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Crude oil edged higher to 79.69 initially last week but retreated sharply. Nevertheless, the retreat was contained at 75.90 and rebounded. Near term outlook is mixed and we'll stay neutral first. on the upside, break of 79.69 will indicate that whole rebound from 64.23 is still in progress for 61.8% projection of 64.23 to 79.38 from 71.09 at 80.45 next. On the downside, break of 75.90 will revive the case that crude oil has topped out at 79.69 already and will flip bias back to the downside for 71.09 support for confirmation.
In the bigger picture, there is no change in the view that rise from 64.23 is a correction to fall from 87.15 only. Hence, even in case of further rally, we'd expect strong resistance below 87.15 high and bring reversal. On the downside, break of 71.09 will be the first signal that whole fall from 87.15 is resuming for another low below 64.23 towards 50% retracement of 33.2 to 87.15 at 60.18
In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.....Nymex Crude Oil Continuous Contract 4 Hours, Daily, Weekly and Monthly Charts.
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Crude oil was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI remain bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 76.76 would confirm that a short term top has been posted.
If September renews this month's rally, the reaction high crossing at 79.97 is the next upside target.
First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Friday morning is 77.90
First support is Wednesday's low crossing at 75.90
Second support is the reaction low crossing at 74.70
Natural gas was higher overnight as it extends this month's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If September extends this month's rally, the reaction high crossing at 4.945 is the next upside target. Closes below the 20 day moving average crossing at 4.571 would temper the near term friendly outlook.
First resistance is the overnight high crossing at 4.876
Second resistance is the reaction high crossing at 4.945
Natural gas pivot point for Friday morning is 4.792
First support is the 10 day moving average crossing at 4.639
Second support is the 20 day moving average crossing at 4.571
Commodities were generally firm after strong European confidence data and bigger than expected decline in initial jobless claims in the US. WTI crude oil price rebounded strongly and pared most of the losses made over the past 2 days amid USD's weakness. The front month contract surged to as high as 78.89 before closing at 78.36, up +1.78%. Natural gas rallied as gas storage rose less than expected in the US while gold price also climbed higher and settled at 1168.4, up +0.69%.
The US Energy Department reported gas inventory added +28 bcf to 2919 bcf in the week ended July 23. Stocks dropped -94 bcf from the same period last year but remained +239 bcf (+8.9%) above the 5 year average of 2680 bcf. Gas price extended the rally for a 4th day and settled at 4.827, up +2.31%.
The dollar plunged to a 12 week low against the euro as economic data in the US has been mixed but biased to the downside while that in the Eurozone has shown improvement after enduring a tough period. At the same time, concerns over sovereign crisis in peripheral European countries continue to diminish as debt-ridden economies have been actively implementing fiscal consolidations measures and economic indicators have been better-than-expected.
Initial jobless claims slipped -11K to 457K (consensus: 460K) in the week ended July 24. The drop also brought the 4 week moving average down to 452.5K, the lowest since the beginning of May, from 457K. While the reading was better than expected, the sluggish decline signals that the job market is improving very slowly.
Stock markets failed to be stimulated by the jobless claims report as corporate earnings in the consumer sector were uninspiring. Kellogg reported a -15% decline in net income to $302M in the quarter ended July 3. The management also revised down its profit forecast for the year due to cereal recall last month. Black & Decker, a diversified worldwide supplier of tools and solutions with sales mainly in the US, revised down its sale guidance for 2010. DJIA and S&P 500 fell -0.3% and -0.4% respectively.
Focus of the day is US' GDP report. The economy probably grew by an annualized +2.5% q/q in 2Q10, an ease from +2.7% in 1Q10 and +5.6% in 4Q09.
Everywhere from around the world, the crudes coming to America, every time that flag’s unfurled
crude is coming to America, got a dream to take it there, it’s coming to America. It’s coming to America and coming to America! Give me your poor, your huddles masses but most of all give me your crude. Crude Imports surged hitting the highest level since August of 2006 leading to a whopper 7.3 million barrel build in US Crude supply. This was a far cry from most analysts’ expectations that were looking for a big drop in supply by thinking that Tropical Storm Bonnie would impact imports in a negative fashion.
I on the other hand did predict a build because as I believed that the storm might have the opposite reaction on Imports and it looks like I was right. In fact according to one report we saw from “Gas Oil and Liquids Daily” supplies in Gulf States jumped a whopping 8.18 million barrels, or 4.6%, to 184.6 million. Regional imports gained 1.73 million bpd, or 32%, to a record 7.21 million. The gain was the largest since Gulf traffic resumed after being slowed by hurricanes Gustav and Ike in 2008. The reason that we saw that big jump in the Gulf Coast may have more to do with the aftermath.....Read the entire article.
Crude oil rose for the first time in a week as the dollar weakened against the euro, boosting the appeal of commodities as an alternative investment. Oil gained as much as 2.5 percent as the dollar fell to a 12 week low against the euro. Unemployment also dropped in Germany, and confidence in Europe’s economy improved. Futures gave up some of the gain as U.S. equities declined. “The oil market is being set by the financial markets,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re back to that kind of correlation trade and not paying so much attention to niggly details like rising inventories and rising OPEC production.”
Crude oil for September delivery gained $1.39, or 1.8 percent, to $78.38 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices have risen 24 percent in the past year and are up 3.9 percent this month. The dollar fell against a majority of its most traded counterparts. The euro increased 0.7 percent to $1.3088 in New York. Earlier, it climbed to $1.3107 amid the increased European confidence. The Reuters/Jefferies CRB Index of 19 commodities advanced 1.6 percent to 270.27, the strongest level since May 4. All of the commodities increased. Investment funds appear to be doing “pretty strong buying” of energy commodities, said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Gasoline rose 1.6 percent and natural gas 2.4 percent as floor trading closed at 2:30 p.m. in New York.....Read the entire article.
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Crude oil was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI have turned bearish signaling that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 76.49 would confirm that a short term top has been posted. If September renews this month's rally, the reaction high crossing at 79.97 is the next upside target.
First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97
Crude oil pivot point for Thursday morning is 76.88
First support is Wednesday's low crossing at 75.90
Second support is the reaction low crossing at 74.70
Natural gas was higher overnight as it extends this month's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends this month's rally, the reaction high crossing at 4.945 is the next upside target.
Closes below the 20 day moving average crossing at 4.570 would temper the near term friendly outlook.
First resistance is Wednesday's high crossing at 4.863
Second resistance is the reaction high crossing at 4.945
Natural gas pivot point for Thursday morning is 4.741
First support is the 10 day moving average crossing at 4.600
Second support is the 20 day moving average crossing at 4.570
Most traders I have been talking with are feeling the same thing. Something big is brewing for the equities market but most do not want to get heavily involved until there is a clear direction. The broad market has been consolidating for almost 3 months and it’s important to remember that the larger the consolidation the bigger the move.
Also the biggest and best moves come from failed patterns. So is the big head & shoulders pattern on the SP500 which everyone is yelling about (the sky is falling) really going to happen or is this the BIG fake out? Only time will tell, either way no matter which way it goes I will be sure to catch some of it.
Below area few charts pointing out patterns and trends which could provide some opportunity in the coming days or weeks.
XLF – Financial Sector ETF
Financials play a large roll in moving the major indexes so if this reverse head and shoulders patter breaks out to the upside then the indexes should rally and XLF etf could reach its measured move of $16.50.
USO – Crude Oil Fund
Crude oil almost looked like it was going to breakout and mover higher this week but sellers jumped in sending it lower once again. The daily chart shows a large bearish pennant which is known as a continuation pattern. So it looks as though we should see lower prices for oil.
GLD – Gold Bullion ETF
Gold has been sliding lower for several weeks now and it looks to be showing selling exhaustion. The 5th wave down with the volume spike indicates panic selling as investors cannot hold onto those positions any longer and exit. This is a bullish sign for gold. Also we are seeing gold fall deep into a support level along with the 200 day moving average.
Mid-Week Financial, Oil and Gold Trading Conclusion:
In short, the equities market is in limbo until a clear trend is established. If the financial sector breaks out to the upside then we should see a sizable rally. As for oil it looks to be trading in near the middle of its range but is still in a down trend overall. Gold is almost looking ready for a bounce but I am waiting for more confirmation before jumping on the wagon.
Crude oil closed lower due to profit taking on Wednesday as it consolidated some of this month's rally. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 76.42 would temper the near term friendly outlook. If September renews the rally off this month's low, June's high crossing at 80.82 is the next upside target. First resistance is Tuesday's high crossing at 79.69. Second resistance is June's high crossing at 80.82. First support is the 20 day moving average crossing at 76.42. Second support is the reaction low crossing at 74.40.
Natural gas closed higher on Wednesday as it extended last week's rally. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends this week's rally, the reaction high crossing at 4.945 is the next upside target. Closes below the 20 day moving average crossing at 4.563 would temper the near term friendly outlook. First resistance is today's high crossing at 4.863. Second resistance is the reaction high crossing at 4.945. First support is the 10 day moving average crossing at 4.581. Second support is the 20 day moving average crossing at 4.563.
The U.S. Dollar closed lower on Wednesday but remains above the 50% retracement level of the November-June rally crossing at 82.15. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. If September extends the decline off June's high, the 62% retracement level of the November-June rally crossing at 80.47 is the next downside target. Closes above the 20 day moving average crossing at 83.49 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.69. Second resistance is the 20 day moving average crossing at 83.49. First support is Tuesday's low crossing at 81.97. Second support is the 62% retracement level of the November-June rally crossing at 80.47.
Gold closed higher due to short covering on Wednesday as it rebounds off the 50% retracement level of this year's rally crossing at 1158.30. Stochastics and the RSI are bearish hinting that additional weakness is possible near term. If August extends the decline off June's high, the 62% retracement level of the aforementioned decline crossing at 1132.70 is the next downside target. Closes above the 20 day moving average crossing at 1196.40 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1184.90. Second resistance is the 20 day moving average crossing at 1196.40. First support is today's low crossing at 1155.60. Second support is the 62% retracement level of the aforementioned decline crossing at 1132.70.
Another failed upside breakout as the global oil market continues to wallow in this endless trading range. As the bull and bear frustrations continue to mount, I have heard traders on both sides of the market that tell me that somehow the markets are wrong and that the fundamentals do not justify the current price. In other words that the market is somehow fundamentally flawed and that the price is out of whack with either your bullish or perhaps bearish reality. Oil bulls are frustrated with the lack of investment that they see in the oil industry and feel we are over estimating the drop in demand.
They point to China and its explosive growth and its growing appetite for oil. They say that the market is not correctly accessing event risk especially with the type of talk coming out of Iran and Israel in recent days especially in the aftermath of European sanctions. The oil bulls say that despite the drop in demand that as the economy continues to recover oil supplies will tighten faster than you think. The latest to express that frustration was noted oil bulls Goldman Sachs who just recently exclaimed that crude oil prices are “significantly” below the level warranted by fundamentals.....Read the entire article.
Crude oil was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are overbought and are turning bearish signaling that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 76.45 would confirm that a short term top has been posted. If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target.
First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Wednesday morning is 77.99
First support is Tuesday's low crossing at 76.79
Second support is the 20 day moving average crossing at 76.45
Natural gas was higher overnight as it consolidates above the 20 day moving average. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into early August. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.
First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945
Natural gas pivot point for Wednesday morning is 4.630
First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290
ConocoPhillips' (COP) second quarter earnings more than quadrupled on higher commodities prices and as its refining business returned to profitability, with results topping expectations. The company also reached an agreement to sell about 40% of its stake in Russian oil giant OAO Lukoil Holdings (LUKOY, LKOH.RS) and unveiled plans to sell all of it by the end of next year, instead of prior plans to just halve it. Conoco agreed to sell the initial part of its 20% stake in Lukoil for $3.44 billion. The deal is set to close in the current quarter. The rest will be sold to either Lukoil or on the open market.
Conoco, the third largest U.S. oil company by market value after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), is in the midst of a major restructuring program that includes plans for $10 billion in divestitures in an effort to repay debt, a shift from a debt fueled acquisition spree when commodities prices were soaring. It reported a profit of $4.16 billion, or $2.77 a share, up from $900 million, or 57 cents a share, a year earlier. The latest quarter included a net $1.10 a share in gains. Analysts polled by Thomson Reuters forecast earnings of $1.56 a share. Conoco didn't provide revenue figures.
Exploration and production, which accounts for most of the company's profits, saw earnings soar on higher prices, though, as average daily oil and gas production fell 7.5% amid normal field declines and planned maintenance. Conoco's refining business profit also soared as margins strengthened and utilization rates improved. Refiners have benefited as demand for gasoline and diesel began to improve this year, though the sustainability is highly uncertain. Shares closed Tuesday at $54.44 and were inactive premarket. The stock is up 6.6% this year.
Crude oil closed lower due to profit taking on Tuesday as it consolidated some of this month's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 76.41 would temper the near term friendly outlook. If September extends the rally off this month's low, June's high crossing at 80.82 is the next upside target. First resistance is today's high crossing at 79.69. Second resistance is June's high crossing at 80.82. First support is the 20 day moving average crossing at 76.41. Second support is the reaction low crossing at 74.40.
Natural gas closed higher on Tuesday as it extended last week's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above last Thursday's high crossing at 4.699 are needed to confirm that a short term low has been posted. Closes below the 10 day moving average crossing at 4.543 would temper the near term friendly outlook. First resistance is last Thursday's high crossing at 4.699. Second resistance is the reaction high crossing at 4.945. First support is the 10 day moving average crossing at 4.543. Second support is the reaction low crossing at 4.290.
The U.S. Dollar closed higher due to short covering on Tuesday as it consolidates above the 50% retracement level of the November-June rally crossing at 82.15. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. If September extends the decline off June's high, the 62% retracement level of the November-June rally crossing at 80.47 is the next downside target. Closes above the 20 day moving average crossing at 83.69 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.82. Second resistance is the 20 day moving average crossing at 83.69. First support is today's low crossing at 81.97. Second support is the 62% retracement level of the November-June rally crossing at 80.47.
Gold closed lower on Tuesday and tested the 50% retracement level of this year's rally crossing at 1158.30. Stochastics and the RSI are turning neutral to bearish hinting that additional weakness is possible near term. If August extends the decline off June's high, the 62% retracement level of the aforementioned decline crossing at 1132.70 is the next downside target. Closes above the 20 day moving average crossing at 1200.50 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1189.50. Second resistance is the 20 day moving average crossing at 1200.50. First support is today's low crossing at 1156.90. Second support is the 62% retracement level of the aforementioned decline crossing at 1132.70.
Gee I miss the old days when a headline or two would get the oil screaming. When the markets feared that even the loss of just one drop of oil could knock the world out of its delicate supply versus demand balance. You remember those days not to long ago when the market soared on even the most mundane headline. Instead what we have now a lack of passion and that oh so boring market stability.
Oh sure oil may try to reluctantly breakout to the upside as it follows the stock-market on its earnings fueled optimistic rally yet deep down it really does not want too. You see the oil glut the likes of which we haven’t experienced in decades is leading to a drab oil market and heavens forbid less interesting Energy Reports, Oh No! So let’s pretend if only for today that these stories that used to drive markets wild actually still matter to price. Like for example say sanctions on Iran.
Something like, oil traders ran for cover as the long awaited sanctions on a still defiant Iran took hold. (Ok well everything is true except for the running for cover part) Iran’s President Mahmoud Ahmadinejad warned that sanctions imposed by arrogant Western powers will not slow their nuclear ambitions. (Yikes!) The European Union adopted new sanctions targeting Iran's foreign trade, banking and energy sectors brought sharp criticism from.....Read the entire article.
Crude oil was higher overnight and poised to extend last Thursday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.
If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below the reaction low crossing at 74.70 would temper the near term friendly outlook.
First resistance is last Friday's high crossing at 79.60
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Tuesday morning is 78.79
First support is the 10 day moving average crossing at 77.82
Second support is the 20 day moving average crossing at 76.49
Natural gas was higher overnight as it consolidates above the 20 day moving average crossing at 4.556. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.
First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945
Natural gas pivot point for Tuesday morning is 4.586
First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290
Crude oil traded near an 11 week high in New York as equities rallied around the world and Goldman Sachs Group Inc. said crude prices are too cheap. Oil was at about $79 a barrel before a government report due tomorrow that may show U.S. fuel supplies increased last week. Goldman Sachs said futures prices are “significantly” below the level warranted by “fundamentals,” offering buying opportunities for this year and next.
“We expect an average of $92 next year, so on a longer term horizon prices are too cheap, but not far too cheap,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “Crude faces some resistance around $80 as although fundamentals are slowly improving they’re not yet strong enough.” Crude for September delivery was at $79.28 a barrel, up 30 cents, in electronic trading on the New York Mercantile Exchange at 1:23 p.m. London time. Brent crude for September settlement traded at $77.82 a barrel, up 32 cents, on London’s ICE Futures Europe exchange. Futures rose as high as $79.60 a barrel on July 23, the highest intraday price since May 6.
European stocks rose for a sixth day as UBS AG and Deutsche Bank AG reported earnings that beat estimates and the Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules. The Stoxx Europe 600 Index gained 0.6 percent to 258.65. Goldman Sachs said in a report yesterday that the balance between supply and demand will continue to tighten in the second half of this year as global economic growth boosts demand, returning inventories to “more normal” levels.....Read the entire article.
Crude oil closed up $0.01 at $78.99 a barrel today. Prices closed nearer the session high today. Bulls have the slight near term technical advantage. The next near term upside price objective for the bulls is producing a close above major psychological resistance at $80.00 a barrel.
Natural gas closed up 2.7 cents at $4.59 today. Prices closed near the session high today and saw tepid short covering in a bear market. The bears have the overall near term technical advantage. Prices are still in a six week old downtrend on the daily bar chart.
The U.S. stock indexes closed higher and near the session high today in the wake of upbeat economic data in the form of a stronger than expected new home sales report today. The stock index bulls have gained some fresh upside near term technical momentum recently and the indexes today hit fresh multi week highs.
The U.S. dollar index closed down 44 points at 82.18 today. Prices closed near the session low today and hit a fresh three month low. Bears have the near term technical advantage. Prices are in a seven week old downtrend on the daily bar chart.
Gold closed down $4.50 at $1,187.10 today. Prices closed near mid-range today in quieter trading. A weaker U.S. dollar index today did not help the gold bulls. The gold market bulls still have the slight overall near term technical advantage as trading has turned choppy recently. Prices just last month hit a fresh all time record high. However, prices are also in a six week old downtrend on the daily bar chart.
With Bonnie behind us and more economic ahead of us the oil market currently is in a state of flux. The market continues to be supported by economic earnings related optimism but at the same time it has to worry about current state of oversupply. Oil and the products remain range bound and will continue to see swings perhaps on both sides of unchanged throughout the day. When the big news of the day is whether or not Tony Heyward will step down or be pushed out of BP has to wonder whether or not the markets are focused on what it should be focused on. The Financial Times reports on another way that Shale Gas production is impacting the world.
The FT says that “International energy groups are set to miss out on billions of dollars of future sales during the next decade as China, their most voracious customer, aggressively develops its own large gas reserves and drastically cuts its imported gas requirements, a new study shows. As a result they have a limited window to export their growing new volumes of gas to China. Industry consultant Wood Mackenzie says China will need only half as much more liquefied natural gas from 2020 onwards than it will require in the next decade and it will need no additional gas transported by pipeline after 2020.....Read the entire article.
Crude oil was lower due to profit taking overnight as it consolidates some of last Thursday's rally. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.
If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below the reaction low crossing at 74.70 would temper the near term friendly outlook.
First resistance is last Friday's high crossing at 79.60
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Monday morning is 78.99
First support is the 10 day moving average crossing at 77.60
Second support is the 20 day moving average crossing at 76.45
Natural gas was lower overnight as it consolidates some of last Thursday's rally. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.
First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945
Natural gas pivot point for Monday morning is 4.599
First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290
The second half of last week we saw some strong price action in the equities market. The SP500 broke through the 5 and 50 day moving averages closing the week just under key resistance levels. The SP500 futures will find resistance at the June high $1099.25, $1100 which is whole number then at $1103 which is the 200 day moving average. Each of these are clumped together making it really just one solid area which sellers will be waiting to short the market.
The market momentum and internals are looking strong for the equities market overall. With last weeks strong close we have seeing the percentage of stocks closing above their 50 and 200 day moving averages surge from 40% to 68% from the previous week. Stocks closing above their 20 day moving average jumped from 40% to 82% from the previous week. Seeing this type of shift in the market Momentum is generally a bullish indicator.
From a quick glance at the internals it looks as though Monday will trade flat/negative for the session. Reason being is that the NYSE Advance/Decline line is telling us the market is overbought when looking at a short term time frame. I would expect some selling Monday or possibly we get a gap up, then a sell off early in the session while the market digests last weeks strong closing.
Gold
Bullion has been giving mixed signals for while now. It looks like there has been a possible ABC retace, but on the other hand it looks to be forming a stair step pattern lower (series of bear flags). Until we get something more concrete from the charts lets just keep our eye on it for now.
Crude Oil
The past month we have seen oil form a bear flag which generally leads to lower prices. That said oil continues to grind its way higher closing at a key resistance level. This could be a possible double top before heading lower or we could get a breakout and rally this week. I know that does not sound helpful but remember oil is very sensitive to weather (hurricanes), US Dollar and geopolitical events making it much more unpredictable than one may think. That said I am not trading it right now.
Pre-Week Trading Warm Up
I feel the equities market has some strength behind it. But we must see the SP500 futures contract close strongly above the $1103 area. With the market overbought and trading at resistance I am favoring some early weakness Monday
As for the gold and oil, I am just going to keep an eye on them. I’m just not feeling/seeing the patterns which I find tradable at the moment for a low risk setup.
Quick Trading Tip: I try to always analyze and trade the market the way which has always worked for me. Keeping my emotions in control and filtering out as much news, events and opinions as possible so I can think clearly while I focus on my low risk setups. The past couple months have had big news and events unfolding making it harder for traders to stay focused. It is crucial for traders to step back and clear their heads from all the news, hype and opinions shared across all the mediums and just look at a simple chart analyzing the price, volume and trend.
Crude Oil traded near $79 a barrel in New York for a third day as advancing equities in Asia bolstered speculation the global recovery in fuel demand will be sustained. Crude earlier rose as much as 0.4 percent as the MSCI Asia Pacific Index reached a one month high after most European banks passed stress tests aimed at assuring investors. Consumer spending, which accounts for about 70 percent of the U.S. economy, the world’s largest, probably increased last quarter, according to a Bloomberg News survey of economists before a report this week.
“The market is on the way to test $80 and the stock market is one of the factors,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge Group in Tokyo. “After the result of the stress tests, we have to continue to monitor the financial markets. Even on Friday, the markets sustained gains.”
Oil for September delivery was at $78.99 a barrel in electronic trading on the New York Mercantile Exchange, up 1 cent, at 1:05 p.m. Singapore time. On July 23, the contract fell 32 cents, or 0.4 percent, to $78.98 after settling at $79.30 on July 22, the highest since May 5. Futures have gained 16 percent in the past year.
The MSCI Asia Pacific Index climbed 0.3 percent to 117.72 as of 1:25 p.m. in Tokyo amid optimism over the health of the global economy. Finance companies were the biggest boost to the index, set for the highest close since June 22.....Read the entire article.
Crude oil's break of 79.38 resistance indicates that whole rebound from 64.23 is still in progress and has resumed. Further rise will be expected as long as 76.16 support holds towards 80.53 resistance (61.8% projection of 64.23 to 79.37 from 71.09 at 80.48). On the downside, below 76.16 will flip intraday bias back to the downside for 71.09 support. Break there will indicate that rebound from 64.23 is completed.
In the bigger picture, while rise from 64.23 is still in progress, there is no change in the view that it's a correction to fall from 87.15 only. Hence, even in case of further rally, we'd expect strong resistance below 87.15 high and bring reversal. On the downside, break of 71.09 will be the first signal that whole fall from 87.15 is resuming for another low below 64.23 towards 50% retracement of 33.2 to 87.15 at 60.18
In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.....Nymex Crude Oil Continuous Contract 4 Hours Chart
The battle between the bulls and the bears continues in the S&P 500 with neither side able to gain the upper hand. This choppy trading action will eventually lead to a large move one way or the other. The bulls are betting that we are headed higher and the bears are betting that the economy is going to tank.
In our latest video, we share with you some of the key technical points that are still in play and where the market needs to go in order to break out of the current logjam that it's in.
As always our videos are free to watch and there is no need for registration. Please let us know your thoughts by leaving a comment.
Crude oil was lower due to light profit taking overnight as it consolidates some of Thursday's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook.
First resistance is the overnight high crossing at 79.60
Second resistance is the reaction high crossing at 79.97
Crude oil pivot point for Friday is 78.29
First support is the 20 day moving average crossing at 76.50
Second support is last Tuesday's low crossing at 74.70
Natural gas was slightly lower overnight as it consolidates some of Thursday's rally but remains above broken resistance marked by the 20 day moving average crossing at 4.571. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above Wednesday's high crossing at 4.662 would confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below Monday's low crossing at 4.454 would temper the near term friendly outlook.
First resistance is Thursday's high crossing at 4.719
Second resistance is the reaction high crossing at 4.923
Natural gas pivot point for Friday is 4.624
First support is Monday's low crossing at 4.454
Second support is last Tuesday's low crossing at 4.334
Our Smart Scan Chart Analysis is showing some near term weakness in crude oil ETF, USO. However, this market remains in the confines of a longer term Uptrend. Trade with tight money management stops.
Based on a pre-defined weighted trend formula for chart analysis, USO scored +70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10.....Last Hour Close Above 5 Hour Moving Average
+15.....New 3 Day High on Thursday
+20.....Last Price Above 20 Day Moving Average
+25.....New 3 Week High, Week Ending July 24th
-30.....New 3 Month Low in May +70.....Total Score
Crude oil closed sharply higher on Thursday over concerns of the pending Gulf storm and spillover strength from the equity markets. Today's rally allowed September to breakout of its sideways trading pattern of the past week and the high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off this month's low, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook. First resistance is today's high crossing at 79.42. Second resistance is the reaction high crossing at 79.97. First support is last Tuesday's low crossing at 74.40. Second support is the reaction low crossing at 71.47.
Natural gas closed higher on Thursday and above the 20 day moving average crossing at 4.579. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above Wednesday's high crossing at 4.662 are needed to confirm that a short term low has been posted. If August resumes the decline off June's high, the reaction low crossing at 4.108 is the next downside target. First resistance is today's high crossing at 4.719. Second resistance is the reaction high crossing at 4.923. First support is the 10 day moving average crossing at 4.479. Second support is last Thursday's low crossing at 4.288.
The U.S. Dollar closed lower on Thursday and closed below the 10 day moving average crossing at 83.34 as Investors unloaded the Dollar over worries about a sluggish U.S. economic recovery persist and confidence in the euro zone and nations abroad increase. The low range close sets the stage for a steady to lower opening on Friday. Despite today's decline, stochastics and the RSI are turning bullish signaling that a short term low might be in or is near. Closes above the 20 day moving average crossing at 84.22 are needed to confirm that a short term low has been posted. If September resumes the decline off June's high, the 50% retracement level of the November-June rally crossing at 82.15 is the next downside target. First resistance is Wednesday's high crossing at 83.64. Second resistance is the 20 day moving average crossing at 84.22. First support is last Friday's low crossing at 82.25. Second support is the 50% retracement level of the November-June rally crossing at 82.15.
Gold closed higher amidst increased interest in many commodities after some bullish corporate earnings reports boosted confidence in the economic recovery. August gold continues to consolidate above the 38% retracement level of this year's rally crossing at 1183.90. At the same time, stochastics and the RSI are oversold and turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1210.90 are needed to confirm that a short term low has been posted. If August renews the decline off June's high, the 50% retracement level of the aforementioned decline crossing at 1158.30 is the next downside target. First resistance is today's high crossing at 1201.20. Second resistance is the 20 day moving average crossing at 1210.90. First support is Tuesday's low crossing at 1175.10. Second support is the 50% retracement level of the aforementioned decline crossing at 1158.30.
Ben what a bummer! Way to bring us all down Ben. Dude, we were feeling happy in this little bubble world of earnings driven economic expectations and you go and have to ruin our little economic recovery fantasy world bliss. Why did you have to tell us the truth man and ruin the buzz? That you and most of your friends at the Fed saw the risks to growth as weighted to the downside.
Why tell us that the economic expansion is only proceeding at a moderate pace and only because it is being supported by stimulative monetary and fiscal policies. We may be high but to some it felt like we were doing it on our own. Why tell us that the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction? And on top of that, you remind us that this is an important drag on household spending. Then you have to bring up that darn slow recovery in the labor market and the attendant uncertainty about job prospects.
Did you have to go and say that after two years of job losses, private payrolls expanded at an average of about 100,000 per month during the first half of this year, a pace insufficient to reduce the unemployment rate materially? Or that in all likelihood it is going to take a significant amount of time to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009.....Read the entire article.
The market continues to become quicker and fiercer as it move up and down 2+% on a regular basis This week we have seen some wild price swings due to earnings, events and the Fed’s which just makes trading that much more intense.
I have pointed out yesterday that this market only gives you a brief moment to take profits before it starts going wild shaking traders out of positions. This increased volatility is caused from a couple of things:
1. Traders/Investors know the financial system is still riddled with unethical practices/manipulation. This causes everyone to be extra jumpy/emotional and causes volume surges in the market as the herd starts to get greedy or fearful.
2. Volume overall on the buying side of things just isn’t there… I see some nice waves of buying but it doesn’t move the market up much… then it only takes a small wave of sellers for the market to drop....Investors are just scared to buy stocks and that is not a good thing…
I keep a close eye on the buying and selling volume for the NYSE as it tends to help pin tops and bottom within a 2-3 day period. In short when we get panic buying meaning 75%+ of volume is from buyers then I know the general public is jumping into the market buying everything up and that’s when the smart money starts to scale out of their position selling to these retail investors. These retail investors are buying on news and excitement much like what we are seeing now with earnings season. Stocks have run up for 5-10 days, as the smart money buys in on anticipation of good news, then the earnings are released which are better than expected and the stocks pop and drop. Well the pop higher on BIG volume are all the retail investors buying and are generally the last ones in. The smart money is quickly selling into this buying surge so they end up getting out at high prices.
My point here is that in general I see 4-6 of these panic buying or selling days a year which I find are tradable. The crazy part is that we have seen 11 of these panic days (both buying and selling) in just 8 weeks… We are seeing more selling than we did at the bottom in 2009! Something big is about to happen and I want to make sure we get a price of it once the moves starts.
Anyways, below is a chart of the SP500 showing how its trading under some key resistance levels. Today the market gapped up testing the 50 day moving average and above the 5 day moving average then sold down very strongly during Ben Bernanke’s speech. This is not a good sign for the overall health of the market.
On the commodities side of things we are not seeing much happening with gold or oil at the moment. Gold is still in a short term down. And gold took an $8 drop today when Ben Bernanke said inflation would remain low for an extended period of time.
As for crude oil, yesterday afternoon I pointed out to members that oil had a big run up on virtually no volume Tuesday and it would most likely give back those gains today. We saw this today with oil dropping from $78 down to 76.50 per barrel. Overall Oil looks like it wants to go higher but has some work to do before that can happen.
Mid-Week Trading Conclusion:
In short, the market remains choppy and we are getting more than normal news/events which are moving the market and this is causing extra noise and volatility for traders. Cash is king during volatile times and if you are doing some trades be sure to keep the positions small for another month or so.
If you would like to receive Chris Vermeulen's detailed trading analysis and alerts be sure to checkout The Gold And Oil Guy.Com
Earlier this week we produced a video on the Euro, Is the Euro on Shaky Ground?, making a case that the currency was very close, if not at its highs. Since then, we have had two significant events fall into place which made the dollar skyrocket against the euro.
This new video shows you exactly what transpired and where we are so far this week. We think you'll find it interesting and informative.
As always this video is free to watch and there is no need for registration. We would appreciate that if you have comments on this market that you please leave them for everyone to see.
Crude oil was higher overnight as it extends the trading range of the past two weeks. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
If September renews this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook.
First resistance is Wednesday's high crossing at 78.57
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Thursday is 77.11
First support is last Tuesday's low crossing at 74.70
Second support is the reaction low crossing at 71.47
Natural gas was higher overnight as it extends the trading range of the past five trading sessions. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above Wednesday's high crossing at 4.662 would confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below Monday's low crossing at 4.454 would temper the near term friendly outlook.
First resistance is the reaction high crossing at 4.662
Second resistance is the reaction high crossing at 4.923
Natural gas pivot point for Thursday is 4.552
First support is Monday's low crossing at 4.454
Second support is last Tuesday's low crossing at 4.334
Crude oil closed lower on Wednesday as it extends last week's trading range. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off this month's low, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook. First resistance is today's high crossing at 78.57. Second resistance is the reaction high crossing at 79.97. First support is last Tuesday's low crossing at 74.40. Second support is the reaction low crossing at 71.47.
Natural gas closed lower on Wednesday as it continues to consolidate above the 10 day moving average crossing at 4.456. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above today's high crossing at 4.662 are needed to confirm that a short term low has been posted. If August resumes the decline off June's high, the reaction low crossing at 4.108 is the next downside target. First resistance is today's high crossing at 4.662. Second resistance is the reaction high crossing at 4.923. First support is last Thursday's low crossing at 4.288. Second support is the reaction low crossing at 4.108.
The U.S. Dollar closed higher on Wednesday and above the 10 day moving average crossing at 83.46 signaling that a short term low has likely been posted. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 84.38 are needed to confirm that a short term low has been posted. If September extends the aforementioned decline, the 50% retracement level of the November-June rally crossing at 82.15 is the next downside target. First resistance is today's high crossing at 83.64. Second resistance is the 20 day moving average crossing at 84.38. First support is last Friday's low crossing at 82.25. Second support is the 50% retracement level of the November-June rally crossing at 82.15.
Gold closed lower on Wednesday and remains poised to extend the decline off June's high. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If August extends the decline off June's high, the reaction low crossing at 1168.00 is the next downside target. Closes above the 20 day moving average crossing at 1212.90 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 1198.10. Second resistance is the 20 day moving average crossing at 1212.90. First support is Tuesday's low crossing at 1175.10. Second support is the reaction low crossing at 1168.00.
I’d like to tell you that the supply report from the American Petroleum Institute matters and that we could go back to find love and happiness continuing to scalp oil in its very defined trading range. I would even like to tell you that todays Energy Information Agency report is going to matter as well. Yet the threat to our little trading range nirvana is being threatened by another potential storm down in the Gulf of Mexico. The National Hurricane Center now shows that a tropical wave that we have been watching now has about a 70% chance to biome a hurricane and play havoc with production and imports into the Gulf of Mexico.
The NHC says that “STRONG TROPICAL WAVE...LOCATED NEAR THE EASTERN DOMINICAN REPUBLIC AND EXTENDING NORTHWARD OVER THE ATLANTIC FOR A FEW HUNDRED MILES...IS PRODUCING A LARGE AREA OF SHOWERS AND THUNDERSTORMS FROM THE NORTHERN LEEWARD ISLANDS WESTWARD TO HISPANIOLA...AND OVER THE ADJACENT WATERS OF THE ATLANTIC AND NORTHEASTERN CARIBBEAN SEA. ALTHOUGH A CLOSED SURFACE CIRCULATION HAS NOT YET DEVELOPED...ENVIRONMENTAL CONDITIONS ARE EXPECTED TO BECOME MORE CONDUCIVE FORTROPICAL CYCLONE FORMATION AS THE SYSTEM MOVES WEST-NORTHWESTWARD AT ABOUT 10 MPH DURING THE NEXT DAY OR SO. THERE IS A HIGH CHANCE...70 PERCENT...OF THIS SYSTEM BECOMING A TROPICAL DEPRESSION OR A TROPICAL STORM DURING THE NEXT 48 HOURS. REGARDLESS OF DEVELOPMENT...LOCALLY HEAVY RAINFALL AND GUSTY WINDS WILL CONTINUETO AFFECT THE VIRGIN ISLANDS AND PUERTO RICO...AND LIKELY AFFECT THE DOMINICAN REPUBLIC...HAITI...EASTERN CUBA...THE TURKS AND CAICOS ISLANDS...AND THE BAHAMAS DURING THE NEXT COUPLE OF DAYS. THE HEAVY RAINS COULD CAUSE LIFE THREATENING FLASH FLOODS AND MUD SLIDES IN MOUNTAINOUS AREAS.”
So there is a possibility that oil and other petroleum products may put in some hurricane premium. The Natural gas seems less worried as on shore production is rising and supplies are ample. Yet we cannot be complacent. The API showed less than exciting numbers showing crude down 241,000 barrels gas down 412,000 barrels and distillates rising by 241000 barrels. Of Course oil may also take its cue from Big Ben and no that is not the name of a hurricane but our name trusty Fed Chairman Ben Bernanke.
Because oil has had a tendency to live and die with the fortunes of the stock market his words may inspire us. Of course the focus may be on the report that a few Fed Banks were pushed for a discount rate increase in an attempt to get credit flowing from banks too scared to lend money. If Ben says that he is considering this oil and stocks should get a quick boost.
Despite the storm threat we still feel oil will be locked in the twilight zone. Not really bearish and not really bullish. Call Phil for the best way to trade it and get signed up for a trial of his daily numbers. Jut call him at 800-935-6487 or email him at pflynn@pfgbest.com
