Musings: Is Capital Discipline Re-emerging in The Natural Gas Market?

The European financial turmoil is roiling global debt, equity and currency markets. These markets in turn are impacting commodity markets and creating significant near term volatility. There doesn't appear to be much direction evident in commodity markets other than their reaction to global events. Weekly changes in crude oil inventories and natural gas injection volumes keep prices bouncing around.

West Texas Intermediate crude oil seems to be bouncing between $80 and $90 per barrel, although a leading oil trader says the price action has established a pattern of lower highs and lower lows leading him to sell crude oil futures every time they rise and buy them when they fall until that trade doesn't work.

The picture for natural gas prices appears less clear. A larger than expected injection of natural gas into storage was reported the week before last while a smaller than anticipated injection last week has kept prices unsettled. Natural gas in storage remains below year ago levels and about in the middle of the five year range. The weekly volatility reflects changes in weather and perceptions of industrial demand trends.

Increased concerns about future economic growth, as highlighted by the International Monetary Fund's reduced forecasts for U.S. and global economic growth in 2011 and 2012. These reduced economic growth estimates suggest the key to any recovery in natural gas prices in the near term will depend on falling supply growth rather than a demand increase......Read the entire Musings article.

Adam Hewison: Do You See the Trees In a Forest, Or Do You Just See the Forest?

There is a saying that goes like this “can’t see the forest for the trees” is a reference to people who get so involved with the details of an issue that they lose sight of the big picture.

If your involved in the markets, it is easy to fall into the trap of just looking at the minute or hourly charts, rather than considering the market as a whole. When you can’t see the market for the minutia, it means that you are deeply involved in a situation, and you are perhaps focusing too much on the inner workings of the market, and not enough on the big trends.

With all of this talk of problems in Greece, defaults, contagion and a host of other problems in Europe, it is easy for traders to get distracted, and not see the forest for the trees.

The most important element in trading in my opinion, is the direction the major trend for that market. It doesn’t really matter what the news is, if the market is doing something else. As traders I believe we have to look at the forest in this case the big trends in the marketplace.

Let’s look at them now: S&P 500 index major trend down. Gold major trend up. Metals major trend down. Crude oil major trend down. Dollar index major trend up. CRB index major trend down.
So, there you have it, all the major trends in all the markets we are dealing with right now.

Everything else is just individual trees, that don’t mean a heck of a lot in the big picture.
It takes a tremendous amount of energy to move a market and change a major trend. This kind of energy normally does not happen in one or two days. As they say in statistics, one data point does not make a trend.

Let's take a look at our Trend Analysis and Trade Triangles for Crude Oil......

As the equity markets go, so goes the price of crude oil. The November contract appears to be having some problems with areas of resistance at the $84.00 and $84.50 levels. With both our long term monthly and intermediate term Trade Triangles in a negative mode we expect this market to have another push down to test the $80 and possibly the $78 a barrel level. While this market is presently higher for the week, it is lower for the month and the quarter. Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed up $1.43 a barrel at $82.64 today. Prices closed nearer the session high today as trading has turned very choppy this week. A firmer U.S. stock market and steady U.S. dollar index today did support fresh buying interest in crude. The crude bulls and bears are on a level near term technical playing field.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75


Check out our Video... "How To Use Fibonacci Retracements"

Precious Metals Charts Point to Lower Prices – Look Out!

From Chris Vermeulen at The Gold and Oil Guy......

Over the past week precious metal investors have had a wakeup call from their big shiny nest eggs. Last week’s free fall in both gold and silver spot prices was enough to get investors into a panic. More on this in a minute though…

The fall was triggered by three key factors which caused the powerful move down. The first factor is based on pure technical analysis (price and volume patterns). Because the metals had such a strong run up this summer and prices had moved to far too fast, it is only natural so see price correct back to a normal price level. 

In general any investment that surges in one direction in a short period of time almost always falls back down shortly after. As I stated in my weekly report on August 31^st, “gold is forming a topping pattern and all investors should take profits or tighten protective stops (exit orders)”.Three days later gold popped to the new high completing the pattern and was quickly sold off which continues to unfolding as we speak from $1920 down to $1532 in only a couple weeks.

The second factor which I think had the most power behind the drop were the margin requirements changes. This new rule literally overnight caused traders and investors holding to much of the metals in their account to liquidate (sell) their positions without having any say in the matter. That is when the most damage was done to the price of gold and silver.

The key factor was the US Dollar which rocketed higher and adding a lot of pressure to the metals. I also covered this in my Aug 31^st report in detail. Overall, past few years we have seen both gold and silver move in opposite direction of the dollar. I don’t expect that to change much going forward. Back in August the US Dollar was coiling (building power) and it was only a matter of time before it would explode to the up side and rallied. This high probability move in the dollar was what triggered me to exit our long gold positions shortly after. I expected the dollar rally to last a month or more and that means we would see a lot of pressure on equities and metals going forward.

Now keep in mind, if Greece or other countries continue to get worse then we could see the dollar and gold move higher together as they are seen as the safe haven at this time. But with the nature of the two I am anticipating a rising dollar and sideways trading range for gold.

Ok, so back to precious metals investor sentiment…

Last Friday and all of this week I have been getting emails from traders and friends saying they are going to sell their gold and silver because they are concerned metals will continue to fall and because many of them are now losing money after chasing prices higher through the summer. The good news is that one of my best indicators for helping to time market tops and bottoms is to just read my emails and answer the phone. 

During market tops, generally the final month when prices are soaring to new highs every day/week is when everyone contacts me and says they just bought gold or are about to buy more gold cause it’s such a great investment. Once I start getting 2-5 of these messages a day alarms start going off in my head. This works the same with market bottoms. So with everyone now in a panic and selling their positions I feel we are darn close to one if we did not see it already.

Let’s take a look at the charts......

Silver Spot / Futures Price Chart

As you can see on the hard right edge silver is forming a very similar pattern which happened this past spring. I would like to note that this type of pattern is typical with extreme market selloffs as to how they generally bottom. I am anticipating silver trades in this range for a couple months and that we could see lower prices in the near term. But my upside target for silver in the coming few months is the $35-$36 level.

Gold Spot / Futures Price Chart

Gold is doing much the same as silver but I have noticed that when gold falls hard the second dip generally does not make a new low as often. If we do get a new low, all the better for buying on the dip but overall I feel gold should trade sideways for a couple months. My upside target for gold is the $1750-$1775 area.

US Dollar Index Price Chart

The Dollar index is looking ripe for another bounce and possibly another rally to new highs in the coming week. If this happens then we should see the SP500 short position (SDS) which we took Tuesday afternoon (Sept 27^th) to continue rocketing another 5-8% in our favour again.

Mid-Week Trading Conclusion:

In short, I feel the US dollar is going to continue higher and that will put the most pressure on stocks, oil and silver. Depending how things evolve overseas gold could hold up and possibly rise with the dollar.

So far subscribers have pocketed over 40% gains this month using ETFs on the SP500, Dollar and Oil and are holding another winning trade in the SDS etf taking partial profits today. 

If you would like learn more about etf trading and receive my daily pre-market videos, intraday updates and detailed trade alerts which even the most novice trader can follow then join my free trading education newsletter and my premium trading service at The Gold and Oil Guy and take your emotions out of your trading!

Phil Flynn: United They Stand

United they stand, divided we fall and Greece's problems has Europe's back to the wall as divisions, divisions bring us down. So much for the euphoric rally on the hope and promise of a deal to meet Greece's debt obligations as divisions in the Euro Zone is stealing some of that incredible market momentum. This Greek tragedy continues to be a major driving force behind the value of oil and every stock and commodity around the globe.

The most obvious and direct impact on the price of oil is reflected in the value of the dollar. The day before yesterday when the market feared that a Greek default may lead to the end of the Euro Zone the dollar became the safe haven of last resort. The market feared that a breakup of the zone and a Greek default could create the same type of contagion mood the globe felt after the Lehman failure.

We see the market was predicting that an unmanaged Greek default would put the world into a deflationary downdraft. If Greece falls then what about Italy? Would they be next? How about Spain or Ireland? The market feared a freezing of the global economy and banking system as banks would refuse to deal with each other as they tried to determine their exposure to the Greek ruins.

Yet when the EU promised a deal that Europe would stand idly by while the world economy fell apart was well. Stocks and commodities soared across the board and the market now believes that there is no way that Europe would stand by while the global economic system fell apart.

In fact even a Financial Times report that said that a split over the terms of Greece’s second 109 billion Euro bail out developed wasn't enough to shake the confidence in the market that the EU would stand idly by while Rome or Athens burned. The FT said that" as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger write down on their Greek bond holdings, according to senior European officials. The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July."

Still it did slow the buying as traders wait to see just what kind of deal would be done. We are still waiting.

The return of Libyan oil to the export market brought it the Brent/wti spread. We may have topped of course beware of a quick pop on positive bailout news. The API reported That crude oil increased by 568,000 barrels! Of Course the EIA should show a much larger increase as it catches up with the AP!.The API also showed a massive 4.63million barrel build in gasoline supply. Is anybody driving anymore?

We still feel the low for WTI oil is in for the year but we are nervous!

Follow Phil @ PFG Best.Com

Seven Month High in U.S. Dollar Muscles Crude Oil and Commodities Lower

We have been saying that the crude oil market is tied with the equity markets. As the equity markets go, so does crude oil. The November contract appears to be having some problems with an area of resistance at the $84.50 level.

With both our long term monthly and intermediate term Trade Triangles negative, we expect this market to have another push down to test the $80 level and possibly the $78 a barrel level. While this market is presently higher for the week, it is lower for the month and the quarter. Intermediate and Long term traders should continue to be short the crude oil market.

We are just two days short of the end of Q3 and the end of the month. How are these markets going to close for the quarter and for the week? Depending on which markets you are looking at, most markets are lower for the month, with the exception of the dollar index. The dollar index could possibly close at a seven month high on the monthly charts.

One thing is for certain, Europe is not the United States of America. In Europe there are too many areas of national pride for each individual country. I always believed this national trait would act as the Achilles’ heel in a euro zone economy. My view has not changed.

Can the banks be saved? We will let the markets answer that question for us.

November crude oil closed lower on Wednesday as it consolidates some of this week's rebound. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 86.39 would temper the near term bearish outlook.

If November extends this month's decline, August's low crossing at 76.61 is the next downside target. First resistance is the 10 day moving average crossing at 84.27. Second support is the 20 day moving average crossing at 86.39. First support is Monday's low crossing at 77.11. Second support is August's low crossing at 76.61.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 85


Trading 101...."How To Trade Market Sentiment"

Bertha Coombs: Cashing in on Crude

The likelihood of building a pipeline to carry new sources of oil from the northern part of the country to the south, with CNBC's Bertha Coombs. And it's up to President Obama to decide whether the pipeline should be built, over the objections of environmentalists.




Every Once in a While, You Find Something Amazing....Check out Trend TV

Rigzone: Crude Oil Diplomacy to the Rescue? Cuban Drilling off Keys to Begin by Year End

For 51 years the U.S. has imposed an economic embargo against Cuba, severely crippling the island's economy for its effrontery in choosing a socialist path for development, a policy confirmed and intensified in the wake of the 1962 Cuban Missile Crisis. Now the unlikeliest of economic interests may be bringing the two countries closer together, oil.

Specifically, oil deposits in the Florida Straits between Key West and Cuba.

Spain's largest oil company, Repsol-YPF, has contracted the massive Italian made Scarabeo 9 semi submersible oil rig, currently en route from Singapore, to arrive in the Florida Straits by the end of the year after the end of hurricane season to begin exploring Cuba's offshore reserves. Repsol-YPF, which drilled Cuba's first onshore well in 2004, intends initially to drill six wells with the Scarabeo 9 rig.

Cuba, which currently produces a paltry roughly 50,000 barrels of oil per day from onshore sources, is understandably keen to begin exploiting its offshore reserves, which estimates place between 5-20 billion barrels of crude in a 43,000 square mile drilling area containing 59 maritime fields it has designated off its northern coast. While Fidel Castro's close ally, Venezuelan Hugo Chávez currently dispatches 120,000 bpd to Cuba on very favorable financing terms, the arrangement is heavily dependent on the friendship between octogenarian Castro and cancer stricken Chávez, hardly a recipe for permanency.

While Repsol-YPF is the first out of the gate, other concessionaires include Norway's Statoil, India's state owned Oil and Natural Gas Corporation (ONGC) and Brazilian state oil company Petroleo Brasileiro, or Petrobras. Note the total absence of U.S. oil companies, that'll punish those pesky Commies.....Read the entire Rigzone article.


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Oil N' Gold: Crude Oil Daily Technical Outlook For Wednesday Sept. 28th

The staff at Oil N Gold has been sticking to their long term Fibonacci numbers and it has served them well. What are they saying this morning......

Crude oil's recovery from 77.11 temporary low might extend further high. But in any case, we'll stay bearish as long as 90.52 resistance holds. We are still favoring the case that whole decline from 114.83 is ready to resume and break of 77.11 should send crude oil through 75.71 support to 70 psychological level next.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.


Posted courtesy of Oil N' Gold.Com


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Don't Be Fooled By This Rally, Crude Oil Bears Maintain The Advantage

The crude oil market has been finding support around the $78 a barrel level. Today’s move to the upside helped alleviate some of the oversold condition that this market was experiencing. The rally triggered our short term Trade Triangle into a positive mode.

This was not enough based on both our long term monthly and intermediate term weekly Trade Triangles which remain in the negative column. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment. Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed up $4.18 a barrel at $84.42 today. Prices closed near the session high today. A rallying U.S. stock market and weaker U.S. dollar index boosted crude today. The crude bulls did gain fresh upside near term technical momentum today. A bullish double bottom reversal pattern may be forming on the daily bar chart.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75

Mike Paulenoff: Is Crude Oil Readying for More Downside?

If you are a regular reader here at The Crude Oil Trader you know that we share our numbers as well as the numbers and trades of other great traders and investors. We base our trades and views on the combined opinions of numerous trader/writers, and so should you. Today we would like to bring Mike Paulenoff into the mix.....

As of this moment, my optimal scenario for the nearby NYMEX oil price calls for a period of stability and/or a recovery rally that grinds into the 80.50-82.00 resistance area prior to another downside pivot that presses the price structure to new lows beneath 75.71 on the way to 70.00-65.00 thereafter.

At the risk of missing such a downleg in the absence of the anticipated recovery bounce, I will watch from the sidelines for a while longer prior to deciding if I should commit funds to a short position -- in the ProShares UltraShort DJ-UBS Crude Oil (SCO),  into NYMEX price weakness (though always a hazardous strategy to short oil into weakness).

That said, only a rally that sustains above 82.00 will neutralize the imminent threat of another plunge in oil prices and the U.S. Oil Fund ETF (USO).

Trade School 101 .... Double Tops and Pivot Points Explained

This may be one of the most important training videos that we share. With the recent action in gold it is important to be able to recognize this set up.

We want to share with you a chart pattern that the pro’s use everyday to great effect. The chart pattern we will be looking at, is one of my favorites as it has a high reliability factor.

The chart pattern in this short video is well known inside the professional trading community. However, outside of the pro circle it seems to be shrouded in mystery.

In this short 3 minute video, we peel away the layers of mystery and show you step by step how you can personally benefit from this chart pattern that occurs in all time frames.

What’s amazing to me about this chart pattern, is the fact that after over 3 decades of real world trading, it continues to repeat itself.

Click Here To Watch The Training Video

With that fact on our side, we think it’s a safe bet that this chart pattern is likely stick around for the next generation of traders.

Please feel free to leave a comment to let us know what you think of the video.

Crude Oil and Gold Market Commentary For Tuesday Morning Sept. 27th

Crude oil was higher due to short covering in Monday evenings overnight session as it consolidates some of last week's decline. Stochastics and the RSI are oversold and are turning neutral hinting that a double bottom with August's low might have been posted with Monday's low.

Closes above the 20 day moving average crossing at 86.68 are needed to confirm that a short term low has been posted. If November extends last week's decline, August's low crossing at 76.61 is the next downside target.

First resistance is the 10 day moving average crossing at 84.83. Second resistance is the 20 day moving average crossing at 86.68. First support is Monday's low crossing at 77.11. Second support is August's low crossing at 76.61. Crude oil pivot point for Tuesday morning is 79.64.

Every Once in a While, You Find Something Amazing....Check out Trend TV

Gold was sharply higher due to short covering in Monday evenings overnight session trading as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near term.

If December extends this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. Closes above the 20 day moving average crossing at 1794.30 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 1746.80. Second resistance is the 20 day moving average crossing at 1794.30. First support is Monday's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20. Golds pivot point for Tuesday morning is 1598.70.

Is gold coming back? Don't miss our recent articles.......

Understanding The Key Support Levels For Gold

Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity

Bloomberg: Crude Oil Gains on Optimism Europe Will Tame Debt Crisis, Boosting Fuel Demand

Crude Oil rose for a second day in New York on speculation European governments will contain their sovereign debt crisis, limiting its impact on the global economy and demand for raw materials.

Futures gained as much as 3.6 percent, trimming the biggest quarterly decline since the global financial crisis in 2008. U.S. Treasury Secretary Timothy F. Geithner predicted Europe will intensify efforts to contain its debt problems after being pressured at international meetings in Washington last week. European stocks climbed for a third day.

“It’s a ‘risk on’ day for oil,” said Thorbjorn Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent will average $107 in the fourth quarter. “Investors are hoping the European Central Bank will pull a rabbit out of the hat, in the form of an increase in the strength of the bond buying program.”

Crude for November delivery climbed as much as $2.90 to $83.14 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.62 at 1:44 p.m. London time. Oil has dropped 13 percent since the end of June, the biggest quarterly loss since the three months ended December 2008. Prices are down 7 percent this month and 9.6 percent this year......Read the entire Bloomberg article.


Is gold coming back? Don't miss our recent articles.......

Understanding The Key Support Levels For Gold

Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity

J.W. Jones: Understanding The Key Support Levels For Gold

Gold bulls and inquiring minds are perplexed by last week’s mayhem in the precious metals markets. In addition to gold and silver, copper prices also went into free fall last week which is an ominous sign for the broader economy in general. We live in interesting times as geopolitical uncertainty, social acrimony, and financial collapse shape the world around us.

The situation in Europe continues to worsen and central banks and wealthy individuals are trying to find safe havens to protect their wealth. Most gold bugs believed that gold and silver would be the answer, but in this environment that hypothesis did not play out. In addition, the Federal Reserve came out with operation twist which market participants despised. Since the 3rd round of Quantitative Easing was not announced, risk assets such as the S&P 500, gold, and silver sold off sharply.

Many gold investors believed that gold is a “safety” trade. I would agree with them if the objective is to remain “safe” from ever rising inflation. In a “run for the exits” sell off caused by deflationary pressure and debt destruction, gold will generally show relative strength versus equities. However, I would remind readers that during the deflationary period back in 2008, gold held up far better than the S&P 500, but prices were volatile.

The gold futures chart from 2008 is shown below:

As can be seen from the chart above, gold futures were volatile throughout 2008 with the March high point representing a 19.83% gain for the year. The low point for gold futures in 2008 was in October and represented a loss of 21.07%. The total return for gold futures in 2008 was 1.94%. Clearly gold futures showed volatility throughout 2008, but gold clearly outperformed the S&P 500 during the same period of time.

The S&P 500 was lower by 37% in 2008, thus gold was clearly the safer asset during 2008 in terms of return. However, one asset class was safer still and had considerably less volatility . . . the U.S. Dollar. In 2008, the U.S. Dollar index futures closed the year with gains around 8.44% with far less volatility than gold or the S&P 500. I am pointing this out to readers because a similar situation is unfolding presently.

Moving forward to the present, the U.S. Dollar Index futures have put on an impressive rally that started back on August 30, 2011. Since August 30th, the Dollar Index futures are trading higher by around 7%. As it turns out, on August 31st I entered a long call ratio spread using the UUP ETF with members of my service and we were able to lock in a gain of around 30% recently.

The daily chart of the U.S. Dollar Index futures is shown below:

All of the calls for hyperinflation in 2011 and a massive crisis in the U.S. Dollar are not coming to fruition. In fact, the opposite is occurring as deflationary pressures are helping force the U.S. Dollar higher. I would point out that the majority of economists and analysts were all predicting hyperinflation for several years and so far they have been wrong. Gold nor any other asset can rally forever, but long term investors must understand that even during a raging bull market corrections and pullbacks are commonplace and healthy.

I want to point out that I sent out multiple articles warning about the possibility that gold prices could sell off or correct dramatically. In every instance, my email inbox was littered with hate mail and vitriolic remarks from gold bugs. Back on August 29th, I wrote the following in my article, What Could Lie Ahead for the S&P 500 and Gold:

“There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff.”

The daily chart of gold is shown below:

“While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.”

As it turns out, the head and shoulders pattern did not play out as I had hypothesized but a double top did emerge which ultimately produced similar price action. The extreme nature of the recent sell off backs up my analysis in that gold prices had gone parabolic and we needed to see regression back to the mean in terms of price.

We are seeing that process unfold now, but as I stated in the article above the completion of this sell off is going to offer an attractive entry point for long term gold investors. While I have routinely discussed pullbacks and corrections regarding gold, I continue to be a longer term bull.

Gold has sold off sharply in the past week, but the following chart illustrates some key support levels for the yellow metal:

While gold and silver sold off sharply, the S&P 500 was also under extreme pressure. My most recent article written on September 21 prior to the Federal Reserve announcement illustrated two outcomes based on what rhetoric came from the meeting. Unfortunately for equity investors my downside prognosis is holding sway. The follow is an excerpt from my article entitled The S&P 500 & the Dollar Ahead of the Fed Statement:

“The flip side of that argument would see the S&P 500 jamming into recent resistance around the 1,230 price level. If prices rolled over and momentum picked up, a test of the recent August lows would likely transpire and could produce a breakdown and a lower low.

When looking at recent price action, the S&P 500 Index has put in a series of higher lows which is a bullish signal, however the S&P 500 has a long road ahead to break out above the 2011 highs. If the S&P 500 carves out a lower high on the S&P 500 Index at 1,230, 1,250, or even 1,280 and subsequently takes out the August lows then the secular bear will be back. The weekly chart of the S&P 500 Index ($SPX) shown below illustrates key support levels:

For now I am just going to sit in cash and wait for Mr. Market to provide me with some better clues. The trading range is pretty wide going from around 1,100 to 1,280.”

My downside scenario played out last week, but I will be watching closely to see if the S&P 500 can push below the August lows. If the August lows are taken out, we could see support come in around the 1,085 price level. If that level breaks down then the 1,008 – 1,040 price range will be in play.

The daily chart of the S&P 500 Index is shown below with the key support levels illustrated:

In closing, last week was wild in terms of price action and volatility was nearly palpable. I am anticipating some additional volatility this coming week. Gold prices could bounce as price is sitting right at the key 50 period moving average. If gold works through the 50 period moving average additional downside will be likely.

Similar to gold, if the S&P 500 is able to push through the August lows additional sellers will step in as stops will be triggered on a breach of the S&P 1,100 price level. News flow and headline risk coming out of Europe will continue to impact price action. I would also point out to members that there is a standing chance that the U.S. government could shut down as budget issues continue to manifest within the confines of the U.S. Congress.

Risk remains extremely high.

Review my track record and join now at  Options Trading Signals.com  and receive a 66% off coupon which expires tomorrow.

Adam Hewison: All Eyes Continue To Focus On Europe

Here we are on the first day of the last week of September, with the end of Q3 approaching on Friday. Are the equity markets building a base to go higher? Or is this just a pause before we start heading back down?

All eyes continue to be focused on the European problem, especially Greece. We still believe Greece will default on their debt. And we still think that the politicians are looking for an easy way out of this economic malaise, unwilling to accept the consequences of their actions.

Last week we saw all the markets under pressure. For the last couple of days we’ve seen some minor support coming to the equity markets. And just today we have seen support come into the metals markets at much lower levels than most folks anticipated.

The November contract for crude oil appears to be finding support at the $78 a barrel level. While it is too early to say that this market has made a bottom, the action indicates that the momentum for the moment has stopped going down.

All of our Trade Triangles remain negative, with resistance coming out just around the $81.80 level basis November. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment. Short, Intermediate and Long term traders should continue to be short the crude oil market.

Crude oil closed higher due to short covering on Monday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If November extends this month's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 86.96 would temper the near term bearish outlook.

First resistance is the 10 day moving average crossing at 85.65. Second support is the 20 day moving average crossing at 86.96. First support is today's low crossing at 77.11. Second support is August's low crossing at 76.61.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90


Has gold found support? Read "Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity"

Chris Vermeulen: Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity

A few weeks ago I wrote about how gold was starting to top and that everyone should expect a very sharp drop to the low $1600 area. How I came to this conclusion was though the use of inter-market analysis combining price patterns, gold futures volume, the dollar index and market sentiment. This allowed me to understand what the majority of other traders/investors were thinking and feeling. By knowing each of these market variables and crowd behavior I can accurately see into the future a few days with a high probability of success and most importantly with low downside risk.

Click Here to view part-1 on how I properly forecasted that gold would fall sharply in August "Dollar’s On the Verge of a Relief Rally...... Look Out!"

At the time when I forecasted gold to reach the low $1600 area gold was still building the top pattern so I could not say how long a recovering would likely take nor did I know exactly when to re-enter a long position. But now that we have seen how gold arrived at my target price I can form a new forecast.

Spot Gold Price Forecast – Daily Chart:

The gold chart below clearly shows rising volatility along with my topping pattern of three surges to new highs. It was August 31st when I warned subscribers and my followers that gold was about to top and that everyone should be taking profits or at least tightening their stops to lock in gains. Only three days later gold topped and it has not stopped falling since.

On August 8th gold had a large opening gap to the upside. This means the price opened the next day much higher from where it closed the previous session. It’s important to note that gaps especially for gold almost always get filled within a couple months. Seeing this gave me a solid reason to think that gold should pullback to this level during the next big correction in price.

Also during the month of August gold had to pullbacks only to continue to make the third and final high. This told me that when the top is put in place was a very high probability that we see the price of gold drop below both of Augusts’ lows and that would trigger stop orders sending the market sharply lower.

Now that we are seeing the stops being flushed out of the market it means the majority of speculative traders have exited their positions. So speculative traders who caused the large surge in gold to take place are now out. Once all the speculative traders have exited which should take place in the coming weeks or two we can expect some type of bounce or rally. I will keep a close eye on the intraday charts for subscribers as we near a potentially major trade setup.

Where are we in this gold bull market?

Well I feel gold is more fairly priced between $1632- $1660 area. Currently gold is trading at $1660 but if things play out like I have seen in the past we just may get one more dip this week to the $1600 area before gold truly puts in a bottom. Because gold went from a new high all the way down to Friday’s panic selling washout instead of a controlled ABC correction I feel a bottom will be more of a one day event. This type of bottom carries more risk and is more difficult to time and trade. So scaling in with a small position at this level and adding on a drop to $1630 then $1600 could prove to be the safest way into a gold position.

Forward looking I see gold bottoming over the next week or two then a nice relief rally to the $1775 area. Depending on how gold arrives there will alter my next gold forecast so let’s wait and see how things unfold.

Spot Silver Price Forecast – Weekly Chart:

Silver I call the "un-Safe" haven because to me it’s not a safe haven in the way everyone’s believes it be. I hear and see everyone including friends and family selling all their stocks and putting their money into silver. To me buying large amounts of silver with your retirement money is just ridiculous. I m sure my statement here will trigger an inbox of silver perma bulls (silver bugs) to send me hate mail but that’s fine as my assistant filters my emails so I don’t have to keep being reminded how rude some humans can be over an simple opinion........

Investments that can lose 25% in value within 2 days or lose 40% of it’s value in 5 months should not be traded nor invested in with large portions of anyone’s life savings, especially if you are over the age of 50 and have not proven to be a constantly profitable trader. No one can stomach losing that much of their nest egg.

That being said I do feel silver is in a similar situation as gold. I do feel a bottom is near. Silver has formed an ABC correction and the price and volume patterns seem to be in line with a typical bottoming pattern. After Friday’s massive selloff I feel silver may slide a little lower yet before putting in a bottom.

One thing to keep in mind with silver is that it is very thinly traded; there are a lot of speculative traders involved which push and pull the price to extreme levels on a regular basis. So if the broad stock market continues to sell off sharply then I expect silver to follow suit.

Pre-Week Precious Metals Trend Analysis Trading Conclusion:

The price action we have seen this year for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012 or it could be a large unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market check out TGAOG at The Gold and Oil Guy.com

Oil N' Gold: Crude Oil Weekly Technical Outlook For Sunday Sept. 25th

Crude oil dropped sharply to as low as 77.55 last week and the development affirmed the case that consolidation from 75.71 is finished at 90.52 and whole decline from 114.83 is resuming. Initial bias remains on the downside this week with 82.21 minor resistance intact. Retest of 75.71 should be seen first. Break will target 70 psychological level and then 100% projection of 100.62 to 75.51 from 90.52 at 65.60. On the upside, above 82.21 minor resistance will turn bias neutral and bring consolidations. But recovery should be limited by 4 hours 55 EMA (now at 85.68) and bring fall resumption.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Crude Oil Makes Sharp Move Below $80, Here's Your Numbers For Friday Morning

Crude oil traded lower overnight and continues south of $80 this morning as it extends this week's sharp decline. Stochastics and the RSI are bearish signaling that lower prices are possible....make that "likely"....in the near term.

Is cluster support of  64.23 on the table? That's what trading shops are talking about today. And it's looking more and more like a possibility.

If November extends this week's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 87.17 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 86.34. Second resistance is the 20 day moving average crossing at 87.17. First support is the overnight low crossing at 78.36. Second support is August's low crossing at 76.61. Crude oil pivot point for Fridays trading is 81.72.


Recent "don't miss" articles.....

Gold Continues to Correct as Forecast in a 4th Wave Pattern

Recent Market Trends Remain in Place ..... Get Positioned!

It's a Simple Theory.... Lower Equity Prices, Means Lower Consumption of Crude Oil

The massive move down in the crude oil market today is largely reflected in what we have been saying about this market for the past several weeks. It only underscores just how powerful our longer term Trade Triangle technology is. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment.

The theory is lower equity prices, means lower consumption of oil. It’s not important whether we agree or disagree with that statement. What is important is how the market is acting. Pay attention to the MACD that is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. Short, Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed sharply lower on Thursday as it extended this week's breakout below August's uptrend line. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If November extends this week's decline, August's low crossing at 76.61 is the next downside target.

Closes above the 20 day moving average crossing at 87.49 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 87.49. Second support is last Tuesday's high crossing at 90.60. First support is today's low crossing at 79.66. Second support is August's low crossing at 76.61.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

Recent articles.....

Gold Continues to Correct as Forecast in a 4th Wave Pattern

Recent Market Trends Remain in Place ..... Get Positioned!

David Banister: Gold Continues to Correct as Forecast in a 4th Wave Pattern

I got a bit of hate email over the last few weeks from the Gold Bugs who thought I didn’t know what I was talking about when I forecasted a multi-month consolidation and correction in Gold was imminent. I’ve written ad nauseum about crowd behavioral patterns as they related to both stock markets and precious metals. 

It should not come as a surprise that Gold is continuing to drop after a 34 Fibonacci month rally from $681 to $1910 per ounce. That rally came in five clear Elliott Waves and ended with a parabolic race to the top. I consistently warned my subscribers and readers of my articles about not being caught holding the bag and to take defensive measures.

My most recent update was to simply try to figure out whether the continuing correction in Gold would take the form of an ABC pattern or an ABCDE Triangle Pattern. It is becoming more clear that the official pattern is ABC. In English it means that the first leg down from 1910 to 1702 was the “A” Wave, the rally back up to 1920 was the “B” wave. 

The C wave is continuing underway and one of my longstanding targets is $1643, which is a Fibonacci fractal relationship to the prior lows and highs, and also conveniently fills in a “Gap” in the Gold chart in the 1650’s.

During these 4th wave consolidation periods, it reduces sentiment back down to normal levels and lets the economics of the move in Gold catch up with the price action that was extended. The first area to watch is the retest of $1702 spot pricing for a C wave low, but the evidence is for a further drop to $1643 before I would get too interested in trying to game Gold to the upside.

Here is the chart I sent out 9 days ago with Gold at $1837 forecasting a possible C wave continuing lower:

I’ve stayed away from either shorting Gold or going long gold while I watch and confirm the 4th wave pattern. It’s simply the smart way to go knowing that upside will be difficult to obtain and downside risks are high. It does now appear that I am eliminating the Triangle pattern and sticking with the ABC Correction with the C wave still working its way lower. If $1702 breaks, then you should expect to see 1620-1643 as next pivot low ranges.

If you’d like to stay ahead of the SP 500, Silver, and Gold trends, check out TMTF at Market Trend Forecast.Com and take advantage of our free occasional reports or a 33% 48 hour coupon to sign up for 5-7 updates a week.

Chris Vermeulen: Recent Market Trends Remain in Place ..... Get Positioned!

What a trading session Wednesday was with the FOMC meeting and the FED coming out leaving the Fed Funds Rate unchanged at 0.25% and saying the economy is looking weak and will not likely to get better any time soon. This wave of negative news triggered a selling spree across the board in stocks, metals, and oil. On the flip side all that money being pulled out of those investments was being dumped into bonds and the dollar currency.

So the question everyone is asking is why almost every asset class sold off after the Federal Reserve’s statement today? The next question is how do we position ourselves to profit?

Understanding how the market moves is not a simple task, if it was that easy everyone would be pulling money out of the market on a daily or monthly basis. With that being said, moves can be anticipated if enough indicators are pointing to the same outcome.

Gold, SP500 and Oil 10 Minute Charts Showing Todays 2:15 FED News
Over the past few weeks we have been seeing stocks, oil, and gold turn bearish with similar price and volume action. Having three major investment vehicles hinting towards a move in the same direction as each other increases the odds for that move to occur. With the Fed coming out with negative news and no quantitative easing on tap, a rally in the dollar was triggered because inflation (printing of money) is not in the picture for some time still.

Bonds and Dollar Index 10 Minute Charts Showing Today’s 2:15 FED News

Now if we look at the safe havens we can see the positive side to today’s news.

Bonds have been trading higher for some time and the key in trading is to trade with the trend. Though it’s easier said than done… In this morning’s pre-market analysis I talked about bond prices and how they are looking toppy but we need one more large surge higher before I will consider looking for a short trade setup. Today’s news sent bonds surging higher which I feel will happen for a few more days. Once the momentum stalls out of bonds, then I may be looking to short bonds using the TBT inverse bond fund.

The fact that there is no quantitative easing planned is bullish for the dollar. Stepping back a few weeks we have seen the dollar index rally very strongly. The move up was an impulse wave meaning a trend reversal from the multi-month down trend. Knowing that the dollar had shifted from a down trend to a strong uptrend prior to the Fed’s announcement today was our tip off to being long the dollar several days ago at a much lower price level.

Mid-Week Market Trend Conclusion:
In short, I feel the intermediate trend (5-20 days) remains firmly down for stocks and crude oil. Silver is more of a wild card because it is more of an industrial metal/speculative investment and it can move at times with gold or down with stocks.......

Looking at gold. I am bullish on gold long term but at this time I remain neutral until I see how the next couple trading sessions play out.

Bonds I remain neutral because they have moved a long way without any substantial pause or pullback and I feel one really positive headline news item could send bonds sharply lower.

The dollar index shifted from a strong down trend to a very strong up trend last month and I feel we could see another substantial rally unfold. I have an 80.00 – 81.00 price target on the dollar index at this time.

Consider joining me at The Gold and Oil Guy for ETF trade ideas on the SP500, crude oil, gold, and silver with great accuracy. Check it out at The Gold and Oil Guy.com