higher and the Dow Hits 13,000!

Global jitters send crude oil higher! Let's check out our Trade Triangle technology to analyze and figure out oil’s next big target.

We were looking for a close in the April contract over the $103.38 level, that took place last Friday and we topped today. Today’s action we consider positive. See our special report on crude oil. We are looking for crude oil to make it’s highs probably somewhere in the May period.

With a Score of +100, this market is in a strong trend to the upside. We remain longer term positive on this market. With our monthly, weekly and daily Trade Triangles in a positive mode, we expect we will see further gains in crude oil. Traders should be long this market with appropriate money management stops.

March crude oil closed higher on Tuesday and above the 75% retracement level of 2011's decline crossing at 105.10 as it extended this month's rally. The high range close sets the stage for a steady to higher opening on Wednesday.

Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If March extends this month's rally, the 87% retracement level of 2011's decline crossing at 110.00 is the next upside target. Closes below the 20 day moving average crossing at 99.71 would confirm that a double top with January's high has been posted.

First resistance is today's high crossing at 106.07. Second resistance is the 87% retracement level of 2011's decline crossing at 110.00. First support is the 10 day moving average crossing at 101.05. Second support is the 20 day moving average crossing at 99.71.


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# 1 Trading Tip: DON’T FIGHT THE MARKET MOVE WITH THE MARKET!

Sunday, February 19, 2012

Gold And Silver Stuck In A Holding Pattern

From the staff at The Technical Trader......

The SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) are both trading slightly lower this morning. These two precious metals will usually trade inverse to the U.S. Dollar, therefore, traders should follow the dollar closely. Short term traders can watch for intra-day support on the GLD around the $167.00, and $166.00 levels. The SLV will have intra-day support around the $32.25, and $31.80 levels.

Some other ways to trade the gold and silver markets are to use the Sprott Physical Gold Trust (PHYS),Sprott Physical Silver Trust ETV (PSLV), and the iShares Gold Trust ETF (IAU). All of these trading vehicles trade in a very similar fashion.





Chinese Internet Stocks Are The Weak Link Today
This morning, all of the leading Chinese internet stocks are declining lower. Baidu Inc (BIDU) is considered the leading Chinese ADR in the market. Today, BIDU stock is trading lower by $2.83 a share. Short term traders should watch for intra day support around the $137.00, and $135.00 levels. The daily chart is holding up fine for BIDU at the moment.

Some other leading Chinese internet stocks that are declining lower this morning include Netease.com Inc (NTES), Sina Corp (SINA), and Sohu Corp (SOHU). All of these stocks have different daily charts, however, these stocks will often follow BIDU closely intra day.


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ONG: Crude Oil Weekly Technical Outlook For Sunday Feb. 19th

From the staff at Oil N' Gold .........

Crude oil rose to as high as 104.14 last week and the break of 103.74 resistance confirmed resumption of 74.95. Initial bias remains on the upside this week and current rally should head towards 114.83 key resistance next. On the downside, break of 100.84 minor support is needed to signal short term topping. Otherwise, near term outlook will remain bullish even in case of retreat.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

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.

WTI crude oil jumped to a 9 month high of 104.14 before ending the week at 103.24. The prompt month contract gained +4.63% during the week as driven by stronger than expected US data and unexpectedly decline in oil inventory. Brent crude oil also soared almost +2.0% although the Greek rescue deal dragged on. Tensions over Iran intensified.

Last week, there was conflicting news about oil exports from Iran to Europe. It was reported that Iran had decided to halt the supply of its crude to Europe before EU sanctions came into effect. However, it was denied by both spokesmen of both parties.

Saeed Jalili, Iran's top nuclear negotiator, wrote a letter last week to the EU's foreign policy head Catherine Ashton to seek negotiations about its nuclear program at the 'earliest possibility'. US' Secretary of State Hillary Clinton and Ashton said they and allies are reviewing the letter to determine next steps.

How the situation evolves remains highly uncertain and military actions from either side cannot be ruled out. This should continue to support oil prices.

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

Friday, February 17, 2012

The New Bull Market.....and it's OIL!

Today we will use our Trade Triangle Technology and figure out Oil’s next big move.

It appears as though the crude oil market [April contract] is coiling up and getting ready to spring upwards.

Here is our 3 main reasons for being bullish on crude oil.

# 1: All our Trade Triangles are green indicating that a very strong trend is in place.

# 2: Crude Oil tends to make major lows every eight or nine months (last major low in October) look at the weekly chart on the video and I’ll show you this.

# 3: The Crude Oil market tends to make a major high every 11 or 12 months.

Presently we are about 6 to 7 weeks away from making a major high in Crude. This cyclic pattern, if it persists, should push Crude up and into a new 6 week high in late March or early April. A move and close on Friday over $103.38 should be viewed as very bullish for Crude Oil, indicating sharply higher levels to come in the weeks ahead.

Big Picture: Strong Trend +100
Trade Triangles: Long Term = Bullish....Intermediate Term = Bullish....Short-Term = Bullish

MarketClub scoring: Trading Range (50 to 65) : Emerging Trend (70 to 80) : Strong Trend (85 to 100)

March crude oil was higher overnight as it extends this month's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends this month's rally, January's high crossing at 103.90 is the next upside target. Closes below the 20 day moving average crossing at 99.36 would temper the near term bullish outlook.

First resistance is the overnight high crossing at 102.95. Second resistance is January's high crossing at 103.90. First support is the 20 day moving average crossing at 99.36. Second support is this month's low crossing at 95.44.


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As with any market analysis there are no guarantees. Always use stops to protect capital and never trade with funds that you cannot afford to lose. With our monthly, weekly and daily Trade Triangles all in a positive mode, we expect to see further gains in Crude Oil.

Thursday, February 16, 2012

Did the SP 500 Just Peak at 1356?

This is somewhat of a things that make you go hmmmmmm exercise, but lets examine this 1356 number for a second here. The SP 500 hit 1356 today and put on the brakes and reversed down to 1341 in a possible terminal top move.

1356 actually has fibonacci relationships. If we take the last major rally which was from the Summer 2010 lows:

1010-1370 (May 2011 highs)

360 points

.786 of 360 is 283 points

Take 283, add it to the 1074 October lows…. you got 1356/57

That would mean this last rally so far is .786 of the 2010-11 rally.

Also, 1356/57 is right in my 1352-1376 pivot ranges for a Major 3 top as well

Evidence is mounting for a good sized correction here is my point.

Possible count, though many will argue not valid:

Wave 1- 666 to 1221- 555 points
Wave 2- 1221-1010- 211 points, .38% of 1
Wave 3- 1010-1370 360 points, .61% of 1
Wave 4- 1370-1074- 296 points… 38% of 1-3 (A bit more than 38%)
Wave 5- 1074-1356 .786 of 3

Only rule violation here is Wave 4 would have delved into wave 1, which is a no-no for most E wavers. However, I would argue that 4 often does delve into the wave 1 arena and legitimately, but that is a topic for another article.

Nonetheless… pay attention to the fibonacci relationships… if anything they may be warning of 1356 as an interim high and top with correction starting.  This would either be a 4th wave down with the 5th and final wave up left… or we topped at 1356. A drop below 1337 will confirm a correction at minimum to 1310 and then 1295 ranges.

Just food for thought…...we have been lightening our positions and raising stops at my ATP trading service.  If you’d like to have regular updates on the SP 500, Gold and Silver so you can benefit from major pivots ahead of the crowd, check us out at Market Trend Forecast for a coupon offer.

Wednesday, February 15, 2012

Crude Oil Bulls Take Charge as Iran Cuts Shipments to Europe

Crude oil closed up $1.15 [March contract] a barrel at $101.89 today, close to a five week high. Bolstered by news that Iran has cut oil shipments to Europe and a steep decline in inventory in the U.S. for the first time in 4 weeks. Prices closed nearer the session high today and hit another fresh four week high. Crude oil bulls have the overall near term technical advantage and have gained some upside momentum recently.

Natural gas closed down 9.4 cents [March contract] at $2.438 today. Prices closed nearer the session low today. Bears have the solid overall near term technical advantage. The next upside price breakout objective for the bulls is closing prices above solid technical resistance at $2.844.

Gold futures closed up $11.60 [April contract] an ounce at $1,729.30 today. Prices closed near mid range today as bargain hunters stepped in to buy the recent dip. The key outside markets were mostly bullish for gold today, the U.S. dollar index was steady weaker and crude oil prices were higher. Gold bulls still have the overall near term technical advantage, but need to show more power soon to suggest a near term price uptrend can be restarted.


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Tuesday, February 14, 2012

Two Short Term Scenarios for the S&P 500 Index

For the first time since the last week of December of 2011, the S&P 500 Index closed lower on the weekly chart. Recently I have been discussing the overbought nature of stocks based on a variety of indicators. However, the real question that should be asked is whether last week was just a short term event or if we see sustained selling in coming weeks.

The issues occurring in Greece spooked the markets somewhat on Friday as Eurozone fears continue to permeate in the mindset of traders. The U.S. Dollar Index is the real driver regarding risk in the near and intermediate term future. If the Dollar is strong, market participants will likely reduce risk. However a weakening Dollar will be a risk-on type of trading event which could lead to an extended rally in equities, precious metals, and oil.

Friday marked an important day for the U.S. Dollar Index futures as for the first time in several weeks the Dollar held higher prices into a daily close. The U.S. Dollar appears to have carved out a daily swing low on the daily chart from Friday. Furthermore, the potential for a weekly swing low at the end of this week remains quite possible. The chart below illustrates how the 100 period simple moving average has offered short term support for the past few weeks.

U.S. Dollar Index Futures Daily Chart


I would also point out that the MACD is starting to converge which is a bullish signal and the full stochastics are also demonstrating a cross on the daily time frame. As long as the 100 period moving average holds price, a rally is likely in the U.S. Dollar Index in coming weeks.

Should that rally play out, it will likely push risk assets lower. My primary target for the S&P 500 would be around the 1,300 – 1,310 price range if the selloff transpires. It is important to note that  headlines coming out of Europe could derail this analysis in short order.

Assuming that a selloff in the S&P 500 occurs it will present a difficult trading environment for market participants. Market participants are going to be in a tough position around the 1,300 price level. A rally from 1,300 could  serve to test the 2011 highs. In contrast, a confirmed breakdown of the 1,300 price level could initiate a more significant selloff towards the 1,250 area.

Should price move towards the 1,300 price level the bulls and bears will be battling it out for intermediate control of price action. This is my preferred scenario for the short term time frame, but I would only give it about a 60% chance of success at this point in time. We simply need more time to see how price action behaves the first few session of the forthcoming week.

S&P 500 Index Bearish Scenario


The alternate scenario which has about a 40% chance of success would be a sharp rally higher which likely would be produced by news coming out of Greece and/or the Eurozone that pushes the Euro higher. Right now risk is high due to the sensitivity of price to headline risk. With that said, the bullish alternative scenario is shown below.

S&P 500 Index Bullish Scenario

At this point we just do not have enough price information to give us clarity regarding the most probable outcome. The price action in the Euro is going to drive price action for the S&P 500 and other risk assets in weeks ahead.

Anything is possible in the short term, but I have to give a slight edge to the bears simply based on the price action Friday and the fact that almost every indicator I follow is screaming that the equities market is severely overbought. The price action this week should be telling. Headline risk is excruciatingly high, trade safely in the coming week!


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