Thursday, January 31, 2013

CME Group: Natural Gas Inventory Withdrawal Below Market Consensus

Today's natural gas inventory came in below the market consensus but still above both last year and the five year average for the same week. The market has viewed the data as bearish in that the market is off about 2% as of this writing. It also supports my view that I have discussed in the newsletter that yesterday's gain in prices were mostly driven by a short covering rally ahead of the expectation for a bullish inventory report today. Another way of looking at the reaction is a buy the rumor, sell the fact pattern.

Next week's inventory report is going to be based on a period that has experienced very warm weather over a major portion of the eastern half of the US and thus the inventory withdrawal is likely to underperform versus history. The latest NOAA six to ten day and eight to fourteen day forecasts remain bearish as they are both projecting above normal temperatures over a major portion of the US for the period February 4th through the 13th.

Inventory withdrawals are likely to underperform versus history during the aforementioned timeframe. With the longer range forecast projecting March to experience above normal temperatures over most of the US.... a sort of early spring.... that does not leave much potential for a sustained winter cold spell. The fundamentals remain bearish and are likely to stay bearish based on the current weather forecasts for the rest of the official heating season which end at the end of March.

Read the entire CME Group article and see Dominick Chirichellas detailed charts.

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Wednesday, January 30, 2013

Musings: Hydraulic Fracturing Issue Encounters Protests And Movies

On Friday, January 11th a 30 day public comment period in New York State on the issue of hydraulic fracturing ended, but not without a certain amount of high drama. The wife and son of the late Beatles star John Lennon, Yoko Ono and Sean Lennon, led a group of protestors on a visit to the Albany office of New York Governor Andrew Cuomo (Dem) and the Department of Environmental Conservation. At the latter stop, the duo, who founded Artists Against Fracking last July, delivered 50 boxes reportedly containing 204,000 comments about hydraulic fracturing.

Around the same time, Ms. Ono had an op-ed published in the Albany Times Union in which she wrote, "My husband, John Lennon, and I bought a beautiful farm in rural New York more than 30 years ago. Like the rest of our state, this peaceful farming community is threatened by fracking for gas. She went on to say, “Governor Cuomo, please don’t frack New York. Don’t allow our beautiful landscapes to be ruined, or our precious and famous clean water to be dirtied."

Read the entire Musings article

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Kinder Morgan [KMP] to acquire Copano [CPNO] for Approximately $5 Billion

Kinder Morgan Energy Partners (NYSE: KMP) and Copano Energy (NASDAQ: CPNO) on Tuesday announced a definitive agreement whereby KMP will acquire all of Copano’s outstanding units for a total purchase price of approximately $5 billion, including the assumption of debt. The transaction, which has been approved by the boards of directors of both companies, will be a 100 percent unit for unit transaction with an exchange ratio of .4563 KMP units per Copano unit.

The consideration to be received by Copano unitholders is valued at $40.91 per Copano common unit based on KMP’s closing price as of Jan. 29, 2013, representing a 23.5 percent premium to Copano’s close on Jan. 29, 2013. The transaction, which is expected to close in the third quarter of 2013, is subject to customary closing conditions, including regulatory approval and a vote of the Copano unitholders. TPG, Copano’s largest unitholder (owning over 14 percent of its outstanding equity), has agreed to support the transaction.

Copano, a midstream natural gas company with operations primarily in Texas, Oklahoma and Wyoming, provides comprehensive services to natural gas producers, including natural gas gathering, processing, treating and natural gas liquids fractionation. Copano owns an interest in or operates about 6,900 miles of pipelines with 2.7 billion cubic feet per day (Bcf/d) of natural gas throughput capacity and 9 processing plants with more than 1 Bcf/d of processing capacity and 315 million cubic feet per day of treating capacity.

Read the Entire Press Release

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Monday, January 28, 2013

Energy Stocks & Crude Oil Special Trend Analysis Report

Crude oil has been trading ways for the past year between the 2011 high and low. The trading range through 2012 has been contracting with a series of lower highs and higher lows. This pennant formation because it is taking place after an uptrend is a bullish pattern with $110 and possibly even $140+ per barrel in the next 6-18 months.

If you look at the weekly investing chart of crude oil the key support and resistance levels area clearly marked. A breakout of the white pennant will trigger a move to the next support or resistance level. And judging from the positive economic numbers not only form the USA but globally the odds are increased for the $110+ price target to be reached sooner than later.

Crude Oil Price Chart – Weekly Investing

Oil Investing

Crude Oil Price Chart – Daily short term Analysis and Target

If we zoom into the daily chart and analyze price and volume you will notice the $100 per barrel level is potentially only 2-3 days way… But keep in mind whole numbers (decade & Century Numbers) naturally act as support and resistance levels. So when the $100 century price is reached there will be a wave of sellers with fat thumbs who will slam the price back down to the $96 and possibly back down to the $92 level before oil continues higher.

Oil Trading

Utility Stocks – XLU – Weekly Investing Chart

The utility sector has done well and continues to look very bullish for 2013. This high dividend paying sector is liked by many and the price action speaks for its self

XLU Trading

Energy Sector Weekly Investing Chart

Energy stocks which can be followed using the XLE exchange traded fund (ETF) typically leads the price of oil. Looking at energy stocks we can see that they are outperforming the price of crude oil and on the verge of breaking out of a large Cup & Handle pattern. If so then $90 is the next stop but prices may go much higher in the long run.

XLE Energy Stock Trading

Energy Stocks and Crude Oil Conclusion:

In short, crude oil is stuck in a large trading range much like gold and silver which I just wrote about here...."Precious Metals & Miners Making Waves and New Trends"

Once a breakout takes place on either the white or yellow lines on the first crude oil weekly chart we should see oil, energy and utility stocks start making some big moves. Depending on the direction of the breakout (Up or Down) it must be played in that direction to generate substantial profits obviously.

Chris Vermeulen

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Precious Metals & Miners Making Waves and New Trends

The precious metals sector has been dormant since both gold and silver topped in 2011. But the long term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart then technical speaking precious metals should continue much higher.

Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward 6-18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months and sometimes years having their investments fluctuate adding extra stress to their life when they really do not need to.

Once a breakout takes place a powerful rally or decline will start putting an investors’ money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.

Gold Price Chart – Monthly

 Gold Monthly Price Chart

Gold Price Chart – Daily

The chart of gold continues to form a large bull flag pattern with a potential 3 or 5 wave correction. If price reverses this week and breaks above the upper resistance trend line then it will be a 3 (ABC) wave correction which is very bullish. But there is potential for a full 5 wave correction which is still bullish, but it just means we have another month or two before metals bottom.

Gold Futures Trading Daily Chart 

Gold Miner Stocks – GDX ETF Chart – Daily

Gold miners do not have the sexiest looking chart. It was formed a strong looking bull flag but has continues to correct and is not nearing a key support level. This level could act as a triple bottom (bullish) or if price breaks below then it would be breaking then neckline of a massive head and shoulders pattern which points to 50% decline. I remain bullish with the longer term gold trend until proven wrong.

GDX - Gold Miner ETF Trading

Silver Price Chart – Daily

Silver remains in a long term bull market much like the monthly chart of gold shown earlier in this report. Silver continues to work its way through a large bull flag pattern with a positive outlook at this time.

Silver Price Chart Daily

Silver Miner Stocks – SIL ETF – Daily Chart

Reviewing the precious metals sector it seems that silver miners have the sexiest looking chart. All price patterns are showing strength and are in proportion to one other. If this chart plays out to what technical analysis is pointing to then we could see the precious metals sector put in a bottom and rally within the next week or two. And if this is the case then silver miner stocks should provide the most opportunity going forward.

SIL - Silver Miner ETF Trading

Precious Metals Trading Conclusion:

In short, what you need to focus on is the yellow consolidation box on the monthly gold chart. A breaking in either direction will trigger a massive move that should last 6-18 months. Until then long term investors can simply sit back and watch the sector while they put their money to work in other active sectors.

From a short term traders point of view, that of mine. I am looking for a signs of a bottom on the daily chart to get my money working earlier to play the bounce/rally that takes place and actively managing the position until a breakout occurs. The charts overall are not that clear as to when a breakout will take place. Metals could start to rally next week or in a few months and all we can do is wait for a reversal to the upside before we get active.

Knowing the big picture trends and patterns at play along with major support and resistance levels (breakout levels) is crucial for success and piece of mind.

Chris Vermeulen 

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Saturday, January 26, 2013

Jim Jubak: Why I added Targa to my Dividend Income Portfolio

Jim Jubak is still one of the go to guys if you are managing your own fund with a long term state of mind. With MLP's getting so much attention it's worth paying attention when the smart guys in the room are making a move.....

I added Targa Resources Partners (NGLS) to my Dividend Income portfolio on January 11 because the units offer a really attractive potential for dividend growth and capital gains. The current dividend, at 6.81% on January 11, isn’t any too shabby either. For the most recent update on that portfolio see my post at Jubak

The big upside here comes from Targa’s acquisition of oil and natural gas pipelines from Saddle Butte Pipeline that for the first time moved Targa into the Bakken shale formation of North Dakota that is the heart of the U.S. oil boom. The deal also gave Targa its first oil pipelines before that Targa had been a natural gas only pipeline play. The North Dakota oil boom is currently very underserved by pipelines, which gives pipeline companies with footholds in the area, and that now includes Targa, an opportunity to invest today’s cheap money in profitable new capital projects.

After the deal Targa reiterated its projections for 10% growth in distributions to holders of the MLP (master limited partnership) units in 2013 from 2012 levels. And the assets added in the deal look to me like they take some of the risk out of Targa’s cash flow. The company has been moving to increase the share of its revenue that comes from fee based transportation of natural gas liquids from 37% in the last twelve months to a projected 55% by the end of 2014. Fee based rather than price based revenue gives Targa protection from what looks like a developing oversupply of natural gas liquids.

I think Targa can easily grow distributions by 9% or so a year over the next few years. That distribution and dividend growth gives Targa, and investors in Targa, protection from a return of inflation or from rising interest rates.

I calculate a one year target price of $44 for Targa.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Targa as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at Jubak Fund Holdings.

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Friday, January 25, 2013

Who are the Top 10 Drillers in the U.S.?

Here's the top 10 land drillers in the U.S. as of January 18th, 2013. I'll admit, there was some surprises here for us.

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Thursday, January 24, 2013

Natural Gas Futures Lower after Inventory Report

A bullish weekly inventory report was not enough to push the Nat Gas futures market back into positive territory nor was the latest NOAA short term weather forecast which was more supportive than the previous day's forecast. The Nat Gas market may be slowly moving into a mode of too little too late so to speak as February is the only month of the remaining winter heating season that is currently projected to experience winter like weather over major portions of the country.

NOAA's six to ten day and eight to fourteen day forecasts are both showing a larger portion of the country expecting more winter like weather especially in the 8 to fourteen day forecast. At the moment both of these forecasts are starting to line up with the 90 day forecast for the month of February issued about a week or so ago. Next week's inventory withdrawal will be bullish versus both the previous year and the more normal five year average.

If the actual weather is in sync with NOAA latest short term forecasts the withdrawals should come in around normal maybe a bit higher through the first week of February. However, as I have been indicating for weeks the winter heating season is running out of time to have a major impact on the ending inventory levels at the end of the heating season.....continue reading.

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EIA: Political risks focus attention on supply of Venezuelan oil to the United States

Uncertainty about the health of Hugo Chávez, Venezuela's president, has raised interest in understanding Venezuela's contribution to U.S. oil supply. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), ranks among the 15 largest global oil producers and is the United States's fourth-largest source of imported oil, behind Canada, Saudi Arabia, and Mexico. Meanwhile, the United States, the world's largest oil consumer and oil importer, is the leading destination for Venezuelan oil exports.

Venezuela and the United States (the U.S. Gulf Coast in particular) are naturally attractive oil-trading partners because of their geographic proximity and a lack of transit chokepoints between them. Furthermore, the robust trade in crude oil from Venezuela to the United States is due to the compatibility between the configuration of some U.S. refineries and the quality characteristics of Venezuelan crude, which is predominately sour (high sulfur content) and medium or heavy (lower degrees of API gravity, meaning it has a higher density). The U.S. Gulf Coast has a concentration of sophisticated refineries (including some wholly or partially owned by Citgo Petroleum Corp.....Read the entire EIA article

Don't miss Precious Metals and Stocks Poised to Ramp Higher in 2013

Tuesday, January 22, 2013

Precious Metals and Stocks Poised to Ramp Higher in 2013

It’s been a long drawn out corrective affair with the precious metals since the August-September 2011 top that seems so long ago right now. During that last spike period where Gold rallied to just over $1900 per ounce, we had mentioned many times in articles and to our subscribers that GOLD was likely peaking in a wave 3 of excitement and high powered bullish sentiment. The “tells” were the articles, the CNBC mentions, the daily “CNBC GOLD” ticker at the top of their screen, and the cover of a major magazine.

Since that time, we believe GOLD has been consolidating in what we term a “wave 4” correction, which is a milder version than some others. This is part and parcel of a 5 wave rally pattern and wave 4 is necessary to cool the engines of overbought sentiment and public love of the metals. These wave 4 patterns can take many forms and shapes, but this one appears to be an irregular ABC Version which we have outlined below on the weekly chart views. The length of period of time is nearing 18 months in total, but the lows in the 1550’s were already marking price bottom territories, and now it seems more of a matter of time before we see wave 5 up really take off.

This means that Gold and Silver Exploration stocks are very cheap as well, because the senior producers are seeing their stockpiles whittled away while their grades deteriorate at the same time. Once GOLD pops over $1750 per ounce we should see a rally in all the Gold Stocks, but especially in the exploration plays, which are historically undervalued here. Take a look at our GDJX Junior Exploration Stocks chart at the bottom of this article as well. It will need some help to break the downtrend, but again we think the odds are in the savvy investors favor to speculate on a select few in this sector.

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Market Trend Forecast




Signs that a Correction Maybe Near in the SPX, RUT & DJIA

The great market prognosticators have by now came out with their 2013 predictions about financial markets. It seems to me to be a fool’s game to try to predict what financial markets are going to do in the future.

I want to be clear in stating that I do not know what is going to happen in the future. I do not know where the S&P 500 Index is going to trade tomorrow let alone 6 months from now. Most market pundits simply will not admit to this fact.

These same market pundits seemingly are unable to be honest about their own fallibility. In their own mind they believe it undermines their credibility or will hurt their forward sales for some book or strategy they are going to unveil. I for one do not prescribe to that notion, I believe in telling the truth.

The truth is that these so called market experts do not know anymore than you or I about price action in the distant future. However, what I do know is that forward price action remains a mystery until its unveiled in the present.

Instead of wasting time discussing potential price action in the future, why not focus on a few pieces of information that have occurred that are known facts right now. I think the chart below points out that in the intermediate time frame, equity indexes are reaching extreme overbought conditions.


As can be seen above, the number of stocks trading above their 50 period moving averages is reaching close to the highest levels in the past 5 years. Many times when these price levels have been reached we witness a correction at the very least and any short-term gains are usually given back in short order. This is not to say that prices are going to sell-off tomorrow or in the next few weeks, however it is a warning that a correction is likely lurking in the not-so-distant future.

To help confirm this notion, a quick look at the Volatility Index (VIX) demonstrates just how much complacency there is in the short term spot VIX price which is currently trading below 5 year lows. For novice readers when the VIX moves lower the outcome is typically bullish for the S&P 500 Index and when the VIX moves higher the reaction is typically bearish in terms of the S&P 500 Index.


As can be seen above, the VIX is trading near the bottom of its recent range. This helps confirm the strength we have seen the past few weeks, however a reversal seems likely in the near future. Should the VIX pick up considerably it would have a negative impact on the S&P 500 Index. Furthermore, if we go out several months in time the Volatility Index Term Structure steepens wildly.

What this means is that traders and money managers have bid up forward VIX contracts in an attempt to hedge against a variety of perceived risk. I would also point out that at the moment February monthly options contracts are cheap relative to their historical volatility levels. However, the VIX could rally violently higher should the appropriate chain of events take place in the months ahead.

There are several catalysts in the short-term which will have a major impact on price action for the broader indexes. This coming week we will have earnings from major companies such as IBM, AAPL, and GOOG which all have the potential to move the tape significantly in either direction.

The other more obvious short-term inflection point is the dreaded U.S. debt ceiling debacle which is likely to begin permeating the financial media as the deadline for action draws near. In recent history both houses of Congress and the Executive Branch have struggled to achieve compromise until the 11th hour. The fiscal cliff was one issue, but the debt ceiling issue has the potential to have a major impact on financial markets.

Just to put into context what happened back in 2011 when Congress could not reach a compromise regarding a debt ceiling increase, the S&P 500 Index had the following reaction as shown below.


Obviously there are significant unknowns regarding how the debt ceiling process will unfold in 2013. However, what is known is that should the politicians wait until the 11th hour equity indexes could force their hands yet again.

Additionally the threat of credit rating agencies downgrading U.S. government debt is a major concern. The outcome of this decision alone has the potential to devastate investment portfolios should the government have a partial shutdown as a result of a failure to reach an agreement regarding the debt ceiling.

What is important to understand is that the longer-term price action in the future is impossible to know at this point. We have major earnings reports which are about to be released over the next few weeks which presents significant risks to the broader indexes in both directions. Furthermore we have a major macro event that is facing us and will have to be addressed in the next 5 – 8 weeks.

The outcome of these events as this point is entirely unknown. I would also point out that in 2011 prior to the debt ceiling debacle we saw equity prices rally higher in late June of 2011 while the VIX traded down near recent lows at that time. After a period of consolidation equity indexes remained patient and gave the politicians time.

Eventually the price action in risk assets forced both political parties and the President to come together. As shown in the chart above, the S&P 500 lost nearly 19% in less than 4 weeks of trading sessions. Even the most skeptical politician was forced into submission by Wall Street and the financial media.

Will history rhyme with the recent past? Will we see a compromise in advance of the dreaded shutdown date? Will the debt ceiling outcome create a major paradigm shift in U.S. financial markets and U.S. politics?

Unfortunately, there is no one that can tell us with any certainty what is about to happen in the next 5 – 8 weeks, let alone later this year. After all of the forthcoming analysis and discussion in the weeks ahead, price action will continue to remain a mystery until the debt ceiling situation is behind us. Until then, caution is warranted in both price directions. Trade safe.

Chris Vermeulen & J.W. Jones....The Active Trading Partners

The Traders Video Playbook

How to Trade Options Around Company Earnings....Example Apple AAPL

The hallmark of a professional option trader is the ability to use a wide variety of trade structures in order to exploit opportunities to profit from specific situations the market presents. One of the opportunities routinely presented multiple times yearly is the impending release of earnings.

Underlying the logic of earnings trades is the stereotypic pattern of increasing implied volatility of options as earnings approach. This pattern is so reliably present that experienced options traders can recognize the approximate date of an impending earnings release by simply perusing the implied volatility of the various series of upcoming options.

As a real time example of this phenomenon, consider the current option chain of AAPL which will report earnings after the market closes on Wednesday, January 23rd.....Let's look at how this sets up.

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Schlumberger Releases Fourth Quarter and Full Year 2012 Results

Schlumberger (NYSE:SLB) today reported full year 2012 revenue of $42.15 billion versus $36.96 billion in 2011.

Full year 2012 income from continuing operations attributable to Schlumberger, excluding charges and credits, was $5.58 billion, representing diluted earnings per share of $4.17 versus $3.61 in 2011.

Fourth Quarter Results

Fourth-quarter 2012 revenue was $11.17 billion versus $10.61 billion in the third quarter of 2012, and $10.30 billion in the fourth quarter of 2011.

Income from continuing operations attributable to Schlumberger, excluding charges and credits, was $1.44 billion, which was flat sequentially, and represents a 3% decrease year on year. Diluted earnings-per-share from continuing operations, excluding charges and credits, was $1.08, the same as in the previous quarter, and $1.10 in the fourth quarter of 2011.

Schlumberger recorded charges of $0.06 per share in the fourth quarter of 2012 versus $0.02 per share in the previous quarter, and $0.06 per share in the fourth quarter of 2011.

Oilfield Services revenue of $11.17 billion increased 5% sequentially and 8% year on year. Oilfield Services pretax operating income of $2.2 billion increased 1% sequentially and was flat year on year.

Read the entire Schlumberger earnings report

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Monday, January 21, 2013

Monday Price Analysis.... Metals, Crude Oil, U.S. Dollar, Bonds and the SP 500

The U.S. stock market is closed today for Martin Luther King, Jr. Day. So we do not expect much price action to take place on the Canadian or futures market today. But we'll still be watching the markets, let's be ready to trade Tuesday morning!

Pre-Market Analysis Points

Dollar index is giving mixed signals this week. Short term chart looks bullish for another couple of days but overall it is trading within a large bear flag and near resistance.

Crude oil is trading lower by -0.50% but remains in a strong uptrend and bull flag. $97-$98 looks like the next upward thrust target.

Natural gas is trading higher 0.87% touching our upside target of $3.60 this morning. It could keep climbing to $3.70 which is the next target but it looks as though its ready for a pause.

Gold and Silver are trading flat. Last week they held up at resistance but have yet to breakout. They could do it this week but until we the trend shifts with volume to support the move and miners to also show strength I will remain on the sideline.

Bonds are trading flat and giving off mixed signals much. The 60 minute chart is bullish with a bull flag, while the daily chart is bearish.

SP500 index remains in a bull market grinding its way higher each week without a decent pausepullback to get long. Technically we could see a 3-4% pullback any day and the market would remain in an uptrend.

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Sunday, January 20, 2013

John's Webinar Thursday Night was Amazing.....Here's the Recording

John Carter pulled out all the stops in Thursday night's options webinar....shared his BEST trading trick and even gave a trade that, if you took it on Friday, would have been money in the bank.

Watch recording HERE NOW

You even got a glimpse at his ACTUAL account and trades he's ACTUALLY in. Here are a few details you missed:

... his 3 favorite options trading strategies,
... how to find high probability trades,
... how to manage options trades,
... his trading rules for doubling his $500,000 account
... and more.

Click here to watch it now!

See you in the markets,

Ray C. Parrish
President/CEO The Crude Oil Trader

Friday, January 18, 2013

Weekly Technical Take - U.S. Dollar, Crude Oil, Natural Gas, Gold, Silver, Bonds and the SP 500 index

Here's COT contributor Chris Vermeulens technical take on these markets including the U.S. Dollar, crude oil, natural gas, gold, silver, bonds and the SP 500 index........

*    Dollar index 4 hour chart is forming a bear flag. Until the lower blue support line is broken the flag will continue higher.

*    Crude oil has a big pop yesterday as it continues up its support trend line. It looks as though it may take a run at the $100 per barrel level over the next 1-2 weeks.

*    Natural gas had bullish inventory numbers yesterday sending the price sharply higher. It tagged our $4.50 resistance price but could not close above it. This morning it is trading above that level and may confirm a breakout.

*    Gold continues in a clear down trend with high volume resistance, down trend line and a moving average holding it down. It seems everyone is turning bullish here on gold, but in my contrarian view that is signaling another short term top. Stick with the trend until proven wrong.

*    Silver is trading similar to gold. Still in a down trend but is much more volatile.

*    Bonds have been pullback since the December and have formed a falling channel. Price remains bearish which is actually bullish for the stock market.

*    SP500 index continues its uptrend but is trading at a 2% premium above my key support/trend moving average. The SP500 has the potential to drop 2-4% at any time and if so we will be looking to get long with the overall trend.

Click here to see all the charts and more details on all of these trades


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Thursday, January 17, 2013

Schlumberger Declares 13.6% Increase in Quarterly Dividend

The Board of Directors of Schlumberger Limited (NYSE:SLB) today approved a 13.6% increase of the quarterly dividend.

The increased dividend of $0.3125 per share of outstanding common stock is payable on April 12, 2013 to stockholders of record at the close of business on February 20, 2013.

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As Supply Glut Eases, Gulf Refiners Likely to Benefit

The expanded Seaway Pipeline, along with other new crude shipping capacity, marks a new era for the U.S. oil industry, soon flooding the Gulf Coast with light, sweet grades and signaling the region's impending disconnect from the North Sea benchmark Brent, according to Platts Oilgram News.

Earlier this month, the Seaway Crude Oil Pipeline Co. completed an expansion that boosted crude capacity to 400,000 barrels a day, nearly triple previous levels, between the Cushing, Okla., storage hub and the Texas Gulf Coast. Last May, the pipeline's inland flow was reversed amid efforts to address a glut in the central U.S.

The Seaway Pipeline expansion "allows Gulf Coast refiners to participate in the raw material advantage that we’ve seen in the Midwest," industry consultant Andy Lipow told Platts Oilgram News. "I anticipate seeing Gulf Coast refiners running high operating rates, [which will] translate the crude oil surplus into a petroleum products surplus, given the stagnant demand for refined products in the U.S.," he added.

Refining margins along the Gulf are expected to improve with the influx of "advantaged" crudes, but eventually regional crude prices will come under pressure from the new supply, analysts said. The WTI-Brent spread narrowed sharply earlier this month, as the Seaway expansion renewed market optimism that additional export capacity will help cut heavy stockpiles at Cushing.

Read the entire report

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Wednesday, January 16, 2013

Kinder Morgan Reports 4th Quarter Earnings KMP KMR KMI

Kinder Morgan Energy Partners (NYSE: KMP) today increased its quarterly cash distribution per common unit to $1.29 ($5.16 annualized) payable on Feb. 14, 2013, to unitholders of record as of Jan. 31, 2013.

This represents an 11 percent increase over the fourth quarter 2011 cash distribution per unit of $1.16 ($4.64 annualized) and is up from $1.26 per unit ($5.04 annualized) for the third quarter of 2012. KMP has increased the distribution 46 times since current management took over in February 1997.

Chairman and CEO Richard D. Kinder said, “KMP had a strong fourth quarter and a very successful year overall. We will distribute our budget of $4.98 per unit for the full year, which represents an 8 percent increase over the 2011 distribution of $4.61 per unit.

KMP also produced cash in excess of our distribution target of approximately $30 million. For 2012, all five of KMP's business segments recorded higher results than in the previous year and generated $4.384 billion in segment earnings before DD&A and certain items, a 20 percent increase from $3.639 billion in 2011.

Summary: Quarter 4 EPS of $0.61 misses by $0.03. Revenue of $2.51 billion beats by $0.06.

Read the entire Kinder Morgan earnings report

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Is it an MLP that Icahn is Really After in Transocean?

Carl Icahn’s new stake in Transocean Ltd. (RIG) may raise pressure on the world’s largest offshore driller to put some of its rigs into a tax advantaged partnership as the billionaire seeks to boost his investment’s value.

Transocean’s announcement this week that Icahn bought 1.56 percent of its shares and sought regulators’ permission to own more than 3 percent stirred a debate in the investment community as the activist investor known for shaking up companies remained silent about his intentions. He’s jumping in less than two weeks after Transocean agreed to pay the U.S. $1.4 billion to settle its liability in the 2010 Gulf of Mexico oil spill.

With the company already in turnaround mode, the shares have led peers with a 34 percent gain over the past year, some investors and analysts said they expect the 76 year old to push for Transocean to create a master limited partnership, or MLP, to raise cash for the parent company and spur growth with its tax free structure.

It would be the second drilling rig partnership after Stavanger, Norway based Seadrill Ltd. (SDRL) spun off assets to create Seadrill Partners LLC (SDLP) in October.....Read the entire Bloomberg article.

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Progress Energy Chooses TransCanada to build new LNG Pipeline

A $5.1 billion natural gas pipeline that will transport liquefied natural gas off Canada's West Coast will be built by TransCanada Corp., the builder of the Keystone XL oil pipeline. Bloomberg reported the Prince Rupert Gas Transmission project could transport up to 2 billion cubic feet of LNG a day from the Montney region in Alberta and British Columbia to an export facility Port Edward, B.C. The pipeline still needs to be approved by the government.

“From a trading perspective, we view today's announcement as an unexpected positive development that should provide support for [TransCanada] shares,” said Pierre Lacroix, an analyst at Desjardins Securities Inc., according to Bloomberg.

Read the entire article

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Tuesday, January 15, 2013

Carley Garner Gives Cramer the Numbers for Natural Gas

One of our favorite people to follow in the commodities sector is Carley Garner. You may know her best as the author of "A Trader's First Book on Commodities".

Well she has set us up a nice trade over the next 4 to 6 weeks, watch it here as Jim Cramer lays out the numbers and the trade. Carley tells us, "If you are interested in bullish strategies in natural gas, you will likely be better served waiting for more favorable entry levels".

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Statoil Leads the way in Norway Energy Auction

Statoil (STO) was the biggest winner in Norway's energy auction today, receiving 14 licenses including seven operatorships spread across the North, Norwegian and Barents seas.

Shell (RDS.A) and Total (TOT) received the most operatorships among non Norwegian firms, with four each; they received five and eight licenses, respectively. XOM, CVX and COP also picked off a few licenses.

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Learn from the Master...."Live Options Strategy Webinar"

This Thursday, John Carter from "Trade The Markets" is conducting a free "Live Options Strategy Webinar"

John's agreed to teach YOU the strategies he plans on using in matter what size your account or level of activity.

Here are the details:

Date: Thursday, January 17th Time: 8:00pm Eastern Time (New York Time)

Click Here To Register

In this webinar John will show you ...

... His 3 favorite options trading strategies,
... How to find high probability trades,
... How to manage options trades,
... His trading rules for doubling his $500,000 account ......and more.

So mark your calendar for Thursday night, January 17th at 8:00pm Eastern Time (New York Time).

Click Here To Register Now

The Technical Traders Morning Charts

Yesterday’s trading session played out exactly as posted in the morning chart update. Today will be a different story from the looks of it as the dollar index looks to be putting in a bottom and that has the SP500 down 0.40% this morning. It may trigger our first entry point to let long stocks today.

Crude oil has been trading sideways/higher the past week but the on balance volume clearly shows sellers are unloading contracts at the $94 level. Yesterday we talked about how crude oil was walking a fine line up its support trend line and once that breaks look out! Price is holding up but be aware it could drop fast and hard any day here....Check out all of this mornings charts for the U.S. Dollar, crude oil, natural gas, SP 500 futures, gold, silver and bonds.

The Technical Traders Morning Charts

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Monday, January 14, 2013

Trends & Trading Signals: Gold, Miners, Crude Oil and the SP500

Gold and gold miner stocks have underperformed in 2012 disappointing most traders. That being said it has traded in a large sideways range since September 2011 and remains stuck in this range as of this week. Investments trading sideways are not my preferred investment of choice because some commodities and stocks for that matter can trade sideways for years before making another bull market rally.

That being said in the last six months gold has started to show life that a new bull market may be starting. 2013 is starting to look as though gold, silver and precious metals miners could lead the market higher if they can break out of their basing patterns. Until we get more bullish price action I am not planning to get long.

Let's take a look at the gold ETF and Gold Miner charts

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Sunday, January 13, 2013

Icahn Seeking Approval to Acquire Voting Securities in Transocean RIG

Pursuant to Article 20 of the Swiss Federal Act on Stock Exchanges and Securities Trading, which requires the disclosure of securities positions at various thresholds in excess of 3% of the voting rights of a listed company, Transocean has reported with the SIX Swiss Exchange that it has been notified by Carl Icahn that Mr. Icahn [together with certain of his affiliates] holds shares of Transocean in an amount totaling 1.56% of the issued shares and has a synthetic long position in shares of Transocean (including options to acquire shares) representing 1.70% of the issued shares.

Additionally, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, Mr. Icahn has notified Transocean that Icahn is seeking approval to potentially acquire voting securities of Transocean in an amount exceeding the $682.1 million Hart-Scott-Rodino threshold, but less than that Act's threshold of 25% of the outstanding voting securities, depending upon various factors.

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Saturday, January 12, 2013

Halliburton Uses Clean Burning Natural Gas to Power a Fracturing Fleet

Are we finding more uses for natural gas in this country. It seems to be taking forever but if you look hard enough it's happening. COT Fund favorite for 2013, Halliburton, is promoting the use of nat gas even if they have to use it themselves....

Halliburton (NYSE: HAL), Apache Corporation and Caterpillar have developed innovative dual fuel technology capable of safely and efficiently powering the pumping equipment used for fracturing treatments with a mixture of natural gas and diesel. With 12 pumps (24,000 horsepower), this is one of the largest scale dual fuel projects ever conducted in the oil and gas industry.

G. Steven Farris, Chairman and CEO of Apache and the Chairman of America’s Natural Gas Alliance (ANGA), encouraged Apache and the industry to increase the use of natural gas as a fuel for engines. In response, Halliburton developed a technical solution for converting the pumping equipment used at a typical large scale fracturing spread to a dual fuel system including natural gas. One that would be more efficient and cleaner burning than using diesel alone.

Halliburton and its supplier, Caterpillar, teamed up to convert the company’s new Q-10 pumps to dual fuel with a technology that would safely and efficiently accommodate high quality liquefied or compressed natural gas. Collaborating closely with Halliburton and Apache to cover a wide range of performance, environmental and efficiency criteria, Caterpillar adapted its proprietary Dynamic Gas Blending (DGB) engine technology to power Halliburton’s massive pumps.

“We anticipate that in the not so distant future, these DGB engines can be easily retrofitted to efficiently burn available on site conditioned field gas, thereby saving operators additional fuel transport costs,” said Marc Edwards, Senior Vice President of Halliburton’s Completion and Production Division.

Read the entire article at

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Crude Oil, Natural Gas and Gold Weekly Technical Outlook for January 12th

It's that time of the week when we check in with the great staff at Oil N' Can crude oil stay in a bullish pattern? Let's see how ONG will be trading crude oil, natural gas and gold this week.....

Crude oil rose further to as as high as 94.70 last week and and breached 61.8% retracement of 100.42 to 84.05 at 94.17 before retreating mildly. Near term outlook stays bullish as long as 91.52 minor support holds. Sustained trading above 94.17 will pave the way for a retest on 100.42 key resistance level. However, note bearish divergence condition in 4 hours MACD. Break of 91.52 will argue that a short term top is formed and bring pull back to 90 psychological level and below.

In the bigger picture, price actions from 114.83 are viewed as a triangle consolidation pattern, no change in this view. Fall from 100.42 is likely the fifth and the last leg of such consolidation. Having said that, downside should be contained above 77.28 and bring an upside breakout eventually. Break of 100.42 resistance will strongly suggest that whole rebound from 33.29 has resumed for above 114.83.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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

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Natural gas attempted to resume recent fall last week but was contained above 3.05 support and recovered again. Initial bias remains neutral this week as consolidation from 3.05 might extend further. But overall outlook remains unchanged. Considering that it's limited by medium term falling trend line, whole rally from 1.902 might be finished at 3.93 already. Near term outlook will stay bearish as long as 3.507 resistance holds. Current decline should target 61.8% retracement of 1.902 to 3.933 at 2.678 on break of 3.05.

In the bigger picture, the bounce off from the long term falling channel resistance for 6.108 retained the case that such decline isn't finished. Break of 2.575 support should make a new low below 1.902 to extend the whole long term down trend. Nonetheless, strong rebound from 2.575, followed by break of 3.933 resistance, will revive that case of long term reversal and target a test on 4.983 key resistance.

Nymex Natural Gas Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

Gold's recovery from 1626 extended further last week as consolidation continued. But with 1695.4 resistance holds, deeper fall is still expected. Below 1626 will extend the whole decline from 1798.1 to 1478.3/1577.4 support zone. On the upside, though, break of 1695.4 will indicate reversal and bring stronger rebound back to 1755.0 resistance and above.

In the bigger picture, price actions from 1923.7 high are viewed as a medium term consolidation pattern. There is no indication that such consolidation is finished, and more range trading could be seen. In any case, downside of any falling leg should be contained by 1478.3/1577.4 support zone and bring rebound. Meanwhile, break of 1792.7/1804.4 resistance zone will argue that the long term up trend is possibly resuming for a new high above 1923.7.

In the long term picture, with 1478.3 support intact, there is no change in the long term bullish outlook in gold. While some more medium term consolidation cannot be ruled out, we'd anticipate an eventual break of 2000 psychological level in the long run.

Comex Gold Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

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Often the key to consistent and successful trading is in the details and the strategy behind the trade. After 20 years of learning this the hard me here.

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Watch the video and watch him make some big trades, and he'll show you how YOU can do the same.

Normally these videos are for members only, but as a reader at The Crude Oil Trader John has agreed to make this video available to you, no strings attached.

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The Crude Oil Trader

Thursday, January 10, 2013

EIA: Average 2012 Crude Oil Prices Remain Near 2011 Levels

Average crude oil prices in 2012 were at historically high levels for the second year in a row. Brent crude oil averaged $111.67 per barrel, slightly above the 2011 average of $111.26. West Texas Intermediate oil averaged $94.05 per barrel in 2012, down slightly from $94.88 in 2011.

The differential between Brent and WTI spot prices historically was just a few dollars per barrel in either direction. In 2011, the Brent premium over WTI averaged $16.38 per barrel; however, in 2012 this premium widened to $17.61 per barrel.

graph of average spot prices, as described in the article text

graph of daily spot prices, as described in the article text

The significant events in 2012 include:

* U.S. crude oil production rose by an estimated 780,000 barrels per day (bbl/d) in 2012, the largest yearly increase to date.

* The surge in crude oil production led to crude oil stocks held in land-locked Cushing, Oklahoma, which is a major pricing point for crude oil, that resulted in record-high end of month stock levels from April through December.

* The United States remained a significant net oil importer when levels of crude oil and petroleum products are added together.

* After Brent fell below $90/bbl in late June and WTI dropped below $80/bbl, prices rebounded in July on expectations that policymakers in the United States, Europe, and China would take action to stimulate economic growth, which could increase oil demand. * Disruptions in oil production in South Sudan, Yemen, Syria, and the North Sea reduced available global supplies, putting upward pressure on oil prices.

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Wednesday, January 9, 2013

Taking Advantage of Recent Lows in the Volatility Index

With the VIX sinking there is nobody better to guide us through a trade on the VIX then todays contributor, COT staffer J.W. Jones.....

One of the newest option products to appear in our universe as an options trader is the option series designed to trade the volatility index (VIX). The VIX is a measurement of the implied volatility of the S&P 500 index.

To review quickly, the implied volatility of an options series is reflective of the aggregate market opinion of the future volatility of a given underlying asset. In terms of the Volatility Index, the price is the current market opinion of the future volatility in the S&P 500 Index over the next 12 months.

As are all attempts to predict the future, this value does not always reflect accurately the actual volatility as it plays out prospectively, but at a practical level it is the best we can do. As sage philosophers have long noted, “the future isn’t what it used to be.”

The importance for traders is the well established and generally known inverse correlation between prices for the given underlying and the measure of implied volatility, in this case our VIX value. What is typically less known is the fact that levels of implied volatility correlate even more closely to the velocity of the price move of the underlying asset in question.......Read J.W.'s entire article and check out the charts

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Baker Hughes Announces December 2012 Rig Counts

Baker Hughes Incorporated (NYSE:BHI) announced today that the international rig count for December 2012 was 1,253, down 14 from the 1,267 counted in November 2012, and up 73 from the 1,180 counted in December 2011. The international offshore rig count for December 2012 was 299, down 1 from the 300 counted in November 2012 and unchanged from the 299 counted in December 2011.

The average U.S. rig count for December 2012 was 1,784, down 25 from the 1,809 counted in November 2012 and down 219 from the 2,003 counted in December 2011. The average Canadian rig count for December 2012 was 353, down 31 from the 384 counted in November 2012 and down 76 from the 429 counted in December 2011.

The worldwide rig count for December 2012 was 3,390, down 70 from the 3,460 counted in November 2012 and down 222 from the 3,612 counted in December 2011.

Here is the Baker Hughes official release and charts

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Monday, January 7, 2013

EIA Video: Cumulative Natural Gas Wells Drilled in Pennsylvania

Between 2009 and 2011, Pennsylvania's natural gas production more than quadrupled due to expanded horizontal drilling combined with hydraulic fracturing. This drilling activity, which is concentrated in shale formations that cover a broad swath of the state, mirrors trends seen in the Barnett shale formation in Texas.

The animation illustrates Pennsylvania's relatively recent transition from conventional vertical wells (black diamonds) to horizontal wells (red diamonds), drilled mostly in sections of the Marcellus, Utica, and Geneseo/Burket shale formations located in the northeast and southwest portions of the state. The animation also shows that as horizontal drilling increased, the number of vertical wells [which are typically less productive] fell, resulting in an overall decline in the state's new well count.

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Saturday, January 5, 2013

A Technical Update on the Mini Crash in GOLD

If you follow one trader for gold trades make it COT staffer David Banister. Today David shows us what he sees "in the waves"......

Let’s make one thing clear; nobody I know including myself predicted that Gold would drop from 1690 to 1625 inside of 48 hours this week. That was not in the charts and so I won’t even pretend I was going to see that train coming through the tunnel.

With that said, let’s try to let the dust settle but take a look objectively at some possibilities.

1. We all know that some FOMC minutes released did in fact cause some major downside in GOLD based on potential for eventual end to QE in the US down the road. It did cause stops to trigger, probably some margin calls, and then more stops creating a mini crash of near 4% on the Metal.

2. The ABC pattern appeared to be completed at 1634 last week, especially when we rallied over 1681 pivot. A brief dip to 1625 spot took place this morning early, and we now trade again around the 1631 pivot.

What are the technical options?

Well if we stick with traditional Elliott Wave Theory, we can see a potential 3-3-5 pattern still unfolding and wave 5 of C is now in play. 3-3-5 patterns have 3 waves down, 3 up, then 5 down to complete the entire ABC Structure.

To confirm this, we will want to see GOLD bottom here fairly soon in wave 5 of C.

Below is the updated chart of GLD ETF showing you this pattern. It’s the best I can do right now. I will keep you updated as things unfold. To be sure, I count this as cycle year 13 in the Gold bull market and I had Gold peaking in June of 2013 at 2280-2400 ranges per ounce, but we will have to see now if that is still valid or not based on whether this C wave can hold and reverse hard soon.

Gold Market Forecast

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Friday, January 4, 2013

Why the 1470-1474 area on the SP 500 is extremely important for Bulls

The SP 500 has been in a potential 5 wave rally going all the way back to October 2011 lows of 1074. This type of 5 wave rally is common in a Bull Market, but must be watched closely as it could also signal another large correction just around the corner from current 1464 levels on the SP 500 Index. Once you complete a 5 wave bullish pattern, there is commonly a 3 wave corrective decline, therefore determining where those key pivot points are is crucial for market watchers.

If we take a look at the length of the 5 waves in the Rising Wedge pattern from the October 2011 lows of 1074 below, and compare them with other waves 2-5, we can see several fibonacci fractal relationships amongst all of them. This is one of the clues I look for when trying to analyze pivot points and knowing at least what I should be watching for further clues.

In most cases, wave 3 is commonly the largest of a 5 wave structure, but that does not preclude wave 1 from being the largest in the series. To wit, recall the nasty decline into October 2011 that spurred the next big market advance of about 350 points off the bottom. When you have a significant decline preceeding the early stages of a 5 wave advance, often the first wave in the pattern is in fact the largest, which may be the case here.

Let’s take a look at a possible 5 wave count just so we know what to be aware of :

Wave 1: That 350 point advance was a possible wave 1 off the 1074 lows of Oct 2011.

Wave 2: managed to retrace 155 points of that advance into June 2012, a common wave 2.

Wave 3: rallied to the 1474 pivot, which was a 207 point rally. 207 points is about 61% fibonacci relationship to wave 1′s 350 point advance, again another clue.

Wave 4: dropped as we know from 1474-1344, or 130 points. 130 points is also about 61% of Wave 3′s prior advance on the downside.

Wave 5: Theoretically this wave 5 is now from 1343, and if we took 61% of wave 3 advance and add it to 1343, we come up with about 1470.

1470 would then be a double top in the market, stop wave 5 in its tracks… and be followed by a large correction.

So with the above in mind, we advise watching 1470-74 with keen interest as the market will want to take this area out with authority to continue the intermediate bull run. If not, we could be in for some downside trouble…

Don't miss a single Elliot Wave Trading article from David Banister, consider joining us for free weekly reports. Just visit Market Trend Forecast or better yet sign up for a 33% discount on a one year subscription to Davids complete service today.

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Wednesday, January 2, 2013

The Fiscal Pop-N-Drop for Equities – Look Out

Today’s gap higher in stocks has many investors feeling really good about but will this rally last?

My to the point answer is “Yes” but there will be some bumps and navigating positions along the way.

Looking at the charts below you will notice how stocks are trading up over 4% in two trading sessions and several indicators and technical resistance levels are now being tested. Naturally when several resistance levels across multiple time frames, cycles and indicators we must be open to the idea that stocks could pause or pullback for a few days before continuing higher.

Here is a quick snapshot of charts we follow closely to help determine short term overbought and oversold market conditions.....Click here to check out the charts for "The Fiscal Pop-N-Drop for Equities – Look Out"

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Stock & ETF Trading Signals