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

Crude oil closed lower on Monday due to concerns over the global economy and the prospect for falling demand near term. A short covering rally tempered early session losses and the high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.

Closes below the reaction low crossing at 94.99 are needed to confirm that a short term top has been posted. If January renews the rally off October's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target.

First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the reaction low crossing at 94.99. Second support is the reaction low crossing at 89.05.

Look for the $100.00 area basis the January contract to offer stiff resistance for any rallies in this market. We would not be surprised to see this market move down to the lower band of its Donchian Trading Channel, around the $95 level.

With two of our Trade Triangles green, giving us a +65 Chart Analysis Score, it still appears as though the under lying elements of this market remain bullish. Long term, and intermediate term traders should be long this market with appropriate money management stops.


Gold’s 4th Wave Consolidation Nears Completion and Breakout

Crude Oil Continues to Mirror Action in the Equity Markets

Is the market a buy or short sale? That’s the question that is going through many trader’s minds this week. Should I buy this market, or should I go short this market? At the moment, this market is being driven by perception and sentiment. Eventually that will change and the market will become driven by the direction of the major trend.

Our major trend indicators remain negative on the equity markets. We are also looking at the S&P 500 at the top of the Donchian trading channel. I believe that was the reason for yesterday’s sharp move down.

In order for this market to really get going on the upside it needs to clear the highs of 1230 on the S&P 500 in a convincing fashion.

There is so much confusion in the marketplace right now.....Interest rates, mortgage foreclosures, contagion in Europe and the occupation of Wall Street. The markets always have numerous conflicting thoughts, but eventually the market figures it out and goes the way it wants to go. Our job here at MarketClub is to recognize those changes and alert you to what we are witnessing.

Let's look at todays action in crude oil......

The crude oil market continues to mirror the action in the equity markets. The highs seen yesterday in the December contract at $88.40 a barrel remains to be taken out if this market is going to move higher. With mixed Trade Triangles and a Chart Analysis Score of +70, there is no clear cut direction for this market at the moment. Crude oil is very overbought on the Wiliams % R indicator.

We are looking for a pullback to the $80 a barrel level, which would represent a 61.8% Fibonacci retracement. Our long term Trade Triangles continue to be negative and we expect they will once again dictate the tone of this market. Long term traders should continue to be short the crude oil market.

December crude oil closed up $1.88 a barrel at $88.50 today. Prices closed nearer the session high today, hit a fresh four week high and scored a bullish “outside day” up on the daily bar chart. Crude bulls still the overall near term technical advantage and gained fresh upside momentum today.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 70

Now, let’s go to today's video and look at the 6 major markets we track every day.

Adam Hewison


Check out Today’s MarketClub Trading Triangles

Adam Hewison: Lloyds of London Pulls Deposits From Banks on Debt Crisis

As traders, we are bombarded with news. Some of it is useful, but a lot of it is just fluff to fill up airspace time. One piece that caught my eye this morning, which I haven’t seen reported in the main media, concerns the venerable Lloyds of London insurance company. This company was founded in 1688 in a London coffeehouse and has gone through wars, boom and bust cycles, every money mania known to man and has always managed to survive. The article claimed that Lloyds of London is taking their cash out of the European banks this morning. From Businessweek Magazine "Lloyds of London Pulls Deposits From Banks on Debt Crisis"

Quite frankly this is shocking, but not surprising given Lloyds’ survival instincts. Lloyds of London is one of the most conservative companies, run by some of the smartest people on the planet. Perhaps it’s an early warning sign about what could potentially happen in Europe.
It is something to think about.

Crude Oil Market Commentary
There is not much going on in the crude oil market, as it continues to remain in a fairly broad trading range with resistance very evident at the $90 a barrel level. Support comes into this market between $84 and 84.50 a barrel. The crude oil market is presenting a mixed picture at the moment with our longer term monthly Trade Triangle negative and our intermediate term weekly Trade Triangle positive. This has created a trading range at the moment. The crude oil market remains in a sort of sideways motion, but with a bias to testing the lower range of the Donchian trading channel.

The Williams % R indicator is stuck in the middle giving no real clue as to direction. Also pay attention to the MACD since it is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. We do not think that the crude oil market is ready to go higher, based on our long term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.

November crude oil closed lower on Wednesday as it consolidates below August's uptrend line crossing near 87.60. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below last Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low while opening the door for a larger degree decline into the end of September. Closes above the May-July downtrend line crossing near 91.34 would confirm an end to this summer's decline.

First resistance is last Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 91.34. First support is last Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

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

Adam Hewison: The Big Picture

Let’s take a look at the big picture and what it means today. There are a number times when the markets trade erratically. When this happens, you get out of the market with some quick move either up or down against you. Then, the market immediately goes your way the next day and afterwards you say to yourself, “I should’ve stayed in!”

That’s why it’s important to look at the big picture, and the big trends. What looked like a possible reversal yesterday, did not change the big trends in the markets. It just doesn’t happen in one day.

So let’s look at the big trends in the various markets we cover. Equity markets, the big trend is down. Metal markets, the big trend is up. Crude oil, the big trend is down. The dollar index, the big trend is up. And lastly, the CRB index, the big trend is down. Providing you are trading in the direction of the major trend, you have the odds in your favor. Always remember to keep your trading logs and game plan up to date. They will help you become a better trader.

Let's look at where we stand in the crude oil and gold markets......

The crude oil market once again came very close to moving over the $90 a barrel level, and at the time of this report has failed. Presently the Trade Triangles are mixed, indicating that this market is in a trading range. We would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. The big trend monthly Trade Triangle remains negative for this market. Look for crude oil to continue to move in a sideways to lower manner.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 60

With a golds chart analysis Score of + 55, it would appear that the gold market is in near term trading range. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. The Williams % R is not yet in an oversold condition. The $1,850 to $1,900 levels are resistance for gold, at the moment. Support comes in around the $1,800 area and extends all the way down to $1750. Looking at the market, it would possibly appear as though we have put in a double top. This will only be confirmed with a close below the $1,750 level. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55


Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology

Adam Hewison: The Markets Voted and it's No Confidence In Obama

It would appear that President Obama’s speech last night was not well received looking at the financial markets this morning.

Readers of this report know that we rely on our Trade Triangle technology for trends, and not what a government official has to say and this includes the president of the United States. I learned over the years that the markets generally tell you what they’re going to do. Price action alone is the greatest truth you can see in the marketplace. Price action is what determines trends, price action is what determines traders actions.

Many newbie traders think there must be some mystical power that drives the markets. The truth is, the market is driven by people who believe prices are you going to go higher or go lower. It is that simple, however, most investors tend to over think the market.

Now I understand that there are folks out there that would disagree with that statement and say that the fundamentals, i.e. supply and demand, earnings etc. etc. is what drives the markets. Yes, there is a certain truth to that, but the other part of the equation is the psychology of the market. Market sentiment or psyche can really play havoc on the fundamentals and that is why price action alone is the best market analyst in the world.

As we go into this weekend with the 10th anniversary of 9/11 looming over everyone’s head It’s important to look at how the markets are closing for the week.

We consider how a market closes for the week to be very important. Did the market make or lose ground for the week? Which way is the monthly Trade Triangles? Did the market close in the direction of the major trend? All of these thoughts are reflected for the most part in the weekly closing price of any market. That’s why we concentrate and bring to you our weekend updates, which allows you to see the big picture and not the minutia of every tick.

Let's look at Crude Oils price action........

The Crude Oil market once again backed off from the $90 a barrel level which we have talked about as being resistance for this market. The Williams % R is setting up for a negative divergence to the downside. Crude Oil reversed itself from the top of its Donchian trading channel yesterday. The monthly Trade Triangle is still negative for this market. We look for Crude Oil to continue to move in a sideways pattern much like it did for most of August. The longer term monthly Trade Triangle must be given more weight than either the daily or weekly Trade Triangles.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 60

Check out todays video that covers all 6 markets that Adam follows.....

Unlimited access to this and other trading videos FREE! Click Here!