Crude Oil Stalls in Resistance Zone

Clear Price Channel May Prompt Big Breakout or Breakdown Move in Oil

In this report, we discuss the recent price action in crude oil and how economic conditions and the pennant flag chart pattern is indicating a big price move is about to take place over the next few weeks. While some of you may want a clear, bold prediction as to whether a breakout or breakdown may happen, as technical traders, our job is to predict different possible setups and identify the criteria that will tell us when to enter the trade upon confirmation.

Crude Oil has continued to retest the $41.75 to $42.00 resistance level over the past 30+ days. My research team believes this represents a very clear indication that further failure to advance above this level will prompt a moderate price decline – likely breaking below the $36.00 ppb price level.

We believe the completed Pennant/Flag Apex, highlighted in Light Green on the Crude Oil Futures chart below, represents a technical pattern suggesting a new price trend is pending. The recent sideways price action, highlighted by the Gold Rectangle on this chart, shows the range of price recently that is currently presenting a very clear support level (near $36) and a very clear resistance level (near $42)....Continue Reading Here.

Saudi Arabia's "Mini Oil Embargo" May Backfire

On October 20, 1973, Saudi King Faisal announced KSA was joining in an oil embargo against the United States and Europe in favor of the Arab position in the Yom Kippur War. In an interview with international media, King Faisal said:

“America's complete Israeli support against the Arabs makes it extremely difficult for us to continue to supply the United States with oil, or even remain friends with the United States."

The price of oil quadrupled in short order, a few months. The oil shortage in America was managed by gasoline rationing by President Nixon. Drivers could buy gasoline on “odd” or “even” days, depending on the last digit of their license plate. There was also a maximum dollar amount set on purchases of $10. Motorists often had to wait in line for an hour to buy gas.

The economic impact on the U.S. and the world economy was devastating. It caused a massive recession in 1974-75, even though the embargo was lifted in March 1974. The Saudis and other OPEC producers learned how “inelastic” (i.e., non-responsive to price) gasoline demand was and their ability to stuff their coffers even with small cuts to production.

However, this episode led to legislation to build the Strategic Petroleum Reserve (SPR) as a means to offset future supply disruptions and even deter them. At present, the SPR contains roughly 650 million barrels of crude oil located in underground salt domes across the Gulf Coast.

The drawdown capacity is rated at 4.4 million barrels per day. And supplies can begin flowing into the pipeline system with 13 days of a presidential order to commence.

Saudi’s Mini Oil Embargo 

Saudi Arabia appears to be attempting to starve the US of oil supplies in a “mini-embargo.” The idea would be to signal to the world that oil supplies are lower than otherwise would be reported internationally.

In the week ending February 22nd, imports from Saudi Arabia totaled 346,000 b/d, the lowest one-week level in the data series going back to 2010. The four-week trend of 491,000 b/d was also the lowest, and 23 percent lower than a year ago. This level does not even meet the requirements of Saudi Aramco’s Motiva refinery at Port Arthur, Texas, which has a capacity of 636,500 b/d.

Despite the lack of Saudi barrels, U.S. crude stocks have nevertheless built by 4.4 million barrels since the end of December. That is because crude production is 1.9 million barrels per day higher in the year-to-date v. last year. “Other supplies,” primarily natural gas liquids are 536,000 b/d higher in that same comparison. Meanwhile, net crude imports, including exports, were 1.877 million barrels per day lower in the year-to-date v. last year. Crude inputs to refineries were 89,000 b/d higher in that same comparison.

Trump Tweet

President Trump warned OPEC on February 25th: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!”

The Saudi mini-embargo to the U.S. may backfire by angering him. It would be a simple matter to replace Saudi imports altogether with a drawdown from the SPR until U.S. production rises another 500,000 b/d. Furthermore, the U.S. could replace Saudi barrels with imports from other sources, Iraq for example.

Conclusions

The Saudi ploy to drain U.S. crude inventories in support of oil prices is doomed to failure. U.S. domestic supply has risen greatly, and the net import need has dropped dramatically in the past year. The demand for OPEC’s oil is projected to drop by 1.0 million barrels per day in 2019. In 2020, the EIA projects that the U.S. will be a net oil exporter.

Furthermore, it could backfire if Trump calls for the NOPEC legislation – No Oil Producing and Exporting Cartels Act - to be passed. The House Judiciary Committee approved the bill. America's vulnerability to Saudi embargoes has long passed.

Check back to see my next post!

Robert Boslego
INO Contributor - Energies

Five Ways to “Crash Proof” Your Portfolio Right Now

By Justin Spittler

The U.S. economy is running out of breath. As you probably know, the U.S. economy has been “recovering” since 2009. The current recovery, now seven years old, is one of the longest in U.S. history. It’s also one of the weakest.

Since 2009, the U.S. economy has grown at just 2.1% per year, making this the slowest recovery since World War II. Last quarter, the economy grew at just 1.1%. We won’t know how the economy did during this quarter until late October.

But we don’t expect good news, and that’s because signs of a stalling economy are everywhere.

They’re in the job market. 
The U.S. economy created 29,000 fewer jobs last month than economists expected. 
They’re in corporate earnings.
Profits for companies in the S&P 500 have been falling since 2014.
They’re even in the price of oil.
Right now, U.S. demand for gasoline is weak, which tells us Americans aren’t driving as much.

Today, we’re going to look at even more evidence that the economy is struggling. If this flood of bad economic data continues, the U.S. could soon enter its first recession in seven years. Normally, this wouldn’t worry us. After all, recessions are a normal part of the business cycle. But we don’t expect the next downturn to be a “run of the mill” recession. According to Casey Research founder Doug Casey, the next financial crisis will be “much more severe, different, and longer lasting than what we saw in 2008 and 2009.” The good news is that there’s still time to protect yourself. We’ll show you how at the end of today’s issue. But first, you need to understand why we’re so worried about the economy.

The U.S. auto market is cooling off..…
The auto market has been one of the economy’s bright spots since the financial crisis. Auto sales have climbed six straight years. Last year, the industry sold a record 17.5 million cars. Many analysts see the booming auto market as proof that the economy is heading in the right direction. Like a house, a car is a big purchase. Most people will only spend thousands of dollars on a car if they think the economy is doing well. After all, you wouldn’t buy a new car if you thought you were going to lose your job next month.

Because of this, car sales can say a lot about consumer confidence.

Auto sales plunged last month..…
     Yahoo! Finance reported last week:

The seasonally adjusted rate of motor vehicle sales decreased to 17 million from 17.88 million in July. Both car and truck sales were down for the month. For August, total vehicle sales were 1,512,556, down from 1,577,407 for a decrease of 4.1%.

After rising 66 straight months, retail car sales have now fallen four out of the last six months. And this trend is likely to continue. According to The Wall Street Journal, the CEO of Ford (F) said he expects his industry to sell fewer cars this year than they did last year. He expects sales to fall even more in 2017.
This isn’t just bad news for automakers like Ford. It’s a problem for the entire economy.

If people buy fewer cars, they’re probably going to take fewer vacations. They’re going to eat out less. They’re going to buy new clothes less often. In other words, the big drop off in car sales could mean U.S. consumers are starting to cut back.

The U.S. manufacturing sector is weakening right now..…
Last week, the Institute of Supply Management (ISM) reported that its Purchasing Managers’ Index fell from 52.6 in July to 49.6 in August. This index measures the strength of the U.S. manufacturing sector. When the index dips below 50, it signals recession.

The U.S. services sector is hurting too..…
The services sector is made up of businesses that sell services instead of goods. It includes industries like banking and healthcare. The ISM Services Index fell from 55.5 in July to 51.4 last month. While this doesn’t indicate recession, last month’s sharp decline was still a major disappointment. Economists expected the index to hit 55.0. Last month’s reading was also the lowest since February 2010. More importantly, the services and manufacturing sectors are now weakening at the same time.

MarketWatch explained why that’s not a good sign last week:

[I]t’s unusual that both indexes would soften so much at the same time. The manufacturing index dropped to 49.4% from 52.6% in August and the ISM services gauge retreated to 51.4% from 55.5%. The combined reading of two indexes was also the weakest in six years.
Since these indexes often track closely with gross domestic product, the surprisingly poor turn has not gone unnoticed.

Right now, several key economic indicators are saying the economy is in trouble..…
We encourage you to take these warnings seriously. If you have any money in the stock market right now, take a good look at your portfolio. Get rid of any expensive stocks. They tend to fall further than cheap stocks during major sell offs. You should also avoid companies that need a growing economy to make money. These include airlines, major retailers, and restaurants; basically any company that depends on a healthy U.S. consumer.

Avoid companies with a lot of debt. If the economy continues to weaken, heavily indebted companies will struggle to pay their lenders. You don’t want to own a company that falls behind on its loans. We encourage you to hold more cash than usual. Setting aside cash will allow you to buy world class businesses for cheap after the next big sell off.

Finally, we recommend you own physical gold. As we often point out, gold is real money. It’s preserved wealth for centuries because it’s a unique asset. It’s durable, easily divisible, and easy to transport. It’s also survived every major financial crisis in history. This makes it the ultimate safe haven asset. These simple yet proven strategies will help “crash proof” your portfolio in case the economy continues to weaken. That’s never been more important.

To see why, watch this short presentation.

It talks about a major warning sign that one of Casey’s analysts recently uncovered. As you’ll see, this same warning appeared before the savings and loan crisis of the 1980s, before the ’97 Asian financial crisis and just before the 2000 tech crash.

More importantly, it explains how you can protect yourself today. Click here to watch.

Chart of the Day

The U.S. manufacturing sector is flashing warning signs. Today’s chart shows the ISM Purchasing Managers’ Index (PMI) going back to 2000. As we said earlier, this index measures the strength of the U.S. manufacturing sector. Last month, the ISM PMI hit 49.6. Any reading below 50 indicates recession.

You can see this index plunged below 50 during the last two recessions. It also sent out a few “false signals” over the years. It dipped below 50 but a recession never followed. Like any indicator, the ISM PMI isn’t perfect. Still, it’s worth keeping a close eye on. If manufacturing activity continues to weaken, other parts of the economy will too. And the ISM PMI is just one of many economic indicators flashing danger right now.

The article Five Ways to “Crash Proof” Your Portfolio Right Now was originally published at caseyresearch.com.

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Technical Evidence Indicates Major Price Movement Just Getting Started!

Stocks around the globe were pummeled again last week. This is no surprise to our subscribers as our predictive trend analytics model gave us clear technical evidence that important multi year highs had completed back in the middle of 2015. I continue to remain steadfastly bearish in my outlook for stocks.

Last Friday, January 15, 2016, the SPX broke below its Aug. 24, 2015 low, which is equivalent to a major sell signal if price closes the month below that level.

Last week, The Dow Jones Industrial Average slumped 511 points, or 3.1%, to 15,866, while the S&P 500 slid 64 points, or 3.4%, to 1,856.34, led by the financials, technology and energy sectors. The Nasdaq Composite tumbled 190 points, or 4.1%, to 4,424.35. Subscribers and I managed to catch a 33% quick intra-week bounce trading the SSO ETF and then got out of harm’s way as volatility took hold once again.

European stocks were unable to escape the downward trend from other markets, and the Stoxx Europe 600 index lost 2.8%. The dollar fell to a one-year low vs. the yen. Gold rose $22.40, or 2.1%, to $1,096.20 an ounce.

The SPX is currently testing major support. This is consistent with a “cycle low” that arrived over the weekend. Even though we are in a bear market, we should expect a “Bear Market Rally” sucking every last investor into long positions, before dropping much lower through previous support areas. This will be a very “short term bottom” this week.

We are in a long term downtrend now; it is not a “hiccup” as we experienced back in 2012.

If the stock market is going to stage a rally from here, this is a good time to start, right when everyone is jumping off the ship and the sentiment is so extremely negative. Just to give you a feel for the level of panic selling on Friday, my panic selling indicator which tells us when short term bottoms are likely to happen as everyone is running for the door, this contrarian indicator spiked to 50. Now any reading over 3 is panic in the market, and a reading of 9-18 is typically a multi week low. So you can see how 50 is VERY extreme.

Because we are entering a bear market and institutions will be unloading shares area record pace going forward, I feel this extreme level of panic selling (50) is only going to trigger a bounce lasting a week or so, then more distribution selling will take hold.

A slew of disappointing U.S. data shows that manufacturing and consumer spending are in trouble. Empire State factory index declined sharply this month to its lowest level since the recession. Retail sales declined by 0.1% in December 2015 and a report on industrial production compiled showed that activity declined for the third straight month.

The New Year is not off to good start. In fact, it may be the worst start ever of a New Year in many world stock indices. Instead off irrational exuberance that had previously been so evident, investors of world equity markets are clearly starting to panic. We all know things are not right. We know it hasn’t been okay since the 2008 financial crisis. The effort by the central banks to get over the hump has fueled an “Asset Bubble” in the stock markets.

This in turn should start to fuel safe haven buying in gold. Gold’s day in the sun is soon approaching. I believe this new year will prove to be a pivotal year for gold, silver and miners.

The “talking heads” tell us that the stock market is falling because energy prices are falling. We need higher energy (gasoline) prices. Really? They claim that energy companies are going out of business and that tens of thousands of people will lose jobs and unemployment will rise. Really? Didn’t the jobs numbers show hundreds of thousands of people getting new jobs – in fields outside of energy? Who are you going to believe?

Later this week I will be posting an exciting video show you how to make a fortune during this pending bear market and exactly how I did this in 2008 – 2012 to become financially free before I turned 30 years of age. Stay tuned and be sure to opt into my free email list if you want to see this exciting, inspiring and educational video!

Visit Here > www.Gold & Oil Guy.com 
Chris Vermeulen

Mike Seerys Weekly Recap of the Crude Oil, Natural Gas, Silver, Dollar, Coffee and Sugar Markets

Is being on the sidelines a good trade? Of course it is and sometimes we just have to step back and being honest with ourselves when there just is not any trends that work to our advantage. And that's never been more the case than it is right now in the commodity markets. So who better to have than our trading partner Mike Seery back to give our readers a recap of this weeks trading and help us put together a plan for the upcoming week. 

Crude oil futures in the December contract are trading below its 20 and 100 day moving average hitting an eight week low in Tuesdays trade only to rebound in Wednesdays trade off of a bullish API report as prices remain choppy as I’m currently sitting on the sidelines just like I have been in many different markets as there are very few trends that are currently developing.

Crude oil prices settled last Friday in New York at 44.60 while currently trading at 46.18 slightly higher for the trading week as the U.S dollar is at an eight week high putting pressure on many commodities especially the precious metals over the last several days, but it looks to me that crude oil prices are stabilizing around the mid-40 level.

Gasoline prices have fallen dramatically over the last several months and has put pressure on crude oil prices as I paid $2.14 in the suburb of Chicago yesterday for gas which was the lowest price since 2009 but at the current time this market remains choppy, but the chart structure still remains very solid as there could be a possible trade in the next week or two.
Trend: Mixed
Chart Structure: Solid

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Natural gas futures in the December contract are trading lower for the 8th consecutive trading session finishing down 25 points for the trading week hitting a 3 ½ year low currently trading at 2.25 as I’ve been recommending a short position for the last eight weeks and if you took that trade congratulations as this market has completely collapsed due to the fact of extremely warm weather in the Midwestern part of the United States. Natural gas prices are trading far below their 20 and 100 day moving average telling you that the trend is sharply lower as the November contract right before expiration actually traded below 2.00 as the next level of support on the December contract is this Fridays low of 2.18 and if that is broken I think we can retest 2.00 once again as the forecast of warmer weather continues.

The chart structure will start to improve dramatically in Wednesdays trade as the 10 day high currently stands at 2.70 but that will be lowered on a daily basis so be patient as the risk will come down so accept the monetary risk. Many of the commodity markets are dictated by a strong or weak U.S dollar, but natural gas is a domestic product as price fluctuations depend on weather conditions as the weather in the Midwest has been extremely warm therefore depressing demand lowering prices as well so remain short in my opinion, however if you have missed this trade move on as you have missed the boat.
Trend: Lower
Chart Structure: Poor

Silver futures in the December contract settled the trading week on a sour note closing around 15.55 an ounce unchanged this Friday afternoon after hitting a 4 month high in Wednesdays trade, but then the Federal Reserve stated that they will possibly raise interest rates in the month of December sending silver prices sharply lower hitting a three week low in today’s trade.

I was recommending a long position from around 16.25 while getting stopped out around 15.60 taking a small loss as I can’t remember the last time the Federal Reserve actually benefited my trades which is very frustrating as I just wish they would raise interest rates and get it over with.

At the current time I’m sitting on the sidelines waiting for another trend to develop as gold prices look very weak in my opinion as I’m sitting on the sidelines in that market as well while focusing at other markets that are beginning to trend as silver prices remain extremely choppy despite the recent bullish momentum.
Ttend: Mixed
Chart Structure: Solid

The U.S dollar is trading above its 20 and 100 day moving average in a very volatile trading week surging higher in Wednesdays trade as the Federal Reserve stated that they might possibly raise interest rates in the month of December, however prices have fallen back 100 points in the last two trading days finishing down on the week by about 50 points. The dollar hit a 10 week high in Wednesday’s trade as I’ve been sitting on the sidelines in this market as well as this remains extremely choppy as the 10 day low is over 200 points away therefore not meeting my risk criteria.

The problem with many of the commodity markets at the current time is that they remain choppy as the U.S dollar is sharply higher one day and then sharply lower the next day so be patient. I’m still looking at a possible bullish position but the chart structure has to improve and that’s going to take another five days so keep a close eye on this market to the upside, but at this point in time look at other markets that are beginning to trend. One bullish fundamental factor that could prop up the dollar is fact that the U.S will raise interest rates it’s just a matter of time while Europe and many other foreign countries continue to lower interest rates.
Trend: Higher - Mixed
Chart Structure: Poor

Coffee futures in the December contract settled last Friday in New York at 118.45 a pound while currently trading at 121.15 as I’m currently sitting on the sidelines waiting for another trend to develop. I was recommending a bullish position several weeks ago when prices traded as high as 138 on concerns about dry weather in Brazil but adequate rains hit key coffee growing regions sending prices to today’s levels.

Major support in coffee is at the contract low around 115 which was hit in the month of September as I think I will be on the sidelines for quite some time as the chart structure is very poor which means that the monetary risk is too high to enter into the trade so look at other markets that are beginning to trend. Volatility in coffee is relatively high as that’s not surprising as coffee historically speaking is one of the most volatile commodities as in 2014 a drought hit Brazil sending prices up about 80% very quickly, but at the current time there are no weather problems existing.

In my opinion I do believe coffee prices are bottoming out as it would surprise me if we headed much lower and if you are a producer I would still be buying at today’s prices as I think the downside is limited.
Trend: Mixed - Lower
Chart Structure: Poor

Sugar futures in the March contract settled last Friday in New York at 14.28 a pound while currently trading at 14.68 up 40 points for the trading week continuing its bullish momentum hitting a 5 1/2 month high. Sugar prices are trading far above their 20 and 100 day moving average telling you that the short term trend is to the upside as I have missed this trade due to the fact that the chart structure was poor at the time of the breakout, but my recommendation would be if you are currently long a futures contract place your stop loss below the 10 day low which stands at 13.94 as the chart structure will start to improve in next week’s trade therefore lowering monetary risk.

The next major level of resistance is at 15.00 as prices bottomed out around 11.50 in September due to less production coming out of Brazil due to heavy rains as well as strong demand changing the supply/demand table very quickly as we will not produce a record crop in 2016 like we have over the last several growing seasons.

As a trader you must have an exit strategy as I had many short positions in sugar over the last year, however I always use the 10 day high if I am short as an exit strategy because holding on and never getting out is a very dangerous way to trade because commodity prices can change very quickly.
Trend: Higher
Chart Structure: Improving

What does Mike mean when he talks about chart structure and why does he think it’s so important when deciding to enter or exit a trade?

Mike tells us "I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10 day highs or 10 day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss."

Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. Get more of Mike's calls on this Weeks Commodity Markets


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Mike Seerys Weekly Recap of the Crude Oil, Natural Gas, Gold, Silver, Dollar and Coffee Markets

Traders reacted to a very bad monthly unemployment number pushing the U.S dollar sharply lower supporting many markets on Friday afternoon. So who better to have than our trading partner Mike Seery back to give our readers a recap of this weeks trading and help us put together a plan for the upcoming week. 

Crude oil futures in the November contract are trading below their 20 and 100 day moving average telling you that the short term trend is to the downside as prices have been consolidating in recent weeks settling last Friday in New York at 45.70 a barrel while currently trading at 45.10 down around $.60 for the trading week. Traders reacted to a very bad monthly unemployment number pushing the U.S dollar sharply lower supporting many markets this Friday afternoon as I’m recommending a short position if prices break 44.00 while placing your stop loss above the 10 day high which now stands at 47.15 risking around $1,600 per contract plus slippage and commission, as prices have not broken out at this point so keep a close eye as this as this could happen any minute.

Many of the commodity markets are mixed this Friday afternoon as a weak U.S dollar has supported many different markets as the S&P 500 is sharply lower and that’s usually a negative influence towards oil prices, but they are stuck in a consolidation and I don’t like to trade choppy markets so be patient and wait for the breakout to occur. Oil prices have been relatively volatile especially with the fact that Russia is bombing Syria sending prices sharply higher yesterday and then falling out of bed towards the end of the day, so make sure you respect this market placing the proper amount of contracts therefore respecting risk which is high at the current time.
Trend: Sideways
Chart Structure: Improving

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Natural gas futures in the November contract settled last Friday in New York at 2.63 while currently trading at 2.43 hitting a 3 ½ year low as I’ve been recommending a short position from around the 2.70 level and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 2.72 as the chart structure is poor at the current time due to the fact that prices continue to move lower.

Mild temperatures in the Midwestern part of the United States is causing demand problems therefore putting pressure on short term prices as the next major level of support is around 2.25 and if that is broken we can retest the 2012 lows around 2.00 in my opinion as the trend is your friend and this trend is getting stronger to the downside on a weekly basis.

At the time of the recommendation the chart structure was outstanding and was one of the main reasons I took that trade, however if you have missed this trade the chart structure is poor as the risk is too high as you have missed the boat so look at other markets that are beginning to trend. If you take a look at the weekly chart pattern natural gas has broken out of major consolidation as I’m looking to add more positions to this trade once the chart structure tightens up which will take another week or so.
Trend: Lower
Chart Structure: Poor

Gold futures in the December contract settled last Friday in New York at 1,145 an ounce while currently trading at 1,131 down about $14 this week but reacting sharply higher today on a poor monthly unemployment number but continuing its long term down trend while trading below its 20 and 100 day moving average retesting major support at 1,100 near an eight week low as I’m currently sitting on the sidelines as this market remains choppy with poor chart structure.

I still see no reason to own gold currently as the risk/reward is not your favor so look at other markets that are starting to trend. Gold prices had a significant rally in the month of August bottoming out around 1,080 then rallying to 1,170 which was impressive in my opinion due to short covering and a flight to quality as the stock market has experienced volatility in recent weeks sending money out of stocks and into gold as a safe haven, but things have settled down putting short term pressure on gold.

As I’ve talked about in many previous blogs I am a trend follower and I do not like to trade choppy markets because they are extremely difficult in my opinion so avoid this market at the current time and wait for better chart structure to develop before entering.
Trend: Lower
Chart Structure: Poor

Silver futures in the December contract settled last Friday in New York at 15.11 an ounce while currently trading at 15.00 down about $.10 reacting sharply higher due to a poor monthly unemployment number today continuing its remarkable choppy trend over the last several months as prices are right near a four week low.

At the current time I’m sitting on the sidelines as I hate trade choppy markets as prices are still trading below their 20 and 100 day moving average telling you that the short term trend is to the downside and the long term down trend is still intact in my opinion as this market has been frustrating as prices seem to go nowhere.

I’ll keep a close eye and wait for better chart structure to develop as platinum prices hit another contract low and I think that will continue to pressure silver, but I will wait for a breakout to occur as the 10 day high is too far away risking too much money at the current time so be patient as the trend clearly remains bearish.

The U.S dollar has remained strong throughout 2015 as that’s put pressure on the precious metals and many other commodities as I think the U.S dollar is about to breakout to the upside and if that does occur look for silver prices to possibly head back down to the $13 level.
Trend: Lower
Chart Structure: Poor

The dollar index futures in the December contract are trading above their 20 day and right at their 100 day average telling you that the trend has turned to the upside as I’m currently sitting on the sidelines waiting for a breakout above 96.88 to occur before entering a bullish position while then placing your stop loss at the 10 day low which would be 95.57.

The dollar settled last Friday at 96.43 while currently trading at 96.45 basically unchanged for the trading week as investors are awaiting the monthly unemployment number which will be released this morning at 7:30 sending high volatility back into this market. I have not traded the dollar index for quite some time but when I do see excellent chart structure coupled with a solid risk/reward situation I will trade the market, but at this point patience is the key waiting for the true breakout to occur before entering as we could be entering a bullish position any day now.
Trend: Mixed
Chart Structure: Improving

Coffee futures in the December contract are trading above their 20 day but still below their 100 day moving average telling you that the short term trend is mixed as I was recommending a short position getting stopped out last Friday around the 122 level as I’m now sitting on the sidelines waiting for another trend to develop as I have been stopped out of the last two recommendations. Coffee settled last Friday at 122.70 a pound while currently trading at 121 down slightly for the trading week with very low volatility as prices are still right near a 4 week high waiting for some fresh fundamental news to dictate short term price action.

Generally speaking coffee is one of the most volatile commodities historically speaking, but with low volatility at the current time as prices have been going sideways for the last month or so, but a new trend could be developing as prices look to be bottoming out around this level in my opinion. The Brazilian Real has stabilized against the U.S dollar in the past week and that’s also helped push up coffee prices here in the short term, but only time will tell to see if that trend remains, but I expect high volatility to emerge in the coming months.
Trend: Higher
Chart Structure: Solid

Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. Get more of Mike's calls on this Weeks Commodity Markets


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Mike Seerys Weekly Recap of the Crude Oil, Natural Gas, Gold, Silver, Dollar and Coffee Markets

The fed showed it's lack of confidence in the economy by keeping rates unchanged and traders made it clear how they feel about it. So who better to have than our trading partner Mike Seery back to give our readers a recap of this weeks trading and help us put together a plan for the upcoming week. 

Crude oil futures in the October contract settled last Friday in New York at 44.63 a barrel while currently trading at 46.40 up nearly $2 for the trading week as the short term trend seems to be gaining traction to the upside.

I’m currently sitting on the sidelines in this market as prices are trading above their 20 but below their 100 day moving average telling you that the trend is mixed as a bullish API report on Wednesday sent prices up sharply as it looks to me that prices want to go higher but the risk is too high at the current time to enter into a position. The U.S dollar was sharply lower this week as that supported the precious metals and the energy sector as prices are still consolidating last month’s rally from $38/$49 as volatility is relatively high at the current time.

The Federal Reserve announced yesterday that they will not raise interest rates helping push up many commodities here in the short term, but the problem with oil at the current time is the fact that we have massive worldwide supplies which have sent prices sharply lower in 2015 but that’s already reflected into the price, but wait for better chart structure to develop as it might take a couple more weeks so keep a close eye on this market.
Trend: Mixed
Chart Structure: Improving

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Natural gas futures in the October contract are trading below their 20 and 100 telling you that the trend is to the downside as I’m now recommending a short position at 2.63 while placing your stop loss above the 10 day high which currently stands at 2.80 risking $1,700 per contract plus slippage and commission.

The chart structure will not improve for another 6 days so you’re going to have to accept the risk as prices are down about 6 points for the trading week as the energy sector is lower this Friday afternoon. Natural gas prices bottomed out around the 263 level on over a dozen occasions only to rally every single time but this time we broke major support and that’s why I am taking a short position as I think the risk/reward is in your favor but I would like to see a little better chart structure as we had a false rally earlier in the week to the upside and that’s why the stop loss is relatively high.

If the risk is too high for your trading account take advantage of any price rally therefore lowering monetary risk as who knows how low prices go as huge supplies continue to put pressure on this market coupled with mild weather conditions therefore decreasing demand here in the United States so stay short in my opinion as this is a major breakdown in price technically speaking.
Trend: Lower
Chart Structure: Solid

Gold futures in the December contract are sharply higher this Friday in New York trading up $20 at 1,137 an ounce after settling last Friday at 1,103 reacting to the Federal Reserve yesterday not raising interest rates sending gold sharply higher with high volatility. Gold is trading above its 20 day but still below its 100 day moving average telling you that the trend is mixed as I’ve been sitting on the sidelines for quite some time as this trend is extremely choppy as I’m advising investors to avoid this market at the current time and wait for better chart structure before entering.

I was recommending a silver trade getting stopped out a couple of days back as the precious metals as a whole have rallied as it looks like the Federal Reserve is very hesitant to raise interest rates which is bullish commodity markets at least here in the short term, but the true breakout in gold is above 1,170 but look at other markets that are beginning to trend with less risk.

The U.S dollar has been down 150 points in the last three days which has been very supportive to the precious metals as money is coming out of the S&P 500 and into gold but time will tell us if this trend is for real.
Trend: Mixed
Chart Structure: Poor

Silver futures in the December contract settled last Friday in New York at 14.50 an ounce while currently trading at 15.25 up $.75 this week reacting to the Federal Reserve not raising interest rates sending silver prices sharply higher. I was recommending a short position in silver from around 14.70 getting stopped out in Wednesdays trade around 14.95 as prices are now trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed so sit on the sidelines and look at other markets that are beginning to trend.

The chart structure in silver at the time of the recommendation was outstanding, however currently the chart structure is poor with high risk as the true breakout does not occur until prices break 15.77 as silver may have bottomed in the short term.

Many of the commodity markets have been choppy in recent weeks as I was stopped out of many of my trade recommendations as my only two positions at current time are short coffee and cattle as I will wait and be patient as sometimes not trading is the best thing to do.
Trend: Mixed
Chart Structure: Poor

The dollar index futures in the December contract are trading below their 20 & 100 day average telling you that the trend is to the downside reacting negatively to the Federal Reserve’s decision not to raise interest rates sending the dollar down over 100 points for the trading week.

I’m currently sitting on the sidelines waiting for a breakout above 96.63 to occur before entering a bullish position but it looks to me that prices look to retest last month’s low of around 93 but the chart structure is poor at the current time so avoid this market as the risk is too high in my opinion.

I have not traded the currencies in quite some time but when I do see excellent chart structure coupled with a solid risk/reward situation I will trade the currency market but at this point the chart structure does not meet my criteria so find another market that is trending.
Trend: Lower
Chart Structure: Poor

Coffee futures in the December contract are trading below their 20 and 100 day moving average telling you that the trend is bearish in the short term after settling in New York last Friday at 116.55 while currently trading at 118.25 in a very nonvolatile trading week. I am currently recommending a short position and if you took that recommendation continue to place your stop loss above the 10 day high which currently stands at 122.50 as the chart structure is outstanding at the current time while the risk/reward is in your favor in my opinion.

Coffee prices continue their bearish trend as traders are concerned that Brazil will continue to sell reserves due to the fact that of the Brazilian Real weakness versus the U.S dollar, but only time will tell to see if this comes to fruition. I’m a trend follower and the trend is to the downside as I think volatility will start to increase as coffee historically speaking is one of most volatile commodities in the world but at this point remains very dormant.

As I talked about in yesterday’s blog anytime you can risk three or four points in coffee you must take that trade as I think that’s a special situation that does not happen very often over the course of the year due to the fact that volatility is usually much higher than it is presently.
Trend: Lower
Chart Structure: Outstanding

Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. Get more of Mike's calls on this Weeks Commodity Markets


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Weekly Crude Oil, Natural Gas, Gold, Silver, Dollar and Coffee Markets Recap with Mike Seery

The institutional traders are back from vacation and trading volume is picking up. So who better to have than our trading partner Mike Seery back to give our readers a recap of this weeks trading and help us put together a plan for the upcoming week. 

Crude oil futures in the October contract settled last Friday in New York at 46.05 a barrel while currently trading at 45.20 as this market has been highly volatile as I probably will not be trading crude oil for quite some time as the chart structure is terrible so look at other markets that are beginning to trend with less risk. Prices are currently trading above their 20 day moving average for the first time in months but still below their 100 day average as the trend remains mixed.

Crude oil prices have been following the stock market as when the S&P 500 is sharply lower you can rest assured crude oil prices will be lower and vice versa as everything comes to and as we were short this market from $59 as the trend was our friend for three months before turning on a dime, as this is why you must have an exit strategy as mine is placing a stop at the 10 day high if I am short as never getting out is very dangerous in my opinion. Goldman Sachs cut demand for crude oil sending prices lower this Friday afternoon as experts are calling for lower prices and the possibly of breaking $30 a barrel due to massive oversupply but I will wait for a trend to develop.
Trend: Mixed
Chart Structure: Poor

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Natural gas futures settled in New York at 2.65 last Friday afternoon while currently trading at 2.67 in a very nonvolatile trading week as prices are stuck in an incredibly tight three-week channel looking to breakout one direction and my feeling is to the downside and if prices break 2.63 I’m recommending a short position while placing your stop loss above the 10 day high at 2.73 risking $1,000 per contract plus slippage and commission. Natural gas futures are still trading below their 20 and 100 day moving average as this has been a bearish trend over the last several years due to oversupply issues here in the United States as we are a massive supplier and exporter of natural gas and I don’t think that situation is going to change, so keep a close eye on this market as a breakout is in the cards in my opinion. As a trader you have to look for special situations as my consolidation rule states that a consolidation must be 8 weeks or longer so this does not meet criteria, however the chart structure is outstanding therefore lowering monetary risk as I’m looking forward to getting into this trade either on the short side or possibly even on the long side as the risk/reward is your favor once the breakout occurs but you must be patient.
Trend: Sideways
Chart Structure: Outstanding

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Gold futures in the December contract settled last Friday in New York at 1,121 an ounce while currently trading at 1,106 down about $15 this week trading below its 20 and 100 day moving average near a 3 week low as I’m currently sitting on the sidelines as this market remains choppy with poor chart structure. I still see no reason to own gold currently as the risk/reward is not your favor so look at other markets that are starting to trend such as the silver market which I am currently recommending a short position because the chart structure is outstanding. Gold prices had a significant rally in the month of August bottoming out around 1,080 then rallying to 1,170 which was impressive in my opinion due to short covering and a flight to quality as the stock market has experienced volatility in recent weeks sending money out of stocks and into gold as a safe haven but things have settled down putting short-term pressure on gold. As I’ve talked about in many previous blogs I am a trend follower and I do not like to trade choppy markets because they are extremely difficult in my opinion so avoid this market at the current time and focus on silver.
Trend: Lower
Chart Structure: Poor

Silver futures in the December contract are trading lower by about $.30 this Friday afternoon in New York currently trading at 14.33 an ounce as I’ve been recommending a short position from around 14.70 and if you took that trade place your stop loss above the 10 day high which currently stands at 14.95 as you’re going to have to be patient as that stop loss will not be lower for quite some time. The next major level of support is at the contract low around the $14 mark and I do think that’s a possibility that could be retested in next week’s trade as the chart structure is still very solid at the current time. Silver prices settled last Friday at 14.55 while currently at 14.33 down over $.20 for the trading week as prices have been consolidating the recent downdraft in prices over the last three weeks, but the long-term and short-term trend still remain bearish in my opinion, so continue to play this to the downside while taking advantage of any price rally while maintaining the proper risk management strategy. Silver futures are trading below their 20 and 100 day moving average closing at 3 week low in today’s trade as the commodity markets still looks bearish in my opinion.
Trend: Lower
Chart Structure: Solid

The U.S. dollar index futures in the September contract are trading below their 20 day but still above their 100 day average telling you that the trend is mixed and has remained choppy for the last two weeks as I’m currently sitting on the sidelines waiting for a breakout above 96.63 to occur before entering a bullish position. The dollar settled last Friday at 96.24 while currently trading at 95.50 as investors are awaiting the Federal Reserve’s interest rate decision which will come out next week and will certainly send high volatility into this market so keep a close eye on this trade as we could be involved in next week’s trade. I have not traded the currencies in quite some time but when I do see excellent chart structure coupled with a solid risk/reward situation I will trade the currency market but at this point the chart structure does not meet my criteria so sit on the sidelines and see what the Federal Reserve states, and in my opinion I think they will not raise interest rates at the current time as there is too much uncertainty especially in the stock market.
Trend: Mixed
Chart Structure: Improving

Coffee futures in the December contract are trading below their 20 and 100 day moving average hitting a multi year low while settling in New York last Friday at 119.15 a pound while currently trading at 117.50 down slightly for the week in low volatility. I’m currently sitting on the sidelines kicking myself as we should be entering a short position but the 10 day high is too far away and does not meet my risk/reward criteria, however I’m certainly not recommending any type of bullish position in this market as I do think prices could break 100 in the next month or so as ample supplies worldwide continue to keep a lid on prices. Many of the soft commodities including sugar and cocoa have rallied in recent weeks but has not help support coffee prices at all as this trend remains your friend and certainly the short-term trend is to the downside and if the chart structure does improve I will be recommending a short position which could happen in the next couple of days especially if a price rally occurs. I would imagine that volatility in coffee will start to increase as historically speaking coffee is one of the top five most volatile commodities in the world as this low volatility will not last.
Trend: Lower
Chart Structure: Improving

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Weekly Crude Oil, Gold and Silver Markets Recap with Mike Seery

The markets end a wild week in about the same place it started. Another wild ride that makes us so thankful to have our trading partner Mike Seery back to give our readers a recap of this weeks stressful trading and help us put together a plan for the upcoming week. 

Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the October contract settled last Friday in New York at 40.45 a barrel while currently trading at 45.00 sharply higher for the trading week as a hurricane is entering the Gulf of Mexico sending prices sharply higher as I have been recommending a short position from 59 over the last three months getting stopped out in today’s trade as everything comes to an end as this market has bottomed in the short term so sit on the sidelines and look at other markets that are beginning to trend.

Many investors are running for the hills today as a relief rally has occurred in many of the commodity markets, however I’m still not bullish, but I’m not recommending any type of bullish position in this market at the current time as the chart structure is extremely poor and the risk is too high currently.

Political tensions with Yemen have also set prices higher but I truly believe this was just massive short covering as many of the funds have been short over many months and exited in today’s trade pushing prices higher but we will have to take a look if the open interest is declining or rising but in my opinion I think we will see the open interest decline which means short covering occurred.
Trend: Mixed
Chart Structure: Poor

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Gold futures in the December contract settled last Friday at 1,159 while currently trading at 1,133 in a wild and volatile trading week as I’ve been sitting on the sidelines as the chart structure is terrible at the current time as the risk/reward is not your favor so look at other markets.

Gold futures are trading above their 20 but still below their 100 day moving average rallying about $90 from their monthly low around 1,080 up to 1,170 in Monday’s trade as the stock market has sent shockwaves throughout the commodities and especially in gold. This market remains extremely choppy as I like trading markets with very tight chart structure as this will take some time to develop so keep an eye on this market but there is no recommendation at this time.

The problem with gold was the fact that the stock market was down dramatically in Monday’s trade but gold was unable to rally as over the course of time as I still see no reason to own gold but there is no trend and as a trend follower I will stick to my rules and look at other markets that are starting to develop.
Trend: Mixed
Chart Structure: Poor

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Silver futures in the December contract settled last Friday at 15.34 an ounce while currently trading at 14.53 down about $.80 for the trading week continuing its bearish momentum and traded slightly below $14 for the first time in 6 years. I am currently sitting on the sidelines as the chart structure is very poor as the 10 day high currently stands at 15.77 as the risk/reward is not in your favor, however I remain bearish so I want to keep a close eye on this as the chart structure will start to improve later next week therefore lowering monetary risk.

Silver futures are trading below their 20 and 100 day moving average telling you that the short term trend is to the downside as volatility is very high as many commodities have rallied this week as silver and gold have followed the footsteps of crude oil which was up about $8 for the trading week as the commodity washout may have stalled for the time being.

In my opinion take advantage of any sharp spike up in silver prices near the $15 level to enter into a short position as the trend is your friend when you trade the commodity markets but make sure you risk 2% of your account balance on any given trade so avoid this market at the current time but we could be entering a short position later next week.
Trend: Lower
Chart Structure: Poor

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Weekly Crude Oil, Gold, SP 500, Coffee and Sugar Markets Recap with Mike Seery

The markets closed out the week in brutal fashion for the bulls this week so we are happy to have our trading partner Mike Seery back to give our readers a recap of this weeks trading and help us put together a plan for the upcoming week. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the October contract settled last Friday in New York at 43.11 a barrel while currently trading at 41.00 continuing its bearish momentum hitting a 6 ½ year low as I’ve been recommending a short position from $59 as we have now rolled over three times as we are now currently in the October contract as we started in July contract as prices still have not hit a 10 day high which currently stands at 46.00.

The chart structure will start to improve on a daily basis starting next week as prices are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as the commodity markets continue to look weak as heating oil and gasoline prices continue to hit new lows as well as who knows how low prices could actually go, however if you have missed the original recommendation sit on the sidelines as you do not want to chase markets as you have missed the boat in my opinion.

The stock market has hit a 7 month low which is also putting pressure on commodity markets as everything looks weak in my opinion so continue to place the proper stop loss as worldwide supplies are overwhelming at the current time coupled with the fact of a relatively strong U.S dollar as there is very little bullish fundamental news except for possible shortcoming to push prices up here in the short term as this trade has been tremendous over the last three months.
Trend: Lower
Chart Structure: Improving

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Gold futures in the December contract settled in New York last Friday at 1,112 an ounce while currently trading at 1,157 up about $45 for the trading week on massive concerns of global slowdowns pushing stock prices to a 7 month low therefore putting money back into the precious metals as I’m currently sitting on the sidelines in this market getting stopped out around 1,105 or 10 day high around 10 days ago as Monday’s trade certainly will be interesting in my opinion.

The chart structure is extremely poor at the current time as we’ve had about an $80 rally from recent lows as prices traded as high as 1,168 earlier in the trading session but this market concerns me due to the fact that many of the commodity markets are headed lower as this is just a flight to quality here in the short term in my opinion.

Gold futures are trading above their 20 and 100 day moving average for the first time in several months as it looks to me that prices might head up to the $1,200 level but I have a hard time believing that gold will rally as demand from China and India at the current time are weak so look at other markets that are beginning to trend as I went through this before especially in 2008 when stock and commodity markets kept going down including gold as everybody had to sell everything because of margin calls and liquidity issues so keep a close eye on this market but at this time continue to look at other markets to sell which has been shooting fish in a barrel over the last 6 weeks.
Trend: Higher
Chart Structure: Poor

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The S&P 500 in the September contract is trading below its 20 and 100 day moving average for the first time in several months hitting a 7 month low settling last Friday in Chicago at 2089 while currently trading at 2001 down 88 points for the trading week as I’ve been recommending a short position from 2080 and if you took that trade place your stop loss above the 10 day high which currently stands at 2103 as the chart structure which once was excellent is now terrible.

If you have missed the original recommendation do not chase this market as the risk/reward is not the favor at the current time so look at other markets that are beginning to trend as the energy sector is pulling down the Dow Jones and the S&P 500 rather dramatically in the last couple of days as the commodity markets are showing real worldwide weakness as I will continue to remain short while taking advantage of any price rally.

As I’ve talked about in many previous blogs I hate selling the S&P 500 and I’ve only done it 2 times in the last 10 years but the risk/reward was highly in your favor so I took a shot and who knows how low prices can go as we are still only 5% from the record high as I think the next major resistance level is at 1950 which could be hit next week as volatility is extremely high with major risk at the current time.
Trend: Lower
Chart Structure: Terrible

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Coffee futures in the December contract settled last Friday in New York at 141.15 a pound while currently trading at 132.50 in a highly volatile last couple of weeks as prices are trading right at their 20 but still below their 100 day moving average telling you that the trend is mixed at the current time.

I’m currently sitting on the sidelines in this market as I was recommending a short position several weeks ago getting stopped out at the 10 day high which at the time was at 128 as the chart structure is very poor currently so I will be sitting on the sidelines for some time as prices did hit a 6 week high last Friday but unable to hold those levels due to the fact of a weak Brazilian Real and weak commodity prices throughout the world.

Volatility in coffee is extremely high as coffee historically speaking is one of the most volatile commodities, but I do not like trading choppy markets and at the current time this market is very choppy so I will wait for tighter chart structure to develop therefore lowering monetary risk with the next major level of support around the contract low of 120 as the soft commodities still look very weak as I’m currently recommending a short position in sugar and cocoa.
Trend: Mixed
Chart Structure: Poor

Sugar futures in the October contract settled last Friday in New York at 10.68 a pound while currently trading at 10.56 trading slightly lower for the trading week on very low volatility as I have been recommending a short position from 11.50 and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 10.93 risking around 37 points or $400 per contract plus slippage and commission from today’s price levels.

Sugar futures are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as the daily chart structure is excellent allowing a tight monetary stop therefore lowering risk as a weak Brazilian Real continues to put pressure on prices coupled with the fact that crude oil has hit a six year low which is also a negative influence on sugar prices as sugar is also used as a biodiesel so continue to play this to the downside in my opinion.

The next major level of support is 10.40 and if that is broken I think we could break 10.00 a pound possibly next week as I see no reason to own any commodity at the current time as worldwide deflation currently exists.
Trend: Lower
Chart Structure: Excellent

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Weekly Crude Oil and Gold Summary with Mike Seery

Crude oil futures are lower this Friday afternoon currently trading in the February contract at 52.60 a barrel after hitting new lows earlier in the trading session trading as low as $52 a barrel and if you’re still short this market the chart structure is improving tremendously so continue to place your stop loss at the 10 day high which stands at 58.53 and that stop will be lowered next week as well as volatility certainly has slowed down in recent weeks due to the holidays.

Crude oil futures are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as I never try to catch a falling knife as this market continues to move lower and that is why I will continue to move my stop to the 10 day high allowing you to try to take advantage of much of the move as possible as nobody knows how low prices could go.

The problem with oil is two fold as the 1st is that we have record supplies and the 2nd is the U.S dollar is hitting another all time year high once again pushing most commodity prices lower but it’s really all about the oversupply issue as the United States is now an exporter with record domestic supplies at the current time, however if you are currently not short this market you have missed the boat and I would sit on the sidelines and look for another market at the current time.

Ever since Thanksgiving when the Saudis announced that they will not cut production prices have been in a free fall and that’s terrific for consumers as gasoline prices in many parts of the country are under $2 a gallon which is remarkable in my opinion happening in such a quick period of time, however prices have been lower in the past so do not try to buy this market in my opinion as I still remain bearish.
Trend: Lower
Chart Structure: Outstanding

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Gold futures in the February contract witnessed another extremely volatile trading session with another $20 trading range currently trading up $4 at 1,188 after trading as low as 1,167 earlier in the session as the U.S dollar hit another multi-year high pressuring many the commodity prices, however bottom feeders appeared thinking that gold was overdone to the downside.

Gold futures are trading below their 20 and 100 day moving average as I am currently sitting on the sidelines in this market waiting for better chart structure to develop as the market is just too volatile in my opinion, however if you are bearish this market I would sell at today’s price while placing my stop above the 10 day high which currently stands at 1,210 risking around $23 or $2,300 per contract plus slippage and commission as the chart structure is relatively solid at the current time.

Gold futures remain in a long term downtrend as investors are still putting money into the S&P 500 and out of the precious metals especially with a strong U.S dollar which looks to head higher in my opinion and with worldwide problems cooling down especially with Russia there’s really no reason to own gold at the current time.

Gold futures traded over the last 2 months in a price range between $1,140-$1,240 and now around mid-range so I’m waiting for a trend to develop as traders are waiting next Friday’s monthly unemployment report which should send even more volatility into this market so make sure if you are in the futures market that you use the proper amount contracts risking 2% of your account balance on any given trade as this market is high risk.
Trend: Lower
Chart Stucture: Excellent

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Jeff Clark: Poor Economy = Low Gold Price?

By Jeff Clark, Senior Precious Metals Analyst

Despite some positive data, the global economy is showing signs of slowing, a remarkable development in itself when you consider all the money printing and deficit spending that's transpired over the past few years. According to the IMF's overview, global growth was less than expected in the first quarter of 2013, at just over 3%, which is roughly the same as 2012. The lower-than-expected figures were driven by significantly weaker domestic demand and slower growth in emerging-market economies, a deeper recession in the euro area, and a slower US expansion than anticipated. The report concludes that the prospects for the world economy remain subdued.

Many investors consider a weak economy to be a bearish environment for commodities, including gold. Doug Casey says we have entered into what will become known as the Greater Depression. That's as bearish as it gets, so should we expect gold to decline if the bears are right?
One of the most rocky economic periods in modern times was the late 1970s. For those who don't remember, the period was characterized by:

• Unexpected jumps in oil prices, leading to soaring gasoline prices and rationing
• A falling dollar
• High and accelerating inflation
• Record interest rates
• Bank failures
• Wars, including the Iranian Revolution (1978), the Iran-Iraq war (1979), the Russian invasion of Afghanistan (1979), and the Iranian hostage crisis (November 4, 1979 to January 20, 1981).

Outside of the Great Depression, it's hard to identify more trying economic circumstances.
Here's a closer look at the three-year period from 1977 through 1979. In the following chart, we looked at the economic indicators that affected citizens and investors the most, showing which were getting better and which, worse. These factors would all have affected market sentiment and the appetite to invest in gold at the time...

You can see that by the time 1979 hit, inflation was rising, gas prices were soaring, incomes were dropping, and mortgage rates were climbing. The S&P was rising, but not so much in real terms. GDP growth was high, but it was clearly not a rosy time for consumers or workers. Key points:

• Nominal GDP in 1979 increased 10% year over year, but it was 4.5 percentage points less than in 1978, when the economy expanded a whopping 14.5%. Real GDP changes didn't reach those highs but kept to the trend: in 1978 the growth was 5.6%, while during 1979 the economy expanded only 3.1%, notably slowing down.
   
• Inflation was dramatically accelerating. The '70s was a hard time for the dollar, much of it connected to the energy crisis. Annual inflation grew from 5.7% in 1976 to 7.6% in 1978, and accelerated to 11.2% in 1979. Prices were up significantly, especially those that had energy costs associated with them, squeezing the average American budget tighter and tighter.
   
• Gasoline prices rose almost 37% in 1979. This obviously impacted spendable income. It would be the equivalent of national gasoline prices hitting $4.54/gallon by December after starting the year at $3.32.
   
• Real disposable personal income slowed in 1979, growing only 1.2%, compared to a 3.5% growth rate just a year earlier.
   
• Mortgage rates were already high—and then shot higher. The interest rate to mortgage a home went from 8.8% in 1978 to 11.2% in 1979. Home values were rising dramatically due to inflation, though rate increases cooled the pace, as values slowed to a 14.7% rate in 1979 vs. 15.3% in 1978.
   
• Real manufacturing and trade sales (listed as Real Trade Sales in the chart) weakened from 7% in 1977 to 2.4% in 1979. This is a broad indicator that includes manufacturing, merchant wholesalers, and retail sales. The likely culprit for the drop was falling personal incomes as prices were rising.
   
• The S&P 500 went from negative territory in 1977 to logging a 12.3% gain in 1979. As inflation rose, so did nominal stock prices, but the real gain was a mere 1.1%.
   
• Unemployment was decreasing during this period, from 7.1% in 1977 to 5.8% in 1979. This may seem at odds with a slowing economy, but labor looked cheap since prices were growing faster than wages. Also, unemployment is a lagging indicator—and it sharply worsened later, when another recession hit in 1980.

So how did gold perform during this challenging economic environment?

The gold price rose 23% in 1977 and 37% in 1978, both of which are considered economic expansion years. But as things worsened in 1979, the price accelerated and went into a mania, ending the year with an incredible 127% return.
While there are many variables at play and no two economic time periods will be the same, this history lesson signals that a sluggish economy is not necessarily an obstacle for gold doing well. Indeed, some of these factors directly contributed to the rush to gold, which is not just a commodity, but the single best tool for storing and transferring wealth (money) ever devised.
In short, there is no contradiction between Doug Casey's gloomy global economic outlook and his bullishness on gold. In our view, the former is the reason for the latter, and a very good reason to buy. If the history of the current bull cycle for precious metals even slightly rhymes with what happened in the 1970s, the market mania that lies ahead should bring us the biggest and fastest gains on our investments to date.

Tomorrow's BIG GOLD outlines why we think buying this month will reward investors not just in the long-term but quite possibly in the short-term as well. The bullion discounts we offered last month have been extended for 30 days solely for BIG GOLD readers—this is the time to pounce, so take advantage of weak prices while they're still available.

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Weekly Energy Futures Recap with Mike Seery

Another week of trading under our belts and that means it's time to check in with Michael Seery of Seery Futures.com to give our readers a weekly recap of the Futures market. Seery has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.....

The energy futures were higher across the board but off of session highs as the stock market is near session lows pushing several of the commodity markets lower for the trading session while crude oil finished up $1.10 at 97.85 a barrel still trading right near recent highs of the trading range but I’m becoming more bearish this sector because the longer prices stay up at these levels without moving higher improves the odd that a top might be in place.

The chart structure in crude oil is excellent at this point in time while it generally follows the S&P 500 due to the fact that the higher the stock market goes the higher the demand for gasoline in theory, however higher interest rates might be here to stay as the Federal Reserve might be running out of bullets to continue to prop up the economy. Heating oil futures for the July contract are breaking out of a 10 week consolidation moving above major resistance at 2.95 a gallon settling at 2.96 a gallon and I’m still somewhat pessimistic about heating oil as we enter the summer months demand should start to slow.

Unleaded gasoline futures which I’ve written about in many blogs and I stated that I was bullish during with the demand season which improving chart structure with prices still around 2.8950 a gallon hitting a 3 month high, however I am generally a trend follower but I still believe that crude oil is getting very toppy up at these levels and there could be a steep decline in the next couple weeks with many of the other commodity sectors across the board including the stock market which has been in a bullish run for 4 years.

The reason commodity prices are headed lower isn’t because the dollar is headed lower which generally is a bullish fundamental factor but the fact that interest rates continue to climb on a daily basis spooking investors thinking that the free money is finally ending which is a pessimistic indicator towards many commodities including the oil sector which has not been affected at this point but in my opinion could be very soon.

Trend: Higher
Chart Structure: Excellant


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Weekly Energy Recap with Mike Seery

The energy futures bucked the trend this week despite the fact that the dollar continues to surge higher but is not putting any pressure on energy prices as July crude oil is still trading above its 20 and 100 day moving average finishing up around $.90 this Friday afternoon at 96.40 a barrel climbing higher for the 3rd consecutive day following the S&P 500 to the upside.

I’ve been advising traders to sit on the sideline in this market because there is no chart structure and I guess the trend might be to the upside but at this point I don’t believe there’s a solid trend to sink your teeth in with major resistance at 98 – 100 which could be tested next week. This market is showing incredible strength in my opinion due to the fact that gold is falling out of bed with many other commodities but even with record supplies here in the United States prices still continue to hang near the top and of the trading range.

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Heating oil futures for the June contract are trading above their 20 day moving average but below their 100 day moving average trading right at 4 week highs up around 300 points the trading week looking to breakout to the upside with major resistance at 2.95 as crude oil is propping up all of the products.

Unleaded gasoline for the June contract is trading above its 20 day moving average but still below its 100 day moving average hitting a 5 week high today as I’ve stated many previous blogs I believe a triple bottom may have occurred in unleaded gas prices and I think were headed higher as demand season for gas starts Memorial Day weekend.

The chart structure in heating oil and in unleaded gasoline is much better than it is in crude oil so focus on the products at this time especially unleaded gas to the upside as prices here in Chicago are flirting around 4.75 a gallon because the fact that we have extremely high taxes and a special summer blend so there is a chance that we could see prices head higher at the pump the summer.

Trend: Higher – Chart structure excellant

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