2011 Crude Oil Price is All About The Double Dip

At this point the future of oil isn't about inventory and current demand. Obviously oil is in the position to trend higher to $100 and higher. What it is really about is do you believe a double dip in the U.S. economy is inevitable. If you listen to the talking heads they seem to think commodity demand in general will move forward even in the face of a double dip. Everyone is on board the bull train. But how quick they forget.

We personally think that if this type of demand increase continues 2011 is shaping up to be a carbon copy of 2008. Remember 2008? Spiking oil and food prices combined with housing prices taking another hit bringing down more banks and financial institutions with them.

All of this could be a distant memory and $93 oil will be called the bull run of 2010. As refinery issues in Canada fade, the Chinese continue to inflate their currency reeling in inflation, end of year low inventory tax advantages disappear and traders come to their senses that none of this was possible without the QE2 printing presses going full speed. This may be no time to short oil but January 15th and a whole new set of rules is right around the corner.

But we are trading TODAY, and here's the numbers we'll be using......


Crude oil was lower due to profit taking overnight as it consolidates some of the rally off November's low. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.63 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.24. Second support is the 20 day moving average crossing at 89.63. Crude oil pivot point for Thursday morning is 91.77.

Natural gas was higher overnight as it extends the rally off last week's low and is trading above the 20 day moving average crossing at 4.298. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 4.298 would confirm that a short term low has been posted while opening the door for additional short covering gains into the new year. If February renews this month's decline, November's low crossing at 3.913 is the next downside target. First resistance is the overnight high crossing at 4.343. Second resistance is the reaction high crossing at 4.554. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Thursday morning is 4.271.

Gold was slightly lower due to light profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If March extends this week's rally, December's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 1415.40. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1410.00.


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Adam Hewison Lays out 5 Market Calls for 2011

As we wind down 2010 it's no surprise that the Monday morning quarterbacks are coming out of the wood work. Everyone pundit, reporter or writer who considers themselves an “expert” comes out of their ivory towers and makes their annual market predictions for the New Year.

It’s time to kiss those predictions goodbye

I can honestly say that I wish I had a crystal ball like these other forecasters, but that’s not quite how the markets work. You see, markets don’t give a “Rats A**” about what forecasters say or what predictions economists make. The market is the only true voice out there. Think about that for a moment. How many predictions do you remember that were even close to being spot on a year in advance? I remember several forecasts for 2010 and most of them were far from accurate.

Does it make any sense to trade on a year end forecast, not knowing what can happen in this crazy world we live in? It doesn’t make any sense to me or to other professional traders who never trade based on year end predictions. So let’s get back to reality and take a look back on 2010 to see what the big trends are showing for 2011.

1. GOLD: Major Trade Triangles Bullish

Let’s start with everyone’s favorite market, gold. Gold is without question the most emotional market in the world. Investors and traders who are involved with this metal are passionate about its future and that can be a bad thing. Let me explain. Back in 1980 gold peaked around $850 an ounce. Had you purchased gold around that time, it would have taken approximately 30 years for gold to get above that level again. Call it the lost 3 decades.

Now the arguments are that the gold market should be trading well above $2,000 and that the central banks and governments are manipulating the price for their own advantage. Don’t believe it. There are also hundreds of other conspiracy theories that seem to pop up for this particular market. Like I said, it is a passionate and emotional market.

Here’s how I’m going to trade gold in 2011. In 2011, I’m going to rely on MarketClub’s “Trade Triangle” technology which has an excellent track record in gold. By taking a methodical approach and not guessing which way the wind is blowing, you have a far greater chance to close out 2011 with a big plus for the year.

I expect the gold trend will carry over from 2010 and then change somewhere along the line. This is the history of this market. One thing that I can be 100% certain of is that gold prices will fluctuate in 2011. That’s a guarantee!

2. CRUDE OIL: Major Trade Triangles Bullish

Next, let’s take a look at a market that impacts everyone’s pocket book, crude oil. Crude oil recently moved over $90 to two year highs and once again shook up excitement in this market. When looking at the fundamental market, we’re running out of oil, production continues to go down, and no new oil fields have been discovered in the last several years. The other fundamental story is that China and India are becoming more affluent and developing a middle class economy which will lead to increased oil consumption to power their newly purchased cars and scooters. This could all be true, however; it really doesn’t change the way you should be looking at the market. Once again, we are going to rely on MarketClub’s Trade Triangle technology, which has done a stellar job identifying trends in this market over the last few years.

So at the moment, the trend in crude oil is on the upside for 2011.

3. US DOLLAR INDEX: Major Trade Triangles Mixed to Negative

The other big market that everyone is talking about is the US dollar. You may or may not remember the doomsday forecasts in December of 2009 for the dollar. Quite the opposite occurred as the dollar enjoyed a spectacular rally for the next six months. That’s the whole point of this report; listen to the markets and ignore the predictions of the so called experts. Again, we will be relying on our Trade Triangle Technology and the technical approach to follow market trends in 2011.

4. GLOBAL STOCK MARKETS: Major Trade Triangles Bullish
I want to talk about the stock market, both in the US and overseas. One of the more interesting portfolios we created in 2010 was MarketClub’s “Global Strategy” portfolio that tracks five different countries. The MarketClub technique using the ETF markets has worked well for our members. We track the following five countries: Brazil, Russia, India, China and Australia. (This portfolio, which is available to all MarketClub members, can be seen here.) We also follow the ETF SPY as it tracks the S&P500. Once again, we use our Trade Triangle Technology to determine the trends in five ETFs.

5. COMMODITY MARKETS: Major Trade Triangles Bullish

Lastly, I want to talk about the commodity markets. You have no doubt heard or have seen that copper prices are at record highs, but you also have other markets that are jumping up and these are all anticipating both strong demand and are now in the beginnings of an inflationary spiral that we envisioned sometime back. Commodities are going to be very important in the future. Traders should be paying close attention to these markets and creating in a new portfolio manager with various commodity portfolios to track these lucrative markets. If you want to see how we have have performed in these markets you may want to take a look at MarketClub’s “World Cup” Portfolio. Since July of 2007, your money would have multiplied 786.16 %by June of 2010. That’s enough to turn $50,000 into $391,580.00 in just three years.

So maybe this is not as exciting or as hyped up as someone saying, “Here are my top five picks for 2011,” but it’s a way to make real money in 2011 and not without having to wing it like so many investors will be doing in the new year.

I think 2011 is going to offer some extraordinary opportunities in the markets listed above. Remember, in every crisis or every boom there are opportunities to make money. It’s when things are dull and boring that it becomes more difficult to produce the type of returns that we are looking for.

So what’s my number one tip for 2011? Watch and trade with the MarketClub’s Trade Triangle technology and ignore the hyped up new year predictions. Here’s wishing you every success in 2011.

Guest blogger Adam Hewison is the Co-founder of MarketClub/INO.com




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Let's Look at 2010 and What's Ahead For Us in 2011

No one can argue that 2010 was a fantastic year for traders. Yes there were some downs, with the economy and all, but trading wise it was outstanding!

I'm sure you've read an article or two that I've posted from Chris Vermeulen, but I have a little more unknown insight into his trading service and it's records...

This is his 2010 members only trading performance......its audited and 100% verified:

But there's something missing......

The last 5 closed trades and their results!
SPY 0.9%, Nov 12 - Nov 15
GLD 1.2%, Nov 4 - Nov 12
SPY 3.5%, Oct 27 - Nov 5
TBT 2.4%, Oct 21 - Nov 2
GLD (1.1%), Oct 19 - Oct 21

Second: He and his members currently have three open positions with the following gains.....

Open Position..........65%
Open Position..........28%,
Open Position............9%

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Is Consumer Confidence and Housing Enough to Stop Crude Oil's Run?

No doubt that 2010 was no 2009 when it comes to oil prices with 2010 bringing a mere 14% gain compared to 2009's 78%. Can 2011 continue the run in the face of even worse consumer confidence reports in the U.S. and a larger than expected drop in home values as the S&P/Case-Shiller index of U.S. property values reported a decline of 0.8 percent in October from a year earlier. If anything can bring down the commodity and equity markets in 2011 it's the much feared double dip in the U.S. housing market.

Say it can't happen? Like anything else in life, just follow the money. The smart money. Why are the banks refusing home loans without large cash down payments? Simple, because when issuing a loan it is really the bank that is investing in the home, not the home owner. The lender is only hoping the home owner will pay it off for THEM! Smart money [the banks in this case] know that the homes are not worth the current prices even as low as they are, making a double dip inevitable.

We know what this will do for consumer confidence in the U.S. but will it stop China and India's rapid expansion and continued increase in energy demand? Unlikely, welcome to the new world economy. Here's your trading numbers for Wednesday morning......

Crude oil was lower due to light profit taking overnight. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.45 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.08. Second support is the 20 day moving average crossing at 89.45. Crude oil pivot point for Wednesday morning is 90.94.

Natural gas was slightly lower overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 4.295 are needed to confirm that a short term low has been posted. If February renews this month's decline, November's low crossing at 3.913 is the next downside target. First resistance is the 20 day moving average crossing at 4.295. Second resistance is the reaction high crossing at 4.554. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Wednesday morning is 4.240.

Gold was slightly lower due to light profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If March extends Tuesday's rally, this month's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 1410.00. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1398.70.


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Free MarketClub Gold Alert!

Tuesday morning MarketClub issued an "enter long" for short term traders with a GREEN Daily “Trade Triangle” @ $1,387.72. Trade Triangles for intermediate and long term traders continue to remain in long positions.


If you are not yet a member of MarketClub see what you are missing with our 30 Day Risk Free trial and receive 3 valuable bonuses just for giving us a try.


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Commodity Traders to China....."Good Start Guys, But Not Enough"

Crude oil and commodity traders seem to be telling China "good start guys, but not enough" as commodity prices appear to be holding up with support of the continued bad weather in Europe and the U.S.

The usual low volume holiday trading is setting up an interesting first week for 2011. Will this "soft landing" in China's pullback be healthy and create sustainable economic growth in China?

The U.S. dollar showed continued weakness for a fourth day, keeping the appeal for commodities going in the U.S. markets. Traders are looking for U.S. oil stockpiles to decrease by 3 million barrels from 340.7 million in the week ended Dec. 24, according to the median estimate of nine analysts surveyed by Bloomberg News. With supplies falling this month by 19 million barrels, or 5.3 percent, the biggest decrease since December 2006.

Let's scrape the ice off of our monitors and trade the numbers given us. Here they are for Tuesday morning......

Crude oil was higher overnight and is poised to extend the rally off November's low. Stochastics and the RSI are diverging but are bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.12 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.85. Second support is the 20 day moving average crossing at 89.12. Crude oil pivot point for Tuesday morning is 90.38.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.167. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Tuesday morning is 4.119.

Gold was higher overnight and has renewed the rally off last week's low. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If March renews this year's rally into uncharted territory, upside targets will be hard to project. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1380.90.


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Who's Your Daddy Energy and Oil Traders?

We knew it was coming, China had already surpassed the U.S. [in some people's eyes] as the largest energy user in the world. But China's "surprise" rate hike over the holiday weekend [niiiice guys] was just a friendly reminder who is in charge of determining the price we pay for energy, commodities, food....really anything in the west and the rest of the world now.

Traders expected a rate rise coming out of China, but the timing caught them off guard. After taking loses early in the Sunday evening session markets recovered as traders expected the rate increases would do little to put a halt to China's appetite for commodities.

The news out of China combined with the last week of 2010 signaling an end to tax break season for refiners in the U.S. has most investors calling a top in crude oil.

While mostly bad news has been coming out of Europe, oil and energy traders have been given some holiday cheer in the form of horrible weather. Worst then normal conditions have energy needs across Europe spiking.

Here's Monday's trading numbers to get your week started......

Crude oil was lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are diverging but are turning bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.89 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.67. Second support is the 20 day moving average crossing at 88.89. Crude oil pivot point for Monday morning is 90.29.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.189. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Monday morning is 4.17. With a score of -85 our "Smart Scan Chart Analysis" of natural gas etf UNG confirms that a short term counter trend move is underway. When this action is over look for the longer term negative trend to resume.

Gold was steady to slightly higher overnight as it consolidates some of last Thursday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is


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Even if Santa Forgot you, The Crude Oil Trader and MarketClub Didn't!

Did Santa forget you this year? Did he leave a lump of coal in your stocking? Not to worry, our friends at MarketClub have a gift for you. We're talking about a real, free of charge, no obligation, gift. Right now you can take advantage of TWO WEEKS of MarketClub on us. If you've been considering taking MarketClub for a test drive, what better time than when you're getting ready for 2011 trading?

No credit cards and no obligation, just sign up and take advantage today.

Just click here to sign up for TWO COMPLIMENTARY WEEKS of MarketClub - the club Where Members Profit.

Happy Holidays from all of us here at The Crude Oil Trader




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Smooth Sailing For Crude Oil Bulls or Bearish Set Up?

Crude oil bulls are enjoying a gift from old Saint Nick. After hitting 90.79 in the overnight session the bulls are now being given a chance to break out of this month's trading range and have visions of $100 oil glistening with holiday cheer! But smart bears that know how to play these set ups with tight stops are peeking around the Christmas tree with such holiday glee. If the bears are regifted with trading below 89.06 [minor support] the trend will flip back to the downside to extend the consolidation from 90.76.

With so many commercial traders taking next week off you have to ask yourself "are you willing to sit on these oil long positions going into the holiday"? Enjoy your Christmas gifts and at the very least take part of your profits. Here's your trading numbers for Thursday morning.....

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below last Wednesday's low crossing at 87.43 are needed to confirm that a short term top has been posted. First resistance is this month's high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.49. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Thursday morning is 90.38.

Natural gas was lower overnight as it extends this week's trading range. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.280 are needed to confirm that a short term low has been posted. If January renews this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.280. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Thursday morning is 4.102.

Gold was lower overnight as it consolidates some of this week's gains. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 1408.90 are needed to confirm that a short term top has been posted. If March renews the decline off this month's high, the reaction low crossing at 1352.00 is the next downside target. First resistance is Tuesday's high crossing at 1393.00. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1387.50.


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Who Will Win The Battle, The U.S. Dollar or Crude Oil?

It's true, oil demand has improved slightly. But crude oil has still over shot it's real value going into this Santa Claus rally and something has to give. History tells us that the dollar and the currency exchanges will win out. We are still bearish the U.S. Dollar for the long term as Washington shows no sign of easing the printing presses. But the near term weakness in the Euro gives dollar bulls the upper hand against commodities, especially oil.

So despite the TV talking heads wild dreams of $100 oil in the near future we just don't see that until summer of 2011....if even then! But we don't trade this market as if we were pshyic, we trade the numbers given us each and every day. And here are those numbers for Wednesday morning......

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.17 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.17. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Wednesday morning is 89.66.

Natural gas was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.290 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.290. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Wednesday morning is 4.120.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1388.20 would confirm that a short term top has been posted. If March renews this month's decline, the reaction low crossing at 1352.00 is the next downside target. First resistance is the 20 day moving average crossing at 1388.20. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1387.70.


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What Patterns are Telling Us That Gold is Going Up?

David Banister has been keeping us on top of gold lately with his expert use of Fibonacci and Elliot Wave patterns he has been shareing with us. This gold bull market has been moving in very reliable Elliott Wave and Fibonacci patterns for many years now, but once in awhile the waters get a little murky for sure. Recently we have seen a fair amount of volatility near year end as position squaring and year end machinations take hold. With that said, it does appear that Gold should be poised to power higher near term, and I’m looking for a completion to a 5 wave rally that began from about $1,040 per ounce in February of this year.

Over the past several weeks, I see a clear Fibonacci trading day relationship on Gold’s swings from pivot highs to pivot lows. 8 days of correction, 13 days of rally, 8 days of correction is the recent pattern over the past 5 weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:

Based on the recent patterns, I believe we completed a minor wave 3 from the February bottom at $1424 a little over 5 weeks ago, and had a shallow period of 8 days to complete a wave 4 to $1,330. Now, we are in the final 5th wave up pattern to complete an entire 5 wave move from February of 2010. In the near term then, I’m expecting a pretty strong rally from this recent $1365 area to at least $1,480 per ounce, and eventually a good shot at completing the structure at $1525 ranges. Short term, we should begin a wave 3 up here, followed by a 4th wave correction, and then a final and terminal 5th wave. Below is a multi- month weekly chart view of where I see us heading and where we’ve been.

Just Click Here if you’d like to stay updated on a more frequent basis, you can subscribe to David Banister's weekly reports at Market Trend Forecast.Com


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Crude Oil Moving Higher Going Into The Year End, What's New!

As usual oil prices are ending the year with a bullish tone. Not pushing through to new highs, but hovering around the high end of the range established in 2010. But as our calls for Tuesday's trading will show, signals are neutral to bearish telling us traders are trying to put a top in here as we go into the end of the year. Looks like natural gas is going to take in the limelight as we head into 2011 with reminders of the good old take over days in the oil and gas industry. Carl Icahn is seeing to that [check out Dian L. Chu's latest article] and something tells me T. Boone is right around the corner. Ah yes, the good old days. Sometimes you can only dream of being physic and getting ahead of the take over trades. For now here is your trading numbers for Tuesday morning......

Crude oil was mostly steady overnight while extending this month's trading range. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 87.73 are needed to confirm that a short term top has been posted. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 87.73. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Tuesday morning is 88.89.

Natural gas was lower overnight as it consolidates some of Monday's rally. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.317 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.317. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Tuesday morning is 4.167.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 20 day moving average crossing at 1387.60 would confirm that a short term top has been posted. First resistance is the 20 day moving average crossing at 1387.60. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1383.90.


Gold, Crude Oil & Index ETF Trading Analysis

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What is the Holiday Grind, and How Can You Trade It?

We go through this every year and it's amazing how many traders forget how to approach this market every year. It’s that time of year when volume dries up and prices rise into the new year. A lot of individuals are scrambling to prepare for the holidays, even though we had a year to prepare. The big money has already done most of their year end shuffling and will be taking it easy until January.

The market is overbought and sentiment readings are at extreme levels which in the past have been the start of large sell offs and even bear markets. While I am keeping a close eye for a top, there is not much we can do but stay long stocks and commodities until the market tips its hand and distribution selling is in control. The U.S. federal government is the only wild card going into year end that should be on traders’ radars. They have been doing a great job boosting prices in the equities and commodities market, but can they continue to hold things up when the big money and the proverbial herd start unloading positions in 2011?

SP500 Holiday Grind – Daily Chart
This chart shows the slow and steady grind higher that we have seen in the S&P 500. I expect this to continue into 2011 The market in my opinion is on the verge of some serious selling so long positions should be small going forward.

US Dollar On Pause For A Couple of Weeks
This 4 hour candle stick chart of the dollar shows price testing resistance (a previous high). I am expecting to see the U.S. Dollar trade sideways or possibly move closer to the previous high as we enter the new year. A sideways dollar will allow the equity and commodity markets to rise.

Conclusion:
In short, I think we could see an intraday pullback early this week and then a grind higher. The pullback would shake out some weak positions before the holiday march higher takes place. I typically don’t trade much going into the holiday season and new year. I may put on a small long position if I like what I see forming on the charts, but that would likely be about it. Light volume can be very dangerous to trade because sharp price spikes up or down can occur in a blink of an eye catching traders off guard.

If you would like to learn more about trading while getting trade alerts for ETFs just click here to join Chris Vermeulen newsletter at The Gold and Oil Guy.com



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With Quadruple Witching Behind us, How do we Trade on Monday?

The end of trading last week was interesting for traders. Fridays quadruple witching, [when contracts for stock index futures, stock index options, stock options and single stock futures all expire] is known to create some "dynamic moves" in the market. Most asset classes moved higher in Fridays session, including bonds, commodities, stocks and the U.S. Dollar. This is usually a bullish signal. This usually equates to a U.S. Dollar strength/weak assets trade. When this happened earlier in the fall of 2010 it was a prelude to a rally in most commodity names.

So is all of this just another sign that this economic recovery is more sustainable? This is new territory for this new world economy. Can we have a healthy U.S. economy when it relies on the Chinese economy that has been under performing for months as they try to reel in inflation? Any real growth in China and all of the BRIC nations is only going to bring the U.S. higher gas prices. And the chance of real recovery in the U.S. is ZERO in the face of $4.00 per gallon gasoline.

That's why so many fund managers are moving to a trade only plan and not investing for the long term. Take advantage of these bull runs and take your profits using todays trading numbers.....

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 86.82 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is the reaction high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is last Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.82. Crude oil pivot point for Monday morning is 88.50.

Natural gas was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. Closes above the 20 day moving average crossing at 4.318 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.318. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Monday morning is 4.042.

Gold was higher due to short covering overnight as it consolidates some of last week's decline but remains below the 10 day moving average crossing at 1389.20. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 10 day moving average crossing at 1389.20 would confirm that a short term top has been posted. First resistance is the 10 day moving average crossing at 1389.20. Second resistance is the reaction high crossing at 1432.50. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is 1374.80.

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Do we Have a Growing Battle Between the Gold Deflationist and Inflationist?

Life has a funny way of reminding a person that he is not really in control of what is going on around him. While he may be proficient in a few specific areas, his overall knowledge is limited. Last night my hot water heater decided to go on vacation and I thought I’d try to be a real man and fix it. I have a general knowledge of how a hot water heater works, but it dawned on me that knowing how it works and fixing it are two totally separate things.

I immediately realized that I was in over my head and made arrangements to have a repair man come and fix my hot water heater. He arrived first thing this morning and I asked if I could watch not only out of curiosity, but to understand how my hot water heater worked and to learn about the man that was fixing it. He was gracious and took the time to explain my issue thoroughly and as I am writing this he is replacing my heating elements.

The interesting thing about this whole chain of events is that he brought up investments with me. Not because he wanted to talk to me or thought I knew anything, but simply because he knew I worked in that field. When you live in a relatively small town and people knew what you do for a living, they are generally quick to ask questions. He told me what he was doing with his retirement accounts and his plans for retirement in great detail.

I immediately respected him for his general knowledge and it was apparent he had done his own homework. He had made wise decisions, saved money, and invested wisely. Clearly the man working on my hot water heater was planning for a quality retirement lifestyle and it sounded as though his planning was going to pay off. He brought up that he had purchased the copper ETF $JJC when he noticed that copper pipe was becoming more difficult to acquire and he was paying more for it.

Then the conversation changed dramatically as he explained to me that he had recently bought gold coins and the gold ETF GLD. Immediately my ears perked up as I follow gold and oil quite closely as regular readers are aware. He wanted to know if I thought he should buy more on dips and if he had purchased gold at a good price. He told me he thought he had bought around the $1,200 an ounce price level. I replied that I was not qualified to offer investment advice, but that I expected gold was likely going to go through a mild pullback in coming days and weeks......Read the entire article from J.W. Jones.


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European Summits and IEA Reports Not Enough to Fool Commodity Traders

Commodity traders, especially crude oil traders, good be the smartest and least naive people on the planet. It sure didn't take long for them to realize that the IEA could possibly be turning itself into the new OPEC. Remember the old days when OPEC could issue a statement and send markets reeling. Those days appear to be here for the IEA as traders recognized the over "exaggeration" of international demand issued by the IEA this week.

Enbridge pipeline shut down, end of year tax strategies, European Summits, just to name a few, were not enough to take traders eyes off the world oil glut and the real trouble looming in the Euro. Giving the U.S. dollar new strength chasing investors out of the weak dollar/commodities trade.

Commodity traders also showed a lack of confidence in the news coming out of the Brussels Summit. Most traders think their statements just don't offer enough details to give investors any real promise of a concrete plan to shore up the Euro as the down grades just keep coming.

End of week trading is here and it always give an insight into what traders can stomach holding over the weekend. And I am thinking that is not a lot. Here is your trading numbers for Friday......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.32. Stochastics and the RSI are bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 86.47 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.47. Crude oil pivot point for Friday morning is 87.99.

Natural gas was lower overnight as it extends the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, November's low crossing at 3.853 is the next downside target. Closes above the 20 day moving average crossing at 4.329 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.329. Second resistance is last Thursday's high crossing at 4.637. First support is the overnight low crossing at 3.987. Second support is November's low crossing at 3.853. Natural gas pivot point for Friday morning is 4.100.

Gold was lower overnight as it extends Thursday's decline below the reaction low crossing at 1372.10 confirming that a short term top has been posted. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 10 day moving average crossing at 1391.60 would confirm that a short term top has been posted. First resistance is the 10 day moving average crossing at 1391.60. Second resistance is last Tuesday's high crossing at 1432.50. First support is Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Friday morning is 1373.30.

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What Everyone Should Know About Shale Gas

It's no secret that natural gas will play a big role in the U.S. energy needs in years to come. And we need to understand where these sources will come from to make money investing and trading the new sources of natural gas. One of those is shale gas. Shale gas refers to natural gas that is trapped within shale formations. Shales are fine grained sedimentary rocks that can be rich sources of petroleum and natural gas. Over the past decade, the combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical to produce. The production of natural gas from shale formations has rejuvenated the natural gas industry in the United States.

Does the U.S. Have Abundant Shale Gas Resources?
Of the natural gas consumed in the United States in 2009, 87% was produced domestically; thus, the supply of natural gas is not as dependent on foreign producers as is the supply of crude oil, and the delivery system is less subject to interruption. The availability of large quantities of shale gas will further allow the United States to consume a predominantly domestic supply of gas.

According to the EIA Annual Energy Outlook 2011, the United States possesses 2,552 trillion cubic feet (Tcf) of potential natural gas resources. Natural gas from shale resources, considered uneconomical just a few years ago, accounts for 827 Tcf of this resource estimate, more than double the estimate published last year. At the 2009 rate of U.S. consumption (about 22.8 Tcf per year), 2,552 Tcf of natural gas is enough to supply approximately 110 years of use. Shale gas resource and production estimates increased significantly between the 2010 and 2011 Outlook reports and are likely to increase further in the future.

Where is Shale Gas Found?
Shale gas is found in shale "plays," which are shale formations containing significant accumulations of natural gas and which share similar geologic and geographic properties. A decade of production has come from the Barnett Shale play in Texas. Experience and information gained from developing the Barnett Shale have improved the efficiency of shale gas development around the country. Another important play is the Marcellus Shale in the eastern United States. Surveyors and geologists identify suitable well locations in areas with potential for economical gas production by using both surface level observation techniques and computer generated maps of the subsurface.

Check out this EIA article for facts on Shale Gas Formations in the U.S.

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Crude Oil's Strong Resistance and the Return of the Clinton Administration

Wednesday's huge drop in crude oil inventory, the largest in 8 years, appeared to be all the oil bulls needed to finally push through the stubborn $90-$91 resistance level. But slumping gasoline sales in the U.S. and a less then desirable Spain Bond sale has most commodity traders shorting crude near the 90.76 level has they head out the door for the holiday vacation.

Even the return of the Clinton administration, well it sure looks like it doesn't it, was not enough to return confidence to the "if you can drop it on your foot and it hurts trade". Of course this is bringing out the "dollar as bottomed" crowd on every financial news channel. And while the dollar was lower in overnight trading stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term in the dollar.

So sit back and watch our President meet with the finest business leaders in the world and use these trading numbers for Thursdays trading......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.54 signaling that a short term top might be in or is near. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 86.25 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.25. Crude oil pivot point for Thursday morning is 88.18

Natural gas was lower overnight as it extends the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, the reaction low crossing at 4.126 is the next downside target. If January renews the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is last Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the overnight low crossing at 4.162. Second support is the reaction low crossing at 4.126. Natural gas pivot point for Thursday morning is 4.231.

Gold was lower overnight as it consolidates some of this week's rally. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1372.10 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is last Tuesday's high crossing at 1432.50. First support is the reaction low crossing at 1372.10. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1387.50.


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Trading The Inverse Relationship Between The SP 500 and the U.S. Dollar

Between the FOMC meeting, low volume holiday trading and Chinese government banking action this week, no surprise that the street is starting show a lack of confidence in the equities market. This Wednesday we started to see fear (green indicator) reach a level which tells us to start looking for the market to bottoming. I do follow a few other charts and indicators which warn me of a possible trend reversal (high probability setup) before it takes place but the US Dollar and selling volume are key.

As we all know, when the market is trying to top and roll over it tends to be more of a process than a couple day event. It’s this lengthy topping process which has a lot of choppy price action sucking traders into a position much to early or shakes you out of the position before the market does what you anticipated. Knowing that tops tend to drag out for an extended period of time is critical for an options trader simple because of Theta (time decay)

On the flip side, bottoming is more of an event because it tends to happen after a strong wave of panic selling. Fear is the most powerful force in the market (other than the Fed/Manipulators.. but that’s another topic). That being said, when you know what to look for in bottoms you can generally see the market starting to bottom and prepare for it.

The charts below of the US Dollar Index and the SPY clearly show the inverse relationship they have. Right now it seems everything is directly connected with the dollar… it has been like that for most if the year… I will note that its not normally this clear. Anyways, the dollar is currently trading at resistance which means there is a good chance it will turn back down. So if the dollar drops, then it should boost the SPY (equities market) and put in a bottom for stocks.

Looking at the lower chart of the SPY etf you can see that recent prices have dropped down to a support zone. The important thing to note here is how selling volume is ramping up. This to me means more traders are getting worried and are cutting their losses or locking in gains before it gets worse. We typically see panic selling enter the market near the end of pullbacks. Just like in a bull market where the retail trader (John Doe) is the last to buy into a stock before it falls, it’s the same but flipped in a down trend. The retail trader is the last to panic and sell out of their position before the market bounces/rallies.

Currently the equities market looks to be showing signs that a bottom is nearing. Over the next session or two the rest of this equation should come to light as a tradable bottom or to start playing the down side of the market, only time will tell.....

Posted courtesy of Chris Vermeulan at The Gold and Oil Guy.Com

If you would like to learn more and get Chris' trading alerts along with his pre-market morning videos so you know what to look for in the coming session I recommend taking a minute to subscribe to his ETF trading newsletter. Just visit The Gold and Oil Guy.Com




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Higher Interest Rates, Lower Volume.....Is This Run in Commodities Over?

With interest rates making a move upward this week, investors are questioning if the higher rates will make home loans and business loans more expensive to get. Stifling efforts by Congress and the Federal Reserve to strengthen the economy. Welcome to the new U.S. economy, this should be a sign of real economic expansion but it only brings new doubt that the governments stimulus package has any positive effect at all.

For now traders seem to be cautious about riding the bullish momentum in most commodities since they have real support from supply and demand principles. Crude oil is another story. With the failure to push through the $90 dollar per barrel level crude oil bulls were brought back to earth with the truth that we continue to have a glut of oil on the market. And yes, the good old days of having a couple of OPEC members mention the possibility of $100 oil moving the market are gone. Our "friends" in Saudi Arabia have proven to be the only real significant players in setting the price of oil. And it's obvious they prefer the $80+ range, just below what some believe is profitable for Iran. Coincidence?

For crude oil bulls to have any hope of getting their momentum back they need to defend the 20 day moving average at 85.83 and that appears unlikely as they watch their fellow traders head out to Florida and warmer weather for the holidays. Taking precious market volume with them. Here's your complete trading numbers for Wednesday morning......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.40 signaling that a short term top might be in or is near. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 85.83 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is last Friday's low crossing at 87.10. Second support is the 20 day moving average crossing at 85.83. Crude oil pivot point for Wednesday is 88.32

Natural gas was lower overnight as it extends Tuesday's breakout below the 20 day moving average crossing at 4.346 confirming that a short term top has been posted. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, the reaction low crossing at 4.126 is the next downside target. If January renews the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is last Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the overnight low crossing at 4.230. Second support is the reaction low crossing at 4.126. Natural gas pivot point for Wednesday is 4.315

Gold was lower overnight as it consolidates some of this week's rally but remains above the 20 day moving average crossing at 1382.20. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If March renews this year's rally into uncharted territory, upside targets will be hard to project. Closes below the 20 day moving average crossing at 1382.20 would confirm that a short term top has been posted. First resistance is last Tuesday's high crossing at 1432.50. First support is the 20 day moving average crossing at 1382.20. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1401.90.


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Lack of Volume, Lack of Traders....It's Silly Season Again!

From guest blogger Adam Hewison.....

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.


Just click here for a free sample of the "Trading Triangles" that Adam relies on. Also take a minute to consider his "10 Free Trading Lessons". Get next years trading started on the right foot.

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