Crude Oil Trader

Crude Oil, Gold and Natural Gas Market Commentary For Thursday January 26th

2012-01-26T21:10:00.000-08:00

March crude oil closed higher on Thursday due to light short covering. Profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are still possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted. First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

How To Trade Market Sentiment

April gold closed higher on Thursday as it extends the rally off December's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought 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 62% retracement level of the September-December decline crossing at 1772.28 is the next upside target. Closes below the 20 day moving average crossing at 1636.60 would confirm that a short term top has been posted. First resistance is today's high crossing at 1734.50. Second resistance is the 62% retracement level of the September-December decline crossing at 1772.80. First support is the 10 day moving average crossing at 1670.50. Second support is the 20 day moving average crossing at 1636.60.

How to Use Money Management Stops Effectively

March natural gas closed lower on Thursday ending a three day short covering rally off Monday's low. Stochastics and the RSI are turned bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 2.807 are needed to confirm that a short term low has been posted. If March renews the multi-year decline, monthly support crossing at 1.960 is the next downside target. First resistance is the 20 day moving average crossing at 2.807. Second resistance is January's high crossing at 3.153. First support is Monday's low crossing at 2.289. Second support is monthly support crossing at 1.960.

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EIA: Domestic Supply of Liquid Fuels Projected to Increase, Resulting in Fewer Imports

2012-01-26T17:51:00.000-08:00

U.S. dependence on imported liquids declines through 2035 in the 2012 Annual Energy Outlook (AEO2012) Reference case projection, primarily as a result of growth in domestic oil production, an increase in bio fuels use, and slower growth in consumption of transportation fuels. In this projection, net petroleum imports as a share of total U.S. liquid fuels supplied drop from 49% in 2010 to 36% in 2035.

Net petroleum imports are projected to make up a smaller share of total energy consumption in response to modest economic growth, increased efficiency, growing domestic oil production, and continued adoption of nonpetroleum liquids. Although not included in the Reference case, proposed fuel economy standards for future vehicles (model years 2017 through 2025) would further reduce projected liquids use and the need for imports.

Projections in the Annual Energy Outlook 2012 Reference case assume current laws and regulations remain generally unchanged throughout the projection period, thus serving as a starting point for analysis of energy policies. More highlights from the Reference case, as well as projections for several energy factors through 2035, are available in the AEO2012 Early Release Reference Case Overview and supporting materials.

Gold Appears to Break Out of it's Down Trend

Gold Appears to Break Out of it's Down Trend

2012-01-25T22:59:00.000-08:00

The stock markets had a very solid session. Most charts shot higher after Apple beat estimates Tuesday night surging over 10%. This set the tone for stocks Wednesday. Also the FOMC said they would keep interest rates low until mid 2014 and projected a 2% inflation rate which took the market by surprise. Looking at the 10 minute intraday charts of gold, silver, oil, and the SP500 you would think it was the 4rth of July with everything shooting higher.

My gut feeling before the FOMC meeting was that there would be no QE3 announced. This I figured would trigger the dollar to rise which in turn would put pressure on stocks and commodities. But the low interest rates until mid 2014 was the wild card trumping that scenario.

Trading around FOMC meetings always brings a heightened level of uncertainty to traders and investors. The news is unpredictable making that much more of beast to try and out smart. I personally do not trade on any news because of the added risk involved.

Let’s take a quick look at gold and silver...

The Weekly Gold Chart:

Gold has started to break out of its down trend and if it can hold up into Friday’s close then it will be a very positive sign for the shiny metal. It is still mid week and a lot can happen, so let’s see how it holds up and go from there.

The Weekly Silver Chart:

Silver has some work to do before it’s back in an uptrend on the weekly chart. I would not be surprised to see it catch up with gold and run toward the $35 resistance level in the next couple days.

Mid-Week Trend Conclusion:

In short, gold is on the move and in the next few weeks I figure we will be getting involved. Silver I think will unfold a little different from a chart pattern point of view, but I do feel there will be a buying opportunity soon also.

Looking more broad based we are seeing the stock market continue to make new highs with solid volume behind it while Crude oil continues to tread water.

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Chris Vermeulen

Crude Oil Moves Higher on Federal Reserve Statement

2012-01-25T16:09:00.000-08:00

Crude oil closed higher on Wednesday after Federal Reserve officials said the U.S. benchmark interest rate will stay low until at least 2014 to bolster growth and cut unemployment, boosting fuel demand. The high range close sets the stage for a steady to higher opening on Thursday.

But stochastics and the RSI are still neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

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Stalemate Between European Policy Makers Holds Crude Oil Bulls Back

2012-01-24T15:10:00.001-08:00

March crude oil posted an inside day with a lower close on Tuesday. Today's setback was triggered by a stalemate between European policy makers and Greek bondholders over debt relief increased concern that the European credit crisis will spread. The low range close sets the stage for a steady to lower opening on Wednesday.

Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

With a Chart Analysis Score of -60 today, this market has moved into a trading range. We are longer term positive on this market, however it must move over resistance at $104 to get its upside momentum into high gear. With only our monthly Trade Triangle in a positive mode, we expect we will see further market consolidation in crude oil. Long term traders should be long this market with appropriate money management stops.

Let's look at today's 50 Top Trending Stocks

Apache CEO Steve Farris on Cordillera Acquisition

2012-01-24T06:00:00.000-08:00

Apache CEO, Steve Farris, discusses the acquisition of Cordillera Energy Partners for $2.85B, saying its a unique bolt on opportunity that more than doubles Apache's acreage in a highly liquids-rich fairway in the Anadarko Basin.

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European Union Ban on Iranian Imports Give Crude Oil Bulls a Boost

2012-01-23T16:25:00.000-08:00

March crude oil closed higher on Monday for the first time in four days after the European Union agreed to ban crude imports from Iran, raising concern that retaliation from the Islamic Republic may disrupt oil supply from the Middle East. A 27 nation bloc indicated that it would implement the crude embargo starting July 1 to pressure the country over its nuclear program.

Iran has threatened to close the Strait of Hormuz, the transit point for about a fifth of global oil, if its exports are banned. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 would confirm that a short term low has been posted. First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is today's low crossing at 97.40. Second support is December's low crossing at 92.95.

Check out our gold trend forecast for the 1st Quarter of 2012

EIA: Arctic Crude Oil and Natural Gas Resources

2012-01-23T08:44:00.000-08:00

Resource basins in the Arctic Circle region (click to enlarge)

Source: U.S. Geological Survey.

The Arctic holds an estimated 13% (90 billion barrels) of the world's undiscovered conventional oil resources and 30% of its undiscovered conventional natural gas resources, according to an assessment conducted by the U.S. Geological Survey (USGS). Consideration of these resources as commercially viable is relatively recent despite the size of the Arctic's resources due to the difficulty and cost in developing Arctic oil and natural gas deposits.

Studies on the economics of onshore oil and natural gas projects in Arctic Alaska estimate costs to develop reserves in the region can be 50-100% more than similar projects undertaken in Texas.

Profitable development of Arctic oil and natural gas deposits could be challenging due to the following factors:

Equipment needs to be specially designed to withstand the frigid temperatures.
On Arctic lands, poor soil conditions can require additional site preparation to prevent equipment and structures from sinking.
Long supply lines and limited transportation access from the world's manufacturing centers require equipment redundancy and a larger inventory of spare parts to ensure reliability, while increasing transportation costs.
Employees expect higher wages and salaries to work in the isolated and inhospitable Arctic.
Natural gas hydrates can pose operational problems for drilling wells in both onshore and offshore Arctic areas.

Natural gas development could be especially challenging. Although the Arctic is rich in natural gas, the development of Arctic natural gas resources could be impeded by the low market value of natural gas relative to that of oil. Furthermore, natural gas consumers live far from the region, and transportation costs of natural gas are higher than those for oil and natural gas liquids.

Overlapping and disputed claims of economic sovereignty between neighboring jurisdictions also could be an obstacle to developing Arctic resources. The area north of the Arctic Circle is apportioned among eight countries—Canada, Denmark (Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States. Under current international practice, countries have exclusive rights to seabed resources up to 200 miles beyond their coast, an area called an Exclusive Economic Zone (EEZ). Beyond the EEZ, assessments of "natural prolongation" of the continental shelf may influence countries' seabed boundaries.

Along with economic and political challenges, environmental stewardship and regulatory permitting may also affect timelines for exploration and production of Arctic resources. Environmental issues include the preservation of animal and plant species unique to the Arctic, particularly tundra vegetation, caribou, polar bears, seals, whales, and other sea life. The adequacy of existing technology to manage offshore oil spills in an arctic environment is another unique challenge. Spills among ice floes can be much more difficult to contain and clean up than spills in open waters.

See further information on the Arctic's energy resources and the challenges associated with their development in the December 21, 2011 edition of This Week In Petroleum.

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ONG: Crude Oil Weekly Technical Outlook For Saturday January 21st

2012-01-21T11:03:00.000-08:00

Crude oil's recovery attempt was limited at 102.06 last week and weakened sharply since then. As noted before, consolidation pattern from 103.37 or 103.74 is still in progress. Initial bias is on the downside this week and break of 97.70 will target 100% projection of 103.74 to 97.70 from 102.06 at 96.02 and below. though, we'd expect strong support from 92.52 cluster support (38.2% retracement of 74.95 to 103.74 at 92.74). to contain downside and bring rebound. On the upside, above 102.06 will bring retest of 103.74 resistance.

In the bigger picture, pull back from 114.83 was completed at 74.95 already and medium term rally from 33.2 is not finished yet. We'd tentatively treat rise from 74.95 as resuming 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 92.52 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 and Monthly Charts

Gold Trend Forecast for the 1st Quarter of 2012

OilPrice: China to Aid Saudi Arabia in Nuclear

2012-01-20T06:04:00.000-08:00

Ever since the end of World War Two, the U.S. has come to regard Saudi Arabia as almost its exclusive oil producing enclave.

In February 1945, after the Yalta Conference with Soviet General Secretary Iosif Stalin and British Prime Minister Winston Churchill, on his way home U.S. President Franklin Delano Roosevelt and King Ibn Saud met aboard the New Orleans class heavy cruiser U.S.S. Quincy in the Suez Canal’s Great Bitter Lake. During the meeting, instigated by Roosevelt, he and Ibn Saud concluded a secret agreement in which the U.S. would provide Saudi Arabia military security, including military assistance, training and a military base at Dhahran in Saudi Arabia, in exchange for secure access to supplies of oil.

Sixty seven years later, my, how things have changed, as China is now muscling into the Kingdom of the Two Holy Places.

On 15 January Visiting Chinese Premier Wen Jiabao and Saudi Arabian King Abdullah bin Abdul Aziz agreed to make concerted efforts to enhance bilateral relations. The spectacle of OPEC’s leading petro-state and East Asia’s superpower economy making common cause has surely caused the burning of the midnight oil inside the Beltway.

While Wen said that China is willing to strengthen coordination with Saudi Arabia on all major issues by expanding cooperation in trade, investment, infrastructure, high-tech, finance, security and law enforcement, what must have surely caught the eye of Washington’s mandarins was him adding that China intends to develop a cooperative partnership with Saudi Arabia in the energy sector.

And why not? Saudi Arabia is the largest supplier of oil to China and bilateral trade between the two countries soared to $58.5 billion in the period January-November 2011.

And the fruits of such bilateral proximity were on the table even before Wen made his fulsome remarks, as the state-owned Saudi Press Agency reported on 14 January that Saudi state oil giant Aramco has signed an agreement with state owned giant China Petroleum and Chemical Corporation Ltd. (Sinopec) to build an oil refinery, named Yasref, in the Red Sea city of Yanbu, which will become operational in 2014, processing 400,000 barrels per day.

What is really going to catch Washington’s and the foreign investment community’s attention is how the agreement is structured, Saudi Aramco will hold a 62.5 percent stake with Sinopec holding the remainder.

In one of 2012’s greatest understatements, Aramco president and CEO Khalid al-Falih said that the contract "represents a strategic partnership in the refining industry between one of the main energy producers in Saudi Arabia and one of the world's most important consumers."
Continuing his victory lap around the western shores of the Persian Gulf, Wen will also visit Qatar and the United Arab Emirates, two other stalwart U.S. allies.
And the eastern side of the Gulf?

Commenting on Iran, China’s third largest source of oil imports, on 11 January Chinese Foreign Ministry spokesman Liu Weimin said at a press briefing that China will maintain its trade ties with Iran despite efforts by U.S. Treasury Secretary Timothy Geithner to convince Beijing to join a proposed embargo of Iranian oil exports.

But perhaps the most intriguing element of the Riyadh-Beijing lovefest was the announcement that on 15 January Saudi Arabia signed an agreement with China for cooperation in the development and use of atomic energy for peaceful purposes, an event of significant importance that both Abdullah and Wen attended.

No comment is really needed here, except to note that many of the questions asked about Iran’s civilian nuclear power program, such as why does a leading "petro state" need nuclear energy, are unlikely to be asked about this particular venture, underling that once again, reality in the Middle East is whatever your perceptions tell you in advance it is.

Posted courtesy of John C.K. Daly at Oilprice.com

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Crude Oil Bulls Gaining Much Needed Momentum

2012-01-19T16:49:00.000-08:00

Crude oil closed lower on Thursday as it consolidated some of the rally off last Friday's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If March renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 105.23 is the next upside target.

If March renews this month's decline, December's low crossing at 92.95 is the next downside target. First resistance is this month's high crossing at 103.90. Second resistance is the 75% retracement level of the 2011 decline crossing at 105.23. First support is last Friday's low crossing at 97.93. Second support is December's low crossing at 92.95.

The consolidation in crude oil above the $98 a barrel level continues. We are longer term positive on this market, however it must move over resistance at $104 to get upside momentum into high gear. With a Chart Analysis Score of +90, this market is in a strong trend and with all our Trade Triangles in a positive mode we expect we will see this market breakout to the upside. Long and intermediate term traders should be long this market with appropriate money management stops.

Check out our gold trend forecast for the 1st quarter of 2012

Crude Oil, Gold and Natural Gas Mid Week Market Commentary For Wednesday January 18th

2012-01-18T18:35:00.000-08:00

Crude oil [March contract] closed lower on Wednesday as it consolidates some of Tuesday's rally. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If March extends last week's decline, December's low crossing at 92.95 is the next downside target. If March renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 105.23 is the next upside target. First resistance is this month's high crossing at 103.90. Second resistance is the 75% retracement level of the 2011 decline crossing at 105.23. First support is last Friday's low crossing at 97.93. Second support is December's low crossing at 92.95.

February natural gas posted an inside day with a lower close on Wednesday as it extends the multi year decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If February extends the aforementioned decline, monthly support crossing at 2.409 is the next downside target. Closes above the 20 day moving average crossing at 2.966 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 2.819. Second resistance is the 20 day moving average crossing at 2.967. First support is Tuesday's low crossing at 2.439. Second support is monthly support crossing at 2.409.

Gold closed higher on Wednesday as it extends the rally off December's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought 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 38% retracement level of the September-December decline crossing at 1678.70 is the next upside target. Closes below the 20 day moving average crossing at 1614.30 would temper the near term friendly outlook. First resistance is Tuesday's high crossing at 1670.80. Second resistance is the 38% retracement level of the September-December decline crossing at 1678.70. First support is the 20 day moving average crossing at 1614.30. Second support is December's low crossing at 1526.20.

Gold Trend Forecast for the 1st Quarter of 2012

The Dollar, Weak Earnings Indicate a Top is Near For The S&P 500

2012-01-17T17:19:00.000-08:00

Can we still look to the financials to guide us on market movements?

Earnings season is now upon us and so far the only major earnings component that has been released is the J.P. Morgan earnings report that came in Friday before the market opened. After the report was digested by the marketplace, prices fell dramatically.

While the charlatans in Washington try to sell the American public into believing that the U.S economy is starting to firm up, the underlying truth is that the recovery has been relatively weak. If it were not for the massive liquidity injections provided by the Federal Reserve through multiple quantitative easing adjustments, risk assets would likely be priced significantly lower.

Inquiring minds combed through the data provided in the J.P. Morgan earnings release and a few major outcomes were placed front and center. Earnings disappointed overall due to a massive decline in investment banking activity. Investment banking profits represent a large portion of all of the major banks’ earnings.

On Friday the guys at Zero Hedge provided the following chart in its article titled, “Charting Disappearing Investment Banking Revenues And Profits, JPM Edition.” The chart below illustrates the massive decline in investment banking revenue:

To make the chart a bit easier to follow, the blue bars represent investment banking revenue. It is rather obvious that investment banking revenue is in free fall having dropped nearly 50% since the first quarter of 2011. In addition, I would point out the sharp declines in total net income (purple) and the massive decline in equity market revenue (green).

It is without question that the other major banks that have a large investment banking presence are likely to experience similar revenue losses. A significant reduction in investment banking gross revenue puts tremendous pressure on total bank revenues in this quarter and looking ahead.

I am of the opinion that major money-center banks like Bank of America and Citigroup are likely to experience similar revenue reductions. We will know for sure in the coming weeks as most of the large banks are set to report earnings in the near term. Clearly this expected reduction in overall revenue will likely have a major impact on the financial sector of the economy.

The financial complex is absolutely critical when looking at broad index returns. It is common knowledge that broad indexes such as the S&P 500 and the Dow Jones Industrial Average struggle to rally when the financial complex lags. The same can be said for the semiconductor sector as well.

Recently financials (XLF) and the semiconductor (SMH) sectors have worked considerably higher on relatively light volume. Both XLF and SMH are trading into major resistance and both are starting to show signs that they are nearing a potential top The daily charts of XLF and SMH are shown below:

XLF Daily Chart

SMH Daily Chart

Both the XLF and SMH daily charts illustrate that a major top may be forming in both sectors. It is widely noted that if the financials and semiconductors are not showing strength in a rising market, a correction or major reversal may not be far away.

I have been writing about the potential for a major top to be forming for several weeks now and I find that I am not in the majority in this viewpoint. Recent sentiment and momentum in U.S. equities demonstrate that we are very overbought at this time. Retail investors are extremely bullish and the Volatility Index (VIX) is trading near recent lows.

I am unsure whether this is a major top that leads to strong selling pressure or whether a correction is a more likely outcome. What I do know is that tops are a process, not a singular event and at this point more and more evidence is supporting the viewpoint that equities may be getting tired and some profit taking is likely.

In addition to the lackluster price action in the charts above, earnings releases have been revised lower in the 4^th quarter of 2011. In fact almost 3.5 companies have announced earnings revisions to the downside for every company that has indicated a stable to rising earnings announcements. This type of scenario has not been present since the first quarter of 2008 which as we know was not exactly a great time frame to be looking to put cash into risk assets.

Furthermore, Goldman Sachs analysts came out with the following commentary, “While the 4^th Quarter is typically the strongest quarter for earnings, estimates have fallen 9% since the summer and are now below both realized 2^nd and 3^rd Quarter results.” Goldman Sachs is also expecting significant price pressure coming from a weak U.S. economy and the fears of a European recession in 2012. Overall, the estimates are far from bullish and are in fact quite concerning when looking at the current valuation of U.S. equities.

The impact that a stronger U.S. Dollar will have on domestic companies which are used to having a competitive advantage when looking at earnings due to currency adjustments could produce negative surprises. Typically positive earnings adjustments are likely to be revised to the downside as the U.S. Dollar has rallied sharply higher in light of the weakening Euro currency. The weekly chart of the U.S. Dollar Index is shown below:

The U.S. Dollar Index is consolidating directly beneath resistance which is generally seen as a bullish development. I expect a breakout over new highs is only a matter of time. It is unlikely that in the long term the U.S. Dollar can rally while stocks trade flat or work their way higher. While this is always possible, the likelihood of that scenario is unlikely due to earnings pressures that would occur if the Dollar pushes higher in the intermediate term.

In addition to the variety of above mentioned factors which could have a major impact on equity valuations, the S&P 500 Index is trading into major resistance. Unless the S&P 500 Index can work above the 1,325 area it is unlikely that a new bull market has begun.

If the S&P 500 Index manages to work above the 1,325 level then my analysis may be proven completely incorrect. However, right now the S&P 500 Index has a lot of overhead resistance at the 1,292, 1,300, and 1,310 price levels. The daily chart of the S&P 500 Index is shown below’

Ultimately we are coming into the final week for the January options contracts which are set to expire at the close of business this coming Friday. I would not be shocked to see some volatility late this week and potentially even higher prices for equities.

However, my expectation is that once the January expiration hangover is behind us, increased volatility and lower prices are likely ahead for U.S. equities. The earnings announcements this week will likely have a large impact on the price action. Heads up, risk is exceptionally high!

To learn more about Options Trading Signals visit J.W. Jones Options Newsletter website.

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Crude Oil Closes Higher But Bears Maintain the Momentum

2012-01-17T15:19:00.000-08:00

February crude oil closed higher on Tuesday as it consolidates some of last week's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends last week's decline, December's low crossing at 92.70 is the next downside target.

If February renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. First resistance is this month's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is last Friday's low crossing at 97.70. Second support is December's low crossing at 92.70.

Gold Trend Forecast for the 1st Quarter of 2012

Gold Trend Forecast for the 1st Quarter of 2012

2012-01-15T21:05:00.000-08:00

Over the past five months gold has fallen sharply and is no longer headline news which it once dominated back in 2011 when it was making new highs every day. The shiny metal has been under pressure because traders and investors started to pull some money off the table to lock in gains.

Gold prices had surged so fast most advanced traders knew that final high volume surge was not sustainable. But the main reason gold topped out in my opinion was because the US Dollar index had put in a bottom and started to build a base. As we all know a rising dollar typically means lower stocks and commodity prices.

I have posted some charts below covering gold in detail using multiple time frames. The weekly which is long term, daily which is the intermediate trend and the 4 hour chart which shows gold momentum and intraday action. At the very bottom I talk about the US Dollar and what is happening with that.

Gold Weekly Long Term Trend Analysis

The weekly chart is not the most exciting time frame to follow as you will grow old watching it. That being said it is crucial for understanding the long term trend, price and volume analysis.

Below you can see that gold’s recent pullback has been a 3 wave correction, which is a normal pullback for any investment. But taking into account the rally from 2008 – 2011 I feel this pullback will have one more low put in before bottoming out. This would make for a 5 wave correction much like what happened in 2008.

Daily Chart of Gold Showing the Intermediate Trend

The daily chart allows us to see gold intra week price action and use the 150 moving average which is my preferred daily moving average. As you can see we are getting a similar pullback as 2008 with gold now trading under the 150 MA.

I would like to see gold make another lower low in the next 2-3 months. If that happens I feel it complete the correction and trigger a strong multi month or multiyear rally in gold.

4 Hour Intraday Chart of Gold

The 4 hour chart of gold allows us to see all the intraday price action which would normally not be seen with a daily chart. It also gives us enough data to build our analysis upon.

My preferred setup for gold which I feel if happens will trigger major buying in the yellow metal. If/when we get a rally in gold would also likely mean some more economic uncertainty has entered the market either from within the USA, Europe or China…

Weekly Dollar Index Long Term Analysis

The dollar has the potential to rally to the 87 – 88 level before putting in a major top. For this to happen we will need to see the Euro crumble (both currency and countries divide) in my opinion.

If you look at the weekly chart of gold and this chart of the dollar index you will notice that gold topped when the dollar bottomed. Over the past couple year’s gold and the dollar have had an inverse relationship to each other.

With all kinds of crap about to hit the fan overseas I think it’s very possible gold will rally with the dollar. Reason being there is way more people overseas who want to unload their euro’s and with all the negative talk and doubt with the US Dollar individuals will naturally want to buy more gold.

Weekend Trend Trading Conclusion:

In short, I expect a bumpy ride for both stocks and commodities in the first quarter of 2012. With any luck gold will pull back into my price zone shaking the majority of short term traders out just before it bottoms. And we will be positioning ourselves for a strong rally buying into their panic selling.

To just touch base on the general stock market quickly. I have a very bearish outlook for stocks. If the dollar continues to rise it is very likely the stock market will fall into a bear market. So I am VERY cautious with stocks at this time.

If you would like to receive my Weekly reports, updates and trading education videos each week join my free newsletter here at The Gold and Oil Guy

Chris Vermeulen

ONG: Weekly Fundamentals..... Geopolitical Tensions Drive Crude Oil Volatility

2012-01-14T07:07:00.000-08:00

Geopolitical tensions have been directing the movement of oil prices since the start of the year. Sanctions against Iran in condemnation of its nuclear developments had sent oil prices higher. The US has imposed sanctions against Iran's central bank and it's highly likely that Japan and South Korea will reduce their imports of Iranian oil. The EU has in principle agreed ton an embargo on oil imports.

However, an EU embargo on Iranian oil imports will likely be delayed for 6 months so that countries including Greece, Italy and Spain can find alternative supplies. Data from the European Commission indicated that these three countries accounted for 68.5% of EU imports from Iran in 2010. The news triggered a sharp selloff in oil prices on Thursday and Friday. In Nigeria, President Goodluck Jonathan will meet protesters in an attempt to end the 4 day strike which will affect the oil industry. Oil prices should continue to move with great volatility in coming months as long as geopolitical tensions remain uncertain.

The DOE/EIA released its monthly short-term energy report last week, suggesting the price of WTI crude oil would average about 100/bbl in 2012, up +5/bbl from the average price last year. For 2013, the agency expects WTI prices to 'continue to rise, reaching 106/bbl per barrel in the fourth quarter of next year". Concerning global oil demand/supply, the DOE/EIA expects the tightening of world oil markets would 'moderate in 2012 and resume in 2013'.

Oil demand will probably increase +1.27 mmb, or +1.44% y/y, to 89.38 mmb in 2012. This, however, represents a -0.14 mmb drop from the projection made in December. The DOE/EIA also introduced the demand forecast for 2013. During the year, consumption will climb +1.47 mmb, or +1.44% y/y, to 90.85 mmb. On the supply side, non-OPEC supply is expected to rise +0.91 mmb, or +1.76%, y/y to 52.76 mmb in 2012, followed by a +0.76 mmb, or +1.44%, increase to 53.52 mmb in 2013. The need for oil supply from the OPEC will be 30.30 mmb and 30.76 mmb in 2012 and 2013 respectively.

Is This Pullback in Crude Oil a Buying Opportunity?

2012-01-13T18:46:00.001-08:00

February crude oil closed lower on Friday as it extended yesterday's breakout below the 20 day moving average crossing at 99.40. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, December's low crossing at 92.70 is the next downside target.

If February renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. First resistance is last Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is today's low crossing at 97.70. Second support is December's low crossing at 92.70.

The pullback in the crude oil market is setting up a buying opportunity once the downward momentum is over. A solid close over the $104 level is needed to drive this market to the $120 level. External world events can trigger moves in this commodity. With a Chart Analysis Score of +55, this market is now in a trading range. The crude oil market has major resistance at $104 and support at $97. Long and intermediate term traders should be long this market with appropriate money management stops.

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Rigzone: Crude Oil Falls As Euro Zone Woes Resurface

2012-01-13T14:46:00.000-08:00

Crude futures fell Friday in tandem with a slumping euro as Standard & Poor's prepared to downgrade France's credit rating, adding new fears about Europe's economy.

The ratings service notified the French government and other European governments that it will lower their debt ratings, according to reports Friday, sending the euro to 16 month lows against the dollar and taking the wind out of riskier assets such as oil, stocks and other commodities.

The news of imminent downgrades renewed worries about a potential stumbling block for the global economy, and oil demand. Traders quickly switched gears to focus on Europe's credit crisis after a sell-off Thursday was sparked by potential delays to the E.U. embargo on Iranian oil.....Read the entire Rigzone article.

Phil Flynn: To Embargo or not to Embargo, That is Indeed the Question

2012-01-13T07:41:00.000-08:00

While the market got a boost on reports that European refiners were meeting with Saudi Arabia and other oil producers and securing an alternative to Iranian oil supply, apparently some in the EU did not like the answers that they heard. An overbought oil market seemingly got a reason to sell-off on a Bloomberg report that the European Union embargo on imports of Iranian oil will likely be delayed for six months to allow countries such as Greece, Italy and Spain to find alternative supply, quoting an EU official with knowledge of the talks and it hit the market at just the right time.

The truth is, as I have said before, the EU would like to put off an embargo until after winter and Italy still wants some of the money that the Iranians owe them. Still do not think that Iran will be able to sell their oil very easily. The bottom line is that all Iranian oil will be sold, but it will be sold at a discount. Is it any wonder that Iran is rattling that saber to keep prices high. They are hopping if they can keep prices artificially high they won't miss the loss of revenue! Which means it will be a saber rattling kind of weekend! With a three day holiday in the US, being short over the weekend might be a dangerous propostion.
Yet Bloomberg News is reporting that.....Read the entire article.

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ONG: Sharp Move Dominates Oil Market, Bears Take the Momentum

2012-01-13T06:13:00.000-08:00

Sharp moves dominated yesterday's session, where oil rallied to acquire our targeted area near 103.00 before reversing sharply again to breach the bearish technical pattern shown on image in addition to 100.10 support. Currently, price is testing the breached level again which turns into resistance after testing the main pivotal support at 98.50, but in general, trading remain within the same ranging stance. Today we may see another downside attempt as important technical levels were breached yesterday.

The trading range for the day is expected among the major support at 96.00 and the major resistance at 102.00.

The short term trend is to the downside with steady daily closing below 105.00, targeting 65.00.

Daily Pivot Points				Normal Range					Last Bar
Commodity	Chart	S3	S2	S1	PP	R1	R2	R3	H	L	C
Crude Oil		92.93	95.71	97.41	100.19	101.89	104.67	106.37	102.98	98.50	99.10
Natural Gas		2.540	2.602	2.649	2.711	2.758	2.820	2.867	2.772	2.663	2.697
Heating Oil		2.9200	2.9798	3.0169	3.0767	3.1138	3.1736	3.2107	3.1364	3.0395	3.0541
Gasoline RBOB		2.5845	2.6512	2.6912	2.7579	2.7979	2.8646	2.9046	2.8245	2.7178	2.7313
Gold		1616.1	1628.5	1638.1	1650.5	1660.1	1672.5	1682.1	1662.9	1640.9	1647.7
Silver		28.966	29.418	29.771	30.223	30.576	31.028	31.381	30.675	29.870	30.124
Copper		3.4080	3.4650	3.5570	3.6140	3.7060	3.7630	3.8550	3.6710	3.5220	3.6490
Platinum		1468.7	1480.0	1490.0	1501.3	1511.3	1522.6	1532.6	1512.5	1491.2	1500.1
			Extreme Range

Posted courtesy of Oil N' Gold

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

Crude Oil Bulls Lose Momentum on Sharp Drop

2012-01-12T17:59:00.000-08:00

Crude oil closed sharply lower on Thursday and below the 20 day moving average crossing at 99.21 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. If February extends today's decline, the reaction low crossing at 98.30 is the next downside target.

If February renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. First resistance is last Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the reaction low crossing at 98.30. Second support is December's low crossing at 92.70.

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Crude Oil Moves into Positive Territory on all Trade Triangles

2012-01-12T14:28:00.000-08:00

The crude oil market continues to consolidate over the $100 level. With all of our Trade Triangles in a positive mode we are looking for this market to move higher. A solid close over the $104 is needed to drive this market to the $120 level. External world events can trigger moves in this commodity. With a Chart Analysis Score of +90 this market remains in a strong trend to the upside. The crude oil market has resistance starting at $104. Long and intermediate term traders should be long this market with appropriate money management stops.

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EIA: Brent Crude Oil Averages Over $100 Per Barrel in 2011

2012-01-12T14:12:00.000-08:00

Source: U.S. Energy Information Administration, based on Thomson Reuters.
Note: Brent is the underlying crude oil for the light sweet crude oil futures contracts on the Intercontinental Exchange (ICE). West Texas Intermediate (WTI) represents the spot price for crude oil at Cushing, Oklahoma, the physical delivery hub for NYMEX light sweet crude oil futures contracts.

The crude oil markets sustained high price levels in 2011, as the spot price of Brent averaged $111.26 per barrel, marking the first time the global benchmark averaged more than $100 per barrel for a year (see chart above). The West Texas Intermediate (WTI) crude oil price averaged $94.87 per barrel, up $15 per barrel from 2010, reflecting a discount to the Brent crude oil price due to transportation bottlenecks near Cushing, Oklahoma, the physical delivery hub for NYMEX light sweet crude oil futures contracts.

The price increases in 2011 reflected tightness in the global crude oil market that began in 2010 and marked the highest crude oil prices since 2008. Key factors affecting crude prices in 2011 included:

Arab Spring. The Arab Spring and the civil war in Libya roiled oil markets during the first half of the year. Prices quickly escalated when protests in Libya intensified in late February. The spot price of Brent increased $15 per barrel from February 18 to March 2 as the market coped with the loss of 1.5 million barrels per day (bbl/d) of exports from Libya. With low spare production capacity, this sudden supply loss challenged the ability of the Organization of the Petroleum Exporting Countries (OPEC) producers to provide incremental supplies to an already tight market.
Demand. Demand growth in emerging markets, notably China and the Middle East, drove crude oil prices higher in 2011 as well. During the first six months of 2011, the demand for petroleum products in countries not part of the Organization for Economic Cooperation and Development (non-OECD) grew by almost 4%, just as the market was coping with the loss of Libyan exports. Even with declining OECD country demand in 2011, overall global demand rose by 1.2% (1.1 million bbl/d).
Transportation Bottlenecks. Brent's price strength in the first half of 2011 was not matched by WTI, which became dislocated from the global crude oil market due to transportation bottleneck issues in the U.S. Midwest (see chart below). Amid fast-rising crude oil production from the Bakken Shale formation and Canadian oil sands, prices for U.S. inland crude benchmark WTI weakened relative to those of broadly traded coastal or imported crude oil grades, such as Brent or Louisiana Light Sweet (LLS). Brent's premium to WTI reached a record level of almost $30 per barrel in September 2011. Between October and November the premium fell almost $20 per barrel, most likely as a result of signs that transportation constraints out of the U.S. Midwest, the main market for WTI, were easing. However, the spread ended the year close to $10 per barrel, still wide by historical standards.

Source: U.S. Energy Information Administration, based on Thomson Reuters.

While WTI experienced a wide trading range in 2011, as its isolated market depressed the crude's value, Brent and other waterborne crudes maintained a fairly stable trading range anchored around $110 per barrel from May through the end of the year. Factors mitigating upward crude oil price pressure in 2011 included:

Debt Crisis. The European debt crisis loomed large over the global economy, and expectations for economic growth globally, especially in the OECD economies, were not realized over the course of the year, resulting in lower-than-expected growth in demand for petroleum products.
Strategic Petroleum Release. In response to the loss of Libyan supplies, the International Energy Agency's member countries collectively released stocks from their strategic petroleum reserves during the summer months.
Supply Gains. Output increases from Saudi Arabia (OPEC's largest producer) and the return of Libyan oil production helped dampen price increases during the second half of the year.

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

Crude Oil Settles Lower after US Oil Data

2012-01-11T18:45:00.000-08:00

Crude oil futures prices settled 1.3% lower Wednesday, hit by a steep fall drop in U.S. oil demand and a sharp rise in fuel stockpiles. Prices ended at the lowest level so far in 2012, but were supported above $100 a barrel by growing concerns about the reliability of near term crude oil supply from Iran and Nigeria.

A Nigerian union leader said Wednesday that workers at oil platforms are on "red alert" and ready to shut down facilities in a growing national strike that erupted in response to soaring fuel costs after the government abruptly halted a $7 billion fuel subsidies program. Nigeria pumped 2.2 million barrels a day in December, according to U.S. estimates, and supplied 9% of U.S. crude oil imports in the first 10 months of 2011.

Meantime, U.S. Treasury Secretary Timothy Geithner on Wednesday urged top Chinese officials to significantly reduce imports of Iranian crude, after a new U.S. sanctions policy focused on nations that continue trading with Iran. Countries can avoid those sanctions by showing a significant reduction in Iranian oil imports.....Read the entire Rigzone article.

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

ONG: Crude Oil Daily Technical Outlook For Wednesday January 11th

2012-01-11T06:53:00.000-08:00

Crude oil continues to be bounded in sideway trading from 103.74 and intraday bias remains neutral for the moment. After all, near term outlook will remain bullish as long as 98.30 minor support holds. We'd expect rise form 74.95 to resume sooner or later. Above 103.74 will target 114.83 key resistance next. Though, break of 98.30 will dampen this bullish view and turn bias back to the downside for 92.52 support instead.

In the bigger picture, recent development indicates that pull back from 114.83 was completed at 74.95 already and medium term rally from 33.2 is not finished yet. We'd tentatively treat rise from 74.95 as resuming 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 92.52 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.

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

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

Crude Oil Closed Higher on Tuesday Ending a Three Day Correction

2012-01-10T15:21:00.000-08:00

Crude oil closed higher on Tuesday ending a three day correction off last week's high. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought but are turning neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 99.13 would signal that a short term top has been posted. If February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target.

First resistance is last Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.23. Second support is the 20 day moving average crossing at 99.17.

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

ONG: Crude Oil Prices Lifted by Iranian Tensions Again

2012-01-10T09:10:00.000-08:00

Oil prices soared in European session amid news the US is prepared to force to stop Iran's nuclear development. Concerns over oil supply were exacerbated as Venezuela indicated that the OPEC should do nothing to offset the loss, if any, of oil output from the cartel member. China released its preliminary trade data for December. On the whole, import growth missed expectations as driven by earlier Chinese New year, slowdown in external demand which affected processing import growth and the sharp decline in commodity prices.

Tensions over Iran escalated as a former advisor of Obama's National Security Council Dennis Ross said that the US President would not reluctant to use force to stop the nuclear-armed Iran from continuing development nuclear weapons. The comments followed US Defense Secretary Leon Panetta's warning that the US 'will not tolerate the blocking of the Straits of Hormuz...That's another red line for us and that we will respond to them'.

As we mentioned in previous articles, suspension of Iranian output or the block of the Strait of Hormuz would result in oil supply shortage in the near- to medium-term. While it's expected that Saudi Arabia would increase production to replace any loss of Iranian oil, Venezuela does not seem to agree with that with oil minister Rafael Ramirez stating that 'any Iranian action in defense of their sovereignty is Iran's issue' and 'OPEC can't get involved in this issue'.

China's trade surplus widened to US$ 16.5B in December from US$ 14.5B a month ago. Exports grew +13.4% y/y, easing modestly from +13.8% in the prior month. Import growth fell to +11.8% in December from +22.1% in November. It also missed consensus of +18.0%. For 2011 as a whole, exports and imports expanded +20.3% and +24.9% respectively, down from +31.3% and +38.9% in 2010. Trade surplus narrowed to US$ 155.1B from US$ 184.5B in 2010.

As the second largest oil consumer, China's net imports of crude oil fell to 5.1M bpd in December, down slightly from 5.51M bpd in November. From a year ago, net imports climbed +4.70%, easing greatly from 11.0% and +28.3% in November and October respectively. Net imports of oil products, including gasoline and diesel, soared to the highest level in 2011, however. Although investors may trade the weaker-than-expected import growth number as a negative sign of China's economic growth, it may be driven by seasonal factor (Chinese New Year). Robust export growth should indicate to investors that demands from countries such as the Eurozone, the US and Japan were not as dismal as anticipated.

Posted courtesy of Oil N' Gold.Com

Crude Oil, Gold and Natural Gas Market Commentary For Monday Jan. 9th

2012-01-09T20:22:00.000-08:00

Crude oil closed lower due to profit taking on Monday as it consolidates some of the rally off December's low. The mid 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 February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. Closes below the 20 day moving average crossing at 99.00 would signal that a short term top has been posted. First resistance is last Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.96. Second support is the 20 day moving average crossing at 99.00.

Natural gas closed lower on Monday as it consolidates below the 10 day moving average crossing at 3.058. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.140 are needed to confirm that a short term low has been posted. If February renews last year's decline, monthly support crossing at 2.409 is the next downside target. First resistance is the 10 day moving average crossing at 3.058. Second resistance is the 20 day moving average crossing at 3.140. First support is last Tuesday's low crossing at 2.936. Second support is monthly support crossing at 2.409.

February gold closed lower due to profit taking on Monday as it consolidated some of the rally off December's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 1643.70 are needed to confirm that a low has been posted. If February renews the decline off November's high, July's low crossing at 1482.60 is the next downside target. First resistance is last Friday's high crossing at 1632.30. Second resistance is the reaction high crossing at 1643.70. First support is December's low crossing at 1523.90. Second support is July's low crossing at 1482.60.

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

2012-01-08T19:02:00.000-08:00

Last week we received reports that the unemployment rate in the United States was improving markedly. In addition, sentiment numbers were released that confirmed my previous speculation that market participants were becoming more and more bullish as prices in the S&P 500 edged higher. The exact numbers that came in demonstrated that bullish sentiment had not reached current lofty levels since February 11, 2011. The table below illustrates the most recent sentiment survey:

Chart Courtesy of the American Association of Individual Investors

Clearly investors are growing considerably more bullish at the present time. The bullishness being exhibited by market participants is rather interesting considering the notable headwinds that exist in the European sovereign debt markets, the geopolitical risk seen in light sweet crude oil futures, and the potential for a recession to play out in Europe.

To further illustrate the complacency in the S&P 500, the daily chart of the Volatility Index is shown below:

The VIX has been falling for several weeks and is on the verge of making new lows this week. If prices work down into the 16 – 18 price range a low risk entry to get long volatility may present itself. For option traders, when the VIX is at present levels or lower there are potentially significant risks associated with increases in volatility.

My expectations have not changed considerably since my article was posted last week. However, I continue to believe that the bulls will push prices higher yet in what I believe could be the mother of all bull traps. Let me explain. As shown above, we have strong bullish sentiment among market participants paired with general complacency regarding risk assets.

As I pointed out last week, my expectation if for the S&P 500 to top somewhere between 1,292 and 1,325. A lot of capital is sitting on the sidelines presently and if prices continue to work higher I suspect that a move above the 1,292 price level will trigger a lot of long entries back into stocks or other risk assets.

We could see prices extend higher while the “smart” money sells into the rally. Retail investors and traders will point to the inverse head and shoulders pattern on the daily chart of the S&P 500 and the breakout above the key 1,292 price level. The pervasive fear of missing a strong move higher will help fuel long entries from retail investors.

At the same time retail investors begin buying, a lot of committed shorts will be stopped out if prices push significantly above the 1,292 area or higher toward the more the obvious 1,300 price level. Thus, there will be few shorts to help support prices should a failed breakout transpire. A perfect storm could essentially be born from the lack of shorts to hold prices higher paired with the trapping of late coming bulls.

The daily chart of the S&P 500 Index below illustrates what I expect to take place in the next few weeks:

I want to reiterate to readers that it is not totally out of the question that the 1,292 price level could hold as resistance or that we could roll over early this coming week. Additionally a breakout over 1,330 will certainly lead to a test of the 2011 highs around the 1,370 area.

If the S&P 500 pushes above the 1,370 area we could witness a strong bull market play out. Ask yourself this question, what reasons could produce such a rally and what are the probabilities of that outcome transpiring in the next few weeks?

Obviously earnings season is going to be upon us shortly and if earnings come in below expectations a potential sell off could intensify. Furthermore, economic data in Europe continues to weaken and slower growth appears to be manifesting within the core Eurozone countries like Germany and France. If most of Europe plunges into a recession, deficits will widen beyond economic forecasts and the strain in the sovereign debt market of the Eurozone will increase dramatically.

One key element that many analysts are not even discussing is the potential for higher oil prices to present additional economic headwinds for developed western economies.

Clearly the situation in the Middle East is unstable, specifically what we are seeing taking place in the Strait of Hormuz involving Iran. If a “black swan” event occurs such as a military conflict between the United States and Iran or Israel and Iran the prices of oil will surge.

In a recent research piece put out by SocGen, nearly every scenario that is referenced involves significantly higher oil prices. According to the report, the Eurozone is considering the banning of imported Iranian oil which could cause Brent crude oil prices to surge to a range of $120 – $150 / barrel according to SocGen.

The other scenario involves the complete shut down of the Strait of Hormuz by Iran. If this shutdown were to persist for several days the expectation at SocGen for Brent crude oil prices is in the $150 – $200 / barrel price range.

Clearly if either of these two scenarios play out in real time, the impact that higher oil prices will have on European and U.S. economies could be catastrophic.

The daily chart of light sweet crude oil futures is shown below:

I want readers to note that I am not suggesting that oil prices are going to rise or fall, just outlining the report from SocGen about where they expect oil prices to go should either of the two scenarios presented above play out. If oil prices were to work to the $125 / barrel level and remain there for a period of time, I would anticipate a very sharp decline in the S&P 500.

Currently there are a lot of headwinds for bulls, some of which could persist for quite some time. I intend to remain objective and focus on collecting time premium as a primary profit engine for my Options Trading service.

Once I see a confirmed move in either direction I will get involved. For now, I intend to let others do the heavy lifting until a low risk, high probability trade setup presents itself. Risk is increasingly high.

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JW Jones

EIA: U.S. Refineries and Blenders Produced Record Amounts of Distillate Fuels

2012-01-08T08:19:00.000-08:00

Source: U.S. Energy Information Administration, Weekly Petroleum Status Report.
Download CSV Data

U.S. refiners produced historically high volumes of distillate fuels (a category that includes both diesel fuel and heating oil) and motor gasoline in 2011. By fine-tuning their production mix, refineries consistently set record levels of distillate production, most recently topping 5 million barrels per day (bbl/d) for the weeks ending December 2 and December 16, 2011.

In 2011, weekly distillate production was above the five-year historical range 25 times, and ranked second highest an additional 19 times. Finished motor gasoline production was robust over the same period, but was slightly more in line with production volumes at comparable times of year since 2006.

Because of its chemical composition, crude oil run through a refinery typically yields roughly twice as much motor gasoline as distillate fuels. Therefore, regardless of economic or other incentives, refiners cannot completely stop making some finished petroleum products in favor of others. However, by adjusting downstream processes and the types of crude oil used, refineries can optimize production to fine-tune the balance of their finished products output. For much of 2011, refiners saw favorable margins and robust global demand for distillate fuels. In order to benefit from these trends, refineries:

Increased crude runs to maximize overall output. This explains why both motor gasoline and distillate fuels production levels are high relative to the five-year historical ranges.
Shifted production mix. This explains why the distillate fuels production levels exceeded historical ranges in more weeks than motor gasoline production did.

Since early October, the spot price for ultra-low-sulfur distillate fuel oil rose, while the spot price for motor gasoline (as measured by New York RBOB spot prices in the chart below) declined, widening the spread between these two petroleum product prices. On November 14, 2011, the spot price for ultra-low-sulfur distillate was nearly 65 cents per gallon higher than the spot price for RBOB. The spread between these product prices had not been more than 60 cents per gallon since November 2008.

Source: U.S. Energy Information Administration, based on Bloomberg.

Note: Ultra low sulfur distillate spot prices shown as New York ultra low sulfur distillate spot prices; motor gasoline prices reflect New York RBOB spot prices.

Along with high domestic prices, strong international markets for distillate fuel oils have spurred increased production. In the United States, refineries have typically optimized production for finished motor gasoline to meet high U.S. demand. European refineries, on the other hand, tend to produce higher percentages of distillate fuel oils, as diesel is used more broadly there for transportation.

Due to crude supply disruptions to European refineries for much of this year, the region has imported more finished products. Weekly U.S. gross distillate export estimates (bound primarily for European and South American markets) were at record levels in the fourth quarter of 2011, topping more than 0.9 million bbl/d in October and November, and exceeding 1 million bbl/d in December.

Robust global distillate demand has led to a significant inventory draw, despite heightened U.S. production. From the end of September to the end of December, U.S. distillate inventories fell by more than 13 million barrels.

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ONG: Crude Oil Weekly Technical Outlook For Sunday Jan. 8th

2012-01-08T06:54:00.000-08:00

Crude oil rose further to as high as 103.74 last week but failed to sustain above 103.37 resistance and retreated. Initial bias remains neutral this week for some consolidations first. Nonetheless, near term outlook will remain bullish as long as 98.30 minor support holds. We'd expect rise form 74.95 to resume sooner or later. Above 103.74 will target 114.83 key resistance next. Though, break of 98.30 will dampen this bullish view and turn bias back to the downside for 92.52 support instead.

In the bigger picture, recent development indicates that pull back from 114.83 was completed at 74.95 already and medium term rally from 33.2 is not finished yet. We'd tentatively treat rise from 74.95 as resuming 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 92.52 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 and Monthly Charts

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Phil Flynn: Jobs Baby Jobs!

2012-01-08T06:40:00.000-08:00

Oh sure I can talk about Iran and The possibility of cracks showing in the EU oil embargo but let's face it today at least for awhile it jobs baby jobs! The oil market has been driven to and fro with a lot of bullish and bearish forces at play but the strength of the US jobs market will be the determining g factor as to wither we go higher or lower today. Oil was able to shake off a bearish Department of Energy Inventory report in part because there are worries about the resolve of Europe to embargo Iranian oil.

Other counties such as Japan and other Asian refiners are looking for alternative sources of oil which of course would be short term bullish. Yet with weak demand short term right now there is no fear that there will be a shortfall of oil. But back to the bullish word that China will imports a record amount of oil in 2012 as they look to rebuild and expand their strategic reserves. And on balance strong economic data in the US! Now the final piece of all of these forces will be Jobs, baby Jobs.

Reuters News Reported that " Japan's biggest refiner JX Nippon Oil & Energy Corp is talking with top exporter Saudi Arabia and other oil producers to source crude to replace any disruption to its imports from Iran, the company's president said on Thursday. Fresh U.S. sanctions on Iran over its nuclear program could make it difficult for refiners in Japan, Iran's number three crude buyer, to pay Tehran for its oil. Japan is seeking an exemption to U.S. sanctions that President Barack Obama signed into law on Saturday. The sanctions, if enforced, would penalize financial institutions for undertaking transactions with Iran's central bank, exposing the U.S. operations of Japanese banks that deal with Iran."

Bloomberg News Reported " The leader of financially struggling Italy questioned the scope and timing of a possible European Union halt to Iranian oil purchases, raising an obstacle to stiffer sanctions on Iran’s nuclear activities. Penalties set to be announced on Jan. 30 should be phased in and exempt crude sold by Iran to pay off debts to Eni SpA, Italy’s largest oil company, Prime Minister Mario Monti said. “An oil embargo is conceivable as long as it remains gradual and excludes the deliveries that serve to reimburse the billion euros in debts that Iran owes to Eni, our national company,” Monti told France’s Le Figaro in an interview published today.

Europe’s sanctions threat and an Iranian demand that U.S. warships stay out of the Persian Gulf have stirred new tensions between Iran and the West, contributing to higher energy prices. EU sanctions decisions require that all 27 member states go along. An oil supply dislocation might further damage the economies of Italy and Greece, two countries at the forefront of the European debt crisis. Italy is battling to get by without a bailout and Greece is seeking a second package.

Phil Flynn can be reached at pflynn@pfgbest.com

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Iran Tension Fails to Push Crude Oil Through Resistance

2012-01-07T06:02:00.000-08:00

Crude oil closed lower due to profit taking on Friday as it consolidates some of the rally off December's low. The mid range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. Closes below the 20 day moving average crossing at 98.86 would signal that a short term top has been posted.

First resistance is Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.78. Second support is the 20 day moving average crossing at 98.86.

Precious Metals, Equities and Crude Oil Long Term Outlook

Rigzone: Crude Ends Lower On Weak Equities, Dollar Gains

2012-01-06T21:19:00.000-08:00

Crude oil futures fell Friday despite an improving U.S. jobs picture as traders focused on declines in equities markets and a stronger dollar.

Light, sweet crude oil for February delivery settled 25 cents, or 0.3%, lower at $101.56 a barrel on the New York Mercantile Exchange after trading as high as $102.80 earlier in the session. Brent crude oil on the ICE Futures exchange rose late in the session to trade 80 cents higher at $113.06 a barrel.

After trading higher early Friday, a lower opening for the U.S. stock market held oil futures in negative territory. Equities have served as a guide for oil prices in recent months, and worries about Italy's debt situation kept investors from cheering an improving U.S. employment picture.

A stronger dollar against the euro also took some wind out of the oil market. A rising dollar typically weighs on oil as it makes crude oil more expensive for buyers in other currencies.....Read the entire article.

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EIA: Current Natural Gas Forward Prices Signal Rising....But Still Low Prices in 2012

2012-01-06T07:01:00.000-08:00

Source: U.S. Energy Information Administration, based on Bloomberg.

Note: Forward prices are derived each month (January-December) by adding the locational basis swap to the NYMEX Henry Hub futures price for the given month at each location. The ranges reflect the minimum and maximum monthly price for months in 2012. For example, a January 2012 NYMEX Henry Hub futures contract valued at $3.50/MMBtu and a January 2012 Transco Zone 6-NY basis swap valued at $2.50/MMBtu would yield a $6.00/MMBtu price at Transco Zone-6 NY.

Natural gas forward market prices (as of December 28, 2011) signal a continuation of low natural gas prices into 2012. Winter 2011-2012 forward prices were recently the lowest in over ten years, and, of the eight trading points identified, only Transco Zone 6-NY (New York City) and PG&E Citygate (Northern California) show 2012 forward monthly price ranges that include prices above $4/MMBtu. Natural gas spot prices remained low throughout 2011 relative to prior years, reaching a two-year low in November. The spot natural gas price at Transco Zone 6 New York, shown in the graph, is above next year's average monthly trading ranges due to recent cold weather-driven demand. Current spot natural gas prices are lower than the 2012 forward contract range at several natural gas trading points identified in the chart.

The natural gas price at the Henry Hub in Louisiana informs much of the rest of the country, with prices largely following price movements at Henry. Similarly, forward prices, except for the Northeast (represented here by the Transco Zone 6-NY trading point), closely mirror 2012 forward prices at the Henry Hub. Northeast gas prices behave differently, with spot and forward prices higher during colder months due to expectations regarding pipeline constraints in transporting natural gas to the Northeast during times of high natural gas demand.

Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite.

Phil Flynn: The Widow Maker Is Making OUT

2012-01-05T16:13:00.000-08:00

They of course call it the widow maker or the unimaginative perhaps the heating oil gasoline spread. The Spread has been soaring as the heating oil market is reflecting all of the news that can pact supply by the preponderance of news that has driven oil. The news is getting more bullish for heating oil, diesel and fuel oil and more bearish for oil.

Whether you are talking about the agreement in principle by the European Union to impose an oil embargo on Iran or the closure of Petro Plus refineries in Europe the spread just continues to soar. Of course the other side of that coin is the fact that gasoline demand is weak. As we told you the EU will move forward on an oil embargo and the US made it harder for Iran to sell oil by new banking sanctions. This will tighten Distillate supply in Europe while gasoline demand is tanking!

The MasterCard Spending Pulse showed just how weak by reporting that Gasoline demand in the United States plunged 1.297 million bpd or 13.7% to 8.160 million bpd during the week ended Dec. 30, according to data released today by SpendingPulse, which is published by MasterCard Advisors, the professional arm of MasterCard Worldwide.

SpendingPulse reported 57.122 million bbl of gasoline was sold at retail outlets during the week reviewed, tumbling 9.079 million bbl versus the prior week. While the market was focused on the Iranian drama and word that the EU as expected would put on sanctions the good news was that French refiners decide not to call for a national strike. Also Heating oil is getting a boost from the return of winter, that north eastern cold blast is driving prices in many commodities. Even OJ is soaring as fears that a freeze in Florida may do damage to the Orange trees.

And a frosty reception the French 10 year auction may give us a break to get long. Gold looks like it has hit bottom. Now some say that gold rallied in response to the EU sanctions on Iran but it seems strange that oil fell back and gold did not. It shows you that there is something more to the gold rally. Gold of course did perform better in terms of the Euro as safe haven European buying seemed to gravitate towards the yen Silver on the other hand was weaker.

Of Course despite the recent weakness in silver and it ignominious correction the average annual price of $35.12 per ounce last year, set a new price record and was a 74% gain over the 2010 average annual price of $20.19 per ounce. We are seeing some long gold short silvers as the small investors are not ready to believe in the precious metals rally just yet.

Natural Gas could not stay below $300 for very long. A blast of winter and a upcoming injection report more than likely cause some short covering. That is despite a warm up in the Midwest! Winter? What winter? We should see a 76 bcf withdrawal and will leave supply at a record high for this time of year.

More Rain In Argentina? Maybe? The Beans pull back a bit Some experts are saying that id Argentina crop could be down by 2 to four million tons but could lose as much as 10 million if they do not get rain.

Check out Phil's service by emailing him at pflynn@pfgbest.com

Precious Metals, Equities and Crude Oil Long Term Outlook

Crude Oil Bulls "Cling" to Bullish Trade Triangles

2012-01-05T14:12:00.000-08:00

Crude oil closed lower due to profit taking on Thursday as it consolidates some of the rally off December's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. Closes below the 20 day moving average crossing at 98.84 would signal that a short term top has been posted.

First resistance is Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.55. Second support is the 20 day moving average crossing at 98.84.

Crude oils chart Analysis Score of +90 this market remains very much in a strong upward trend, despite today’s pullback. The crude oil market has resistance starting at $104 up to the $105 level. Long and intermediate term traders should be long this market with appropriate money management stops. Monthly, weekly and daily Trade Triangles all remain bullish.

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ONG: Crude Oil Daily Technical Outlook For Thursday Jan. 5th

2012-01-05T10:26:00.000-08:00

Crude oil lost some upside momentum after breaching 103.37 resistance but retreat is so far shallow. Intraday bias remains on the upside and sustained break of 103.37 will confirm resumption of whole rise from 75.94 and should target 114.83 key resistance next. Meanwhile, break of 98.30 support is needed to signal topping. Otherwise, we'll stay cautiously bullish in crude oil even in case of deeper retreat.

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 completed 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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EIA: The Strait of Hormuz is the World's Most Important oil Transit Choke Point

2012-01-04T15:23:00.000-08:00

The Strait of Hormuz (shown in the oval on the map), which is located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Hormuz is the world's most important oil choke point due to its daily oil flow of almost 17 million barrels per day (bbl/d) in 2011, up from between 15.5-16.0 million bbl/d in 2009-2010. Flows through the Strait in 2011 were roughly 35% of all seaborne traded oil, or almost 20% of oil traded worldwide.

On average, 14 crude oil tankers per day passed through the Strait in 2011, with a corresponding amount of empty tankers entering to pick up new cargos. More than 85% of these crude oil exports went to Asian markets, with Japan, India, South Korea, and China representing the largest destinations.
At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two mile buffer zone. The Strait is deep and wide enough to handle the world's largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.

Several alternatives are potentially available to move oil from the Persian Gulf region without transiting Hormuz, but they are limited in capacity, in many cases are not currently operating or operable, and generally engender higher transport costs and logistical challenges.

Alternate routes include the 745-mile Petroline, also known as the East-West Pipeline, across Saudi Arabia from Abqaiq to the Red Sea. The East-West Pipeline has a nameplate capacity of about 5 million bbl/d, with current movements estimated at about 2 million bbl/d.
The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to the Petroline to the Red Sea, has a 290,000-bbl/d capacity.
Additional oil could also be pumped north via the Iraq-Turkey pipeline to the port of Ceyhan on the Mediterranean Sea, but volumes have been limited by the closure of the Strategic Pipeline linking north and south Iraq.
The United Arab Emirates is also completing the 1.5 million bbl/d Abu Dhabi Crude Oil Pipeline that will cross the emirate of Abu Dhabi and end at the port of Fujairah just south of the Strait.
Other alternate routes could include the deactivated 1.65-million bbl/d Iraqi Pipeline across Saudi Arabia (IPSA) and the deactivated 0.5 million-bbl/d Tapline to Lebanon.

EIA's World Oil Transit Chokepoints analysis brief contains additional information about other chokepoints, and the Middle East & North Africa overview contains additional information about countries in the region.

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ONG: Crude Oil Daily Technical Outlook For Wednesday Jan. 4th

2012-01-04T08:10:00.000-08:00

The retreat from 101.77 was relatively brief and crude oil got strong support from 4 hours 55 EMA. Subsequent rally sent crude oil back to 103.18 so far. Intraday bias is back on the upside for 103.37 resistance. Break there will confirm that rise from 74.95 has resumed and should target 114.83 resistance next. On the downside, below 98.30 minor support will dampen this immediate bullish view and flip bias back to the downside to extend the consolidation from 103.37 instead.

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 completed 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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Will Crude Oil be the New Gold Standard in 2012?

2012-01-03T15:47:00.000-08:00

Crude oil is on the move. Tensions, technicals and Trade Triangles are propelling crude oil higher!

February crude oil closed higher on Tuesday as it extended the rally off December's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, November's high crossing at 103.28 is the next upside target. Closes below the 20 day moving average crossing at 98.70 would signal that a short term top has been posted.

First resistance is November's high crossing at 103.28. Second resistance is the May 2011 high crossing at 105.34. First support is the 20 day moving average crossing at 98.70. Second support is the 38% retracement level of the October-November rally crossing at 92.73.

With a Chart Analysis Score of +100, this market is in a strong upward trend. The crude oil market has resistance starting at $102 up to the $103 level. Long and intermediate term traders should be long this market with appropriate money management stops.

Monthly Trade Triangles for long term trends is bullish. Weekly Trade Triangles for intermediate term trends is bullish. And daily Trade Triangles for short term trends are bullish.

Just click here to check out Adam Hewisons first video of 2012.

Five Best Trade Ideas for the Next Two Weeks

Simple 2012 Trends to Profit from Next

2011-12-30T19:52:00.000-08:00

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

Five Best Trade Ideas for the Next Two Weeks

2011-12-29T07:44:00.000-08:00

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.

Just click here to get My FREE Weekly Newsletter Here

Chris Vermeulen

Market Looks Poised to Reverse Hard to Downside Within Days

2011-12-28T19:00:00.000-08:00

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

2011-12-27T14:57:00.000-08:00

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

Holiday Short Squeeze & Crude Oil Trade Idea

2011-12-24T08:24:00.000-08:00

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.

Let’s take a quick look at how the week finished......

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!

Chris Vermeulen

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Gold and Silver on the Verge of a Big Move

2011-12-21T18:23:00.000-08:00

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

2011-12-21T06:34:00.000-08:00

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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Geopolitical Worries Boost Crude

2011-12-20T20:27:00.000-08:00

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!

2011-12-20T08:59:00.000-08:00

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

2011-12-19T19:31:00.000-08:00

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

2011-12-19T08:32:00.000-08:00

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

2011-12-18T07:14:00.000-08:00

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

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

2011-12-17T06:18:00.000-08:00

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

2011-12-16T11:50:00.000-08:00

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.

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.

Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite.

Crude Oil? Bah Humbug!

2011-12-16T09:43:00.000-08:00

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”

2011-12-16T06:17:00.000-08:00

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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Bears Maintain Near Term Technical Advantage Going Into Fridays Session

2011-12-15T20:02:00.000-08:00

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

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

2011-12-14T12:01:00.000-08:00

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......

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

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

2011-12-14T06:05:00.000-08:00

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

Crude Jumps On False Iran Rumor, But Holds Onto Gains

2011-12-13T19:42:00.000-08:00

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

2011-12-13T17:44:00.000-08:00

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

2011-12-13T06:40:00.000-08:00

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

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

2011-12-12T14:32:00.000-08:00

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

Crude Oil Trader

Crude Oil, Gold and Natural Gas Market Commentary For Thursday January 26th

EIA: Domestic Supply of Liquid Fuels Projected to Increase, Resulting in Fewer Imports

Gold Appears to Break Out of it's Down Trend

Mid-Week Trend Conclusion:

Crude Oil Moves Higher on Federal Reserve Statement

Stalemate Between European Policy Makers Holds Crude Oil Bulls Back

Apache CEO Steve Farris on Cordillera Acquisition

European Union Ban on Iranian Imports Give Crude Oil Bulls a Boost

EIA: Arctic Crude Oil and Natural Gas Resources

Resource basins in the Arctic Circle region (click to enlarge)

ONG: Crude Oil Weekly Technical Outlook For Saturday January 21st

OilPrice: China to Aid Saudi Arabia in Nuclear

Crude Oil Bulls Gaining Much Needed Momentum

Crude Oil, Gold and Natural Gas Mid Week Market Commentary For Wednesday January 18th

The Dollar, Weak Earnings Indicate a Top is Near For The S&P 500

Crude Oil Closes Higher But Bears Maintain the Momentum

Gold Trend Forecast for the 1st Quarter of 2012

ONG: Weekly Fundamentals..... Geopolitical Tensions Drive Crude Oil Volatility

Is This Pullback in Crude Oil a Buying Opportunity?

Rigzone: Crude Oil Falls As Euro Zone Woes Resurface

Phil Flynn: To Embargo or not to Embargo, That is Indeed the Question

ONG: Sharp Move Dominates Oil Market, Bears Take the Momentum

Crude Oil Bulls Lose Momentum on Sharp Drop

Crude Oil Moves into Positive Territory on all Trade Triangles

EIA: Brent Crude Oil Averages Over $100 Per Barrel in 2011

Crude Oil Settles Lower after US Oil Data

ONG: Crude Oil Daily Technical Outlook For Wednesday January 11th

Crude Oil Closed Higher on Tuesday Ending a Three Day Correction

ONG: Crude Oil Prices Lifted by Iranian Tensions Again

Crude Oil, Gold and Natural Gas Market Commentary For Monday Jan. 9th

Could Crude Oil Prices Intensify a Pending SP 500 Sell Off?

EIA: U.S. Refineries and Blenders Produced Record Amounts of Distillate Fuels

ONG: Crude Oil Weekly Technical Outlook For Sunday Jan. 8th

Phil Flynn: Jobs Baby Jobs!

Iran Tension Fails to Push Crude Oil Through Resistance

Rigzone: Crude Ends Lower On Weak Equities, Dollar Gains

EIA: Current Natural Gas Forward Prices Signal Rising....But Still Low Prices in 2012

Phil Flynn: The Widow Maker Is Making OUT

Crude Oil Bulls "Cling" to Bullish Trade Triangles

ONG: Crude Oil Daily Technical Outlook For Thursday Jan. 5th

EIA: The Strait of Hormuz is the World's Most Important oil Transit Choke Point

ONG: Crude Oil Daily Technical Outlook For Wednesday Jan. 4th

Will Crude Oil be the New Gold Standard in 2012?

Simple 2012 Trends to Profit from Next

Five Best Trade Ideas for the Next Two Weeks

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

Market Looks Poised to Reverse Hard to Downside Within Days

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

Holiday Short Squeeze & Crude Oil Trade Idea

Gold and Silver on the Verge of a Big Move

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

Geopolitical Worries Boost Crude

Phil Flynn: The Hopes and Fears!

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

Crude Oil Bears Take a Clear Near Term Advantage

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

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

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

Crude Oil? Bah Humbug!

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

Bears Maintain Near Term Technical Advantage Going Into Fridays Session

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

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:

OPEC Agrees to 30 Million Barrel Output Limit

Crude Jumps On False Iran Rumor, But Holds Onto Gains

Dennis Gartman: The Gold Bull Run is Dead

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

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

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