Crude Oil Bulls Start 2011 on a Positive Note

We can't deny the run, crude oil gained 15 percent last year and most analyst who called the bull run in oil prices were spot on. But is that it? Can a "V" shaped recovery in oil continue in the face of slowed Chinese manufacturing in December 2010 for the first time since July. The Bloomberg survey of economists shows that China, the world’s biggest energy consumer, will slow to 9 percent this year from 10 percent, that would still be three times the rate in the U.S. and six times Europe’s.

Russia for one is doing it's part to put an end to the run. Reporting oil production numbers not seen since the Soviet era. And while that increase in crude oil production was a mere 2.2% Russian natural gas production spiked a whopping 15% in 2010. Do they have more of that in store for us in 2011? And how will our "friends" in OPEC respond? Regardless of what they say I would not expect any pull back from the cash strapped countries of the now obsolete organization. In fact we expect to see an increase from the.....can we call them an organization?

The 2010 run ended with crude oil inventories dropping 4 weeks in row, the longest drop in more then a year. Does all of this scream out bubble? We suspect the bulls are going to enjoy a warm welcome from the sun tanned returning traders. But we stick by our cautioning tale that the second week of January could bring these oil prices back to earth with higher inventory reports. But we are trading TODAY, and here are the numbers we are going to use......

Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI are diverging but are turning neutral to bullish again signaling that sideways to higher prices are possible near term. If February extends the rally off August's low, May's high crossing at 93.87 is the next upside target. Closes below last Thursday's low crossing at 89.02 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 92.20. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.80. Second support is last Thursday's low crossing at 89.02. Crude oil pivot point for Monday morning is 90.83.

Natural gas gapped up overnight and was higher as it extends the rally off December's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If February extends the aforementioned rally, December's high crossing at 4.635 is the next upside target. Closes below the 10 day moving average crossing at 4.268 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.563. Second resistance is December's high crossing at 4.635. First support is the 20 day moving average crossing at 4.310. Second support is November's low crossing at 4.268. Natural gas pivot point for Monday morning is 4.388.

Gold was slightly lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends last week's rally, December's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is last Friday's high crossing at 1422.00. Second resistance is December's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is 1416.00.


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2011 Crude Oil Price is All About The Double Dip

At this point the future of oil isn't about inventory and current demand. Obviously oil is in the position to trend higher to $100 and higher. What it is really about is do you believe a double dip in the U.S. economy is inevitable. If you listen to the talking heads they seem to think commodity demand in general will move forward even in the face of a double dip. Everyone is on board the bull train. But how quick they forget.

We personally think that if this type of demand increase continues 2011 is shaping up to be a carbon copy of 2008. Remember 2008? Spiking oil and food prices combined with housing prices taking another hit bringing down more banks and financial institutions with them.

All of this could be a distant memory and $93 oil will be called the bull run of 2010. As refinery issues in Canada fade, the Chinese continue to inflate their currency reeling in inflation, end of year low inventory tax advantages disappear and traders come to their senses that none of this was possible without the QE2 printing presses going full speed. This may be no time to short oil but January 15th and a whole new set of rules is right around the corner.

But we are trading TODAY, and here's the numbers we'll be using......


Crude oil was lower due to profit taking overnight as it consolidates some of the rally off November's low. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.63 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.24. Second support is the 20 day moving average crossing at 89.63. Crude oil pivot point for Thursday morning is 91.77.

Natural gas was higher overnight as it extends the rally off last week's low and is trading above the 20 day moving average crossing at 4.298. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 4.298 would confirm that a short term low has been posted while opening the door for additional short covering gains into the new year. If February renews this month's decline, November's low crossing at 3.913 is the next downside target. First resistance is the overnight high crossing at 4.343. Second resistance is the reaction high crossing at 4.554. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Thursday morning is 4.271.

Gold was slightly lower due to light profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If March extends this week's rally, December's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 1415.40. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1410.00.


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Is Consumer Confidence and Housing Enough to Stop Crude Oil's Run?

No doubt that 2010 was no 2009 when it comes to oil prices with 2010 bringing a mere 14% gain compared to 2009's 78%. Can 2011 continue the run in the face of even worse consumer confidence reports in the U.S. and a larger than expected drop in home values as the S&P/Case-Shiller index of U.S. property values reported a decline of 0.8 percent in October from a year earlier. If anything can bring down the commodity and equity markets in 2011 it's the much feared double dip in the U.S. housing market.

Say it can't happen? Like anything else in life, just follow the money. The smart money. Why are the banks refusing home loans without large cash down payments? Simple, because when issuing a loan it is really the bank that is investing in the home, not the home owner. The lender is only hoping the home owner will pay it off for THEM! Smart money [the banks in this case] know that the homes are not worth the current prices even as low as they are, making a double dip inevitable.

We know what this will do for consumer confidence in the U.S. but will it stop China and India's rapid expansion and continued increase in energy demand? Unlikely, welcome to the new world economy. Here's your trading numbers for Wednesday morning......

Crude oil was lower due to light profit taking overnight. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.45 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.08. Second support is the 20 day moving average crossing at 89.45. Crude oil pivot point for Wednesday morning is 90.94.

Natural gas was slightly lower overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 4.295 are needed to confirm that a short term low has been posted. If February renews this month's decline, November's low crossing at 3.913 is the next downside target. First resistance is the 20 day moving average crossing at 4.295. Second resistance is the reaction high crossing at 4.554. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Wednesday morning is 4.240.

Gold was slightly lower due to light profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If March extends Tuesday's rally, this month's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 1410.00. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1398.70.


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Commodity Traders to China....."Good Start Guys, But Not Enough"

Crude oil and commodity traders seem to be telling China "good start guys, but not enough" as commodity prices appear to be holding up with support of the continued bad weather in Europe and the U.S.

The usual low volume holiday trading is setting up an interesting first week for 2011. Will this "soft landing" in China's pullback be healthy and create sustainable economic growth in China?

The U.S. dollar showed continued weakness for a fourth day, keeping the appeal for commodities going in the U.S. markets. Traders are looking for U.S. oil stockpiles to decrease by 3 million barrels from 340.7 million in the week ended Dec. 24, according to the median estimate of nine analysts surveyed by Bloomberg News. With supplies falling this month by 19 million barrels, or 5.3 percent, the biggest decrease since December 2006.

Let's scrape the ice off of our monitors and trade the numbers given us. Here they are for Tuesday morning......

Crude oil was higher overnight and is poised to extend the rally off November's low. Stochastics and the RSI are diverging but are bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.12 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.85. Second support is the 20 day moving average crossing at 89.12. Crude oil pivot point for Tuesday morning is 90.38.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.167. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Tuesday morning is 4.119.

Gold was higher overnight and has renewed the rally off last week's low. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If March renews this year's rally into uncharted territory, upside targets will be hard to project. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1380.90.


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Who's Your Daddy Energy and Oil Traders?

We knew it was coming, China had already surpassed the U.S. [in some people's eyes] as the largest energy user in the world. But China's "surprise" rate hike over the holiday weekend [niiiice guys] was just a friendly reminder who is in charge of determining the price we pay for energy, commodities, food....really anything in the west and the rest of the world now.

Traders expected a rate rise coming out of China, but the timing caught them off guard. After taking loses early in the Sunday evening session markets recovered as traders expected the rate increases would do little to put a halt to China's appetite for commodities.

The news out of China combined with the last week of 2010 signaling an end to tax break season for refiners in the U.S. has most investors calling a top in crude oil.

While mostly bad news has been coming out of Europe, oil and energy traders have been given some holiday cheer in the form of horrible weather. Worst then normal conditions have energy needs across Europe spiking.

Here's Monday's trading numbers to get your week started......

Crude oil was lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are diverging but are turning bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.89 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.67. Second support is the 20 day moving average crossing at 88.89. Crude oil pivot point for Monday morning is 90.29.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.189. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Monday morning is 4.17. With a score of -85 our "Smart Scan Chart Analysis" of natural gas etf UNG confirms that a short term counter trend move is underway. When this action is over look for the longer term negative trend to resume.

Gold was steady to slightly higher overnight as it consolidates some of last Thursday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is


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Smooth Sailing For Crude Oil Bulls or Bearish Set Up?

Crude oil bulls are enjoying a gift from old Saint Nick. After hitting 90.79 in the overnight session the bulls are now being given a chance to break out of this month's trading range and have visions of $100 oil glistening with holiday cheer! But smart bears that know how to play these set ups with tight stops are peeking around the Christmas tree with such holiday glee. If the bears are regifted with trading below 89.06 [minor support] the trend will flip back to the downside to extend the consolidation from 90.76.

With so many commercial traders taking next week off you have to ask yourself "are you willing to sit on these oil long positions going into the holiday"? Enjoy your Christmas gifts and at the very least take part of your profits. Here's your trading numbers for Thursday morning.....

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below last Wednesday's low crossing at 87.43 are needed to confirm that a short term top has been posted. First resistance is this month's high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.49. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Thursday morning is 90.38.

Natural gas was lower overnight as it extends this week's trading range. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.280 are needed to confirm that a short term low has been posted. If January renews this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.280. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Thursday morning is 4.102.

Gold was lower overnight as it consolidates some of this week's gains. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 1408.90 are needed to confirm that a short term top has been posted. If March renews the decline off this month's high, the reaction low crossing at 1352.00 is the next downside target. First resistance is Tuesday's high crossing at 1393.00. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1387.50.


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Crude Oil Moving Higher Going Into The Year End, What's New!

As usual oil prices are ending the year with a bullish tone. Not pushing through to new highs, but hovering around the high end of the range established in 2010. But as our calls for Tuesday's trading will show, signals are neutral to bearish telling us traders are trying to put a top in here as we go into the end of the year. Looks like natural gas is going to take in the limelight as we head into 2011 with reminders of the good old take over days in the oil and gas industry. Carl Icahn is seeing to that [check out Dian L. Chu's latest article] and something tells me T. Boone is right around the corner. Ah yes, the good old days. Sometimes you can only dream of being physic and getting ahead of the take over trades. For now here is your trading numbers for Tuesday morning......

Crude oil was mostly steady overnight while extending this month's trading range. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 87.73 are needed to confirm that a short term top has been posted. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 87.73. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Tuesday morning is 88.89.

Natural gas was lower overnight as it consolidates some of Monday's rally. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.317 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.317. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Tuesday morning is 4.167.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 20 day moving average crossing at 1387.60 would confirm that a short term top has been posted. First resistance is the 20 day moving average crossing at 1387.60. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1383.90.


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With Quadruple Witching Behind us, How do we Trade on Monday?

The end of trading last week was interesting for traders. Fridays quadruple witching, [when contracts for stock index futures, stock index options, stock options and single stock futures all expire] is known to create some "dynamic moves" in the market. Most asset classes moved higher in Fridays session, including bonds, commodities, stocks and the U.S. Dollar. This is usually a bullish signal. This usually equates to a U.S. Dollar strength/weak assets trade. When this happened earlier in the fall of 2010 it was a prelude to a rally in most commodity names.

So is all of this just another sign that this economic recovery is more sustainable? This is new territory for this new world economy. Can we have a healthy U.S. economy when it relies on the Chinese economy that has been under performing for months as they try to reel in inflation? Any real growth in China and all of the BRIC nations is only going to bring the U.S. higher gas prices. And the chance of real recovery in the U.S. is ZERO in the face of $4.00 per gallon gasoline.

That's why so many fund managers are moving to a trade only plan and not investing for the long term. Take advantage of these bull runs and take your profits using todays trading numbers.....

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 86.82 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is the reaction high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is last Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.82. Crude oil pivot point for Monday morning is 88.50.

Natural gas was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. Closes above the 20 day moving average crossing at 4.318 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.318. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Monday morning is 4.042.

Gold was higher due to short covering overnight as it consolidates some of last week's decline but remains below the 10 day moving average crossing at 1389.20. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 10 day moving average crossing at 1389.20 would confirm that a short term top has been posted. First resistance is the 10 day moving average crossing at 1389.20. Second resistance is the reaction high crossing at 1432.50. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is 1374.80.

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European Summits and IEA Reports Not Enough to Fool Commodity Traders

Commodity traders, especially crude oil traders, good be the smartest and least naive people on the planet. It sure didn't take long for them to realize that the IEA could possibly be turning itself into the new OPEC. Remember the old days when OPEC could issue a statement and send markets reeling. Those days appear to be here for the IEA as traders recognized the over "exaggeration" of international demand issued by the IEA this week.

Enbridge pipeline shut down, end of year tax strategies, European Summits, just to name a few, were not enough to take traders eyes off the world oil glut and the real trouble looming in the Euro. Giving the U.S. dollar new strength chasing investors out of the weak dollar/commodities trade.

Commodity traders also showed a lack of confidence in the news coming out of the Brussels Summit. Most traders think their statements just don't offer enough details to give investors any real promise of a concrete plan to shore up the Euro as the down grades just keep coming.

End of week trading is here and it always give an insight into what traders can stomach holding over the weekend. And I am thinking that is not a lot. Here is your trading numbers for Friday......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.32. Stochastics and the RSI are bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 86.47 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.47. Crude oil pivot point for Friday morning is 87.99.

Natural gas was lower overnight as it extends the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, November's low crossing at 3.853 is the next downside target. Closes above the 20 day moving average crossing at 4.329 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.329. Second resistance is last Thursday's high crossing at 4.637. First support is the overnight low crossing at 3.987. Second support is November's low crossing at 3.853. Natural gas pivot point for Friday morning is 4.100.

Gold was lower overnight as it extends Thursday's decline below the reaction low crossing at 1372.10 confirming that a short term top has been posted. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 10 day moving average crossing at 1391.60 would confirm that a short term top has been posted. First resistance is the 10 day moving average crossing at 1391.60. Second resistance is last Tuesday's high crossing at 1432.50. First support is Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Friday morning is 1373.30.

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Crude Oil's Strong Resistance and the Return of the Clinton Administration

Wednesday's huge drop in crude oil inventory, the largest in 8 years, appeared to be all the oil bulls needed to finally push through the stubborn $90-$91 resistance level. But slumping gasoline sales in the U.S. and a less then desirable Spain Bond sale has most commodity traders shorting crude near the 90.76 level has they head out the door for the holiday vacation.

Even the return of the Clinton administration, well it sure looks like it doesn't it, was not enough to return confidence to the "if you can drop it on your foot and it hurts trade". Of course this is bringing out the "dollar as bottomed" crowd on every financial news channel. And while the dollar was lower in overnight trading stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term in the dollar.

So sit back and watch our President meet with the finest business leaders in the world and use these trading numbers for Thursdays trading......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.54 signaling that a short term top might be in or is near. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 86.25 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is Wednesday's low crossing at 86.83. Second support is the 20 day moving average crossing at 86.25. Crude oil pivot point for Thursday morning is 88.18

Natural gas was lower overnight as it extends the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, the reaction low crossing at 4.126 is the next downside target. If January renews the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is last Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the overnight low crossing at 4.162. Second support is the reaction low crossing at 4.126. Natural gas pivot point for Thursday morning is 4.231.

Gold was lower overnight as it consolidates some of this week's rally. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1372.10 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is last Tuesday's high crossing at 1432.50. First support is the reaction low crossing at 1372.10. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1387.50.


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Higher Interest Rates, Lower Volume.....Is This Run in Commodities Over?

With interest rates making a move upward this week, investors are questioning if the higher rates will make home loans and business loans more expensive to get. Stifling efforts by Congress and the Federal Reserve to strengthen the economy. Welcome to the new U.S. economy, this should be a sign of real economic expansion but it only brings new doubt that the governments stimulus package has any positive effect at all.

For now traders seem to be cautious about riding the bullish momentum in most commodities since they have real support from supply and demand principles. Crude oil is another story. With the failure to push through the $90 dollar per barrel level crude oil bulls were brought back to earth with the truth that we continue to have a glut of oil on the market. And yes, the good old days of having a couple of OPEC members mention the possibility of $100 oil moving the market are gone. Our "friends" in Saudi Arabia have proven to be the only real significant players in setting the price of oil. And it's obvious they prefer the $80+ range, just below what some believe is profitable for Iran. Coincidence?

For crude oil bulls to have any hope of getting their momentum back they need to defend the 20 day moving average at 85.83 and that appears unlikely as they watch their fellow traders head out to Florida and warmer weather for the holidays. Taking precious market volume with them. Here's your complete trading numbers for Wednesday morning......

Crude oil was lower overnight and trading below the 10 day moving average crossing at 88.40 signaling that a short term top might be in or is near. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 85.83 are needed to confirm that a short term top has been posted. If January renews the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is last Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is last Friday's low crossing at 87.10. Second support is the 20 day moving average crossing at 85.83. Crude oil pivot point for Wednesday is 88.32

Natural gas was lower overnight as it extends Tuesday's breakout below the 20 day moving average crossing at 4.346 confirming that a short term top has been posted. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, the reaction low crossing at 4.126 is the next downside target. If January renews the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is last Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the overnight low crossing at 4.230. Second support is the reaction low crossing at 4.126. Natural gas pivot point for Wednesday is 4.315

Gold was lower overnight as it consolidates some of this week's rally but remains above the 20 day moving average crossing at 1382.20. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If March renews this year's rally into uncharted territory, upside targets will be hard to project. Closes below the 20 day moving average crossing at 1382.20 would confirm that a short term top has been posted. First resistance is last Tuesday's high crossing at 1432.50. First support is the 20 day moving average crossing at 1382.20. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1401.90.


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Lack of Volume, Lack of Traders....It's Silly Season Again!

From guest blogger Adam Hewison.....

About a year ago I wrote a blog on the “silly season,” as I call it. The silly season starts on December 15 and extends through the first week of January. The silly season has nothing to do with telling jokes and laughing at funny things, but everything to do with trading. Trading is a serious business. If you want to be successful you have to practice, just like an athlete would. I don’t think there is an athlete out there who just woke up and said I’m going to be a world class athlete and achieved that goal without practicing. After December 15 most successful traders who made their money during the year are headed to either Florida, Palm Springs, or just taking a break to spend time with family. What makes the silly season, silly?

It has everything to do with the lack of volume in trading. When you have very little volume it is easy for markets to be, forgive me because I am about to say the M word, manipulated, by just a few traders. You do not want to be ending your year at the mercy of markets that are erratic at best. You may as well just head out to Las Vegas and take a shot at the roulette wheel.

So how can you avoid this trading trap? Here’s what I do every year:
After the 15th I close out all of my positions win, lose, or draw, and say thank you very much for another good year. Once I have cleared my trading book I’m free to enjoy the silly season without falling prey to the big M. I let the markets be the markets, because I know they will be there next year and I want to be prepared physically and mentally to take advantage of them.

That being said, here are my five key recommendations for you during silly season.....

1. Enjoy time with your family and friends.

2. Be appreciative what you have, not what you don’t have. There are a lot more folks that have a whole lot less than you than folks who have more.

3. Give something back. It doesn’t matter what it is, or how small, give something back; it will make you feel good.

4. Enjoy the season. Forget about the markets they will be there next year.

5. Take some quiet time for yourself to regenerate your spirit.

For me, number 5 means sitting in a quiet room by myself and thinking about all of the different things that have happened in the past year. Doing this keeps me grounded and prepares me for the year ahead. This quiet time helps me put everything into perspective and gets me in the right frame of mind for trading in the New Year. This quiet time restores your inner strength, which is something you need in trading.

So there you have it. That is how I avoid silly season and prepare myself for the new trading year.


Just click here for a free sample of the "Trading Triangles" that Adam relies on. Also take a minute to consider his "10 Free Trading Lessons". Get next years trading started on the right foot.

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This Week in Crude Oil and Natural Gas Trading

Crude oil traders end the week on a low note as China continues to attempt to reel in inflation through tightening of bank reserve requirements. These moves are seen to have less of an impact on the equity markets than raising interest rates but still have the same effect with the commodity markets which are dominated by commercial traders.

It appears the streets bias remains neutral on crude oil going into next weeks trading week with more consolidations likely. If the bulls expect to gain any momentum back Monday they will need to defend the first support level at the 10 day moving average crossing of 87.62. And more critical would be second support at the 20 day moving average crossing at 85.28.

These lower prices on the week run in the face of the federal government’s EIA reporting that crude inventories fell by 3,819 thousand barrels for the week ending December 3, 2010, well above analyst expectations. The decrease in oil stocks, the first time in three weeks, can be attributed to ramped up refinery operations.

However, at 355.9 million barrels, crude supplies are 5.9% above the year earlier level and remain above the upper limit of the average for this time of the year. The crude supply cover was down slightly from 25.4 days in the previous week to 24.7 days. In the year ago period, the supply cover was 24.2 days.

Natural gas traders also close out the week lower as we see warmer than predicted weather predictions especially in the mid west and the northeast. Stochastics and the RSI are diverging and turning neutral to bearish for natural gas. Hinting that the rally off November's low might be coming to an end. If January extends the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.654 is the next upside target. Multiple closes below the 20 day moving average crossing at 4.301 are needed to confirm that a short term top has been posted. First resistance is Thursday's high crossing at 4.479. Second resistance is the 38% retracement level of the June-October decline crossing at 4.654. First support is the 20 day moving average crossing at 4.301. Second support is last Tuesday's low crossing at 4.126.

Nat gas producers seem to see a bright future ahead though as the natural gas rotary rig count, as reported December 3 by Baker Hughes Incorporated, was 961. An increase of 8 rigs from the previous week.


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Does This Commodity Rally Rely on QE3.....QE4?

At this point traders and investors alike realize that any near term rally in commodities and equities relies fully on the U.S. governments continued printing of money. QE 2, QE 3.....QE 4? But any real long term support of the world economy will be coming from Chinas recent and future increasing import and export numbers. The strong readings should trigger the Chinese government to continue stepping up tightening measures and a rate hike is imminent. This is just one reason our fund has patiently held a position in the Chinese Yuan using ETF....CYB. We have never favored putting our faith in communist governments with our investment strategies but we believe this is one bubble the Chinese cannot control forever. And the Chinese currency will eventually have to be allowed to inflate.

Here's your trading numbers for Friday morning......

Crude oil was higher overnight as it consolidates some of this week's decline. However, stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 85.33 would confirm that a short term top has been posted. If January extends the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is the 10 day moving average crossing at 87.72. Second support is the 20 day moving average crossing at 85.33. Crude oil pivot point for Friday morning is 88.50.

Natural gas was slightly lower overnight as it consolidates some of the rally off November's low. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.301 would confirm that a short term top has been posted. If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the 10 day moving average crossing at 4.369. Second support is the 20 day moving average crossing at 4.301. Natural gas pivot point for Friday morning is 4.494.

Gold was lower overnight and remains poised to extend the decline off this week's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1376.70 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is Tuesday's high crossing at 1432.50. First support is the 20 day moving average crossing at 1376.70. Second support is the reaction low crossing at 1352.00. Gold pivot point for Friday morning is 1389.80.


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Is it Time to Follow The Herd into Trading Gold and the SP500?

Are you the type of trader who follows the herd? Do you use herd mentality against the market? Or are you a "contrarian investor"? Over the past 2 weeks we have seen the market sentiment change three times from extreme bullish to bearish and back to bullish as of today. Normally we don’t see the herd (average Joe) switch trading directions this quickly. Over the past 10 years I found that the average time for the herd to reach an extreme bullish or bearish bias takes between 4-6 weeks in length. It is this herd mentality which makes for some excellent trend trading opportunities. But with the quantitative easing, thinner traded market, and lack of trading participants (smaller herd) I find everyone is ready to change directions at the drop of a hat.

The old school traders/investors who don’t use real time data or charts, and who dabbled in stock picks, and options trades here and there have mostly exited the trading arena from frustration or losing to much money. This group accounted for a decent chuck of liquidity in the market and was also the slowest of the herd to change directions.

The new school, today’s smaller herd is much more aggressive and quicker to act on market gyrations. I think this is because the only people left in the market are those who make a living pulling money from the market and those who feel they are really close to mastering the stock market. It is these individuals who are using trading platforms with real time data, charts and scanners to help get a pulse on the market so they can change directions when the big boys do. I feel this is the reason why the market is able to turn on a dime one week to another over the past 8 months....The easy prey (novice and delayed data traders) are few and far between and the fight to take money for other educated traders seems to be getting a little more interesting to say the least.

Anyways, enough about the herd already.....

It’s been an interesting week thus far with stocks and commodities. The week started with a large gap up only for strong selling volume to step in and reverse direction the following day. It is this negative price action that starts to put fear into the market triggering a downward thrust in the market. During an up trend which we are in now, I look for these bearish chart patterns to form as they tend to trigger more selling the following days which cleanses the market of weak positions. Once a certain level of traders have been shaken out of their positions and are entering positions in order to take advantage of a falling market, that’s when we get the next rally, catching the majority of traders off guard as they panic to buy back their short positions. It’s this short covering which sparks a strong multi day rally and kicks off the new leg up in the market.

Currently we getting some mixed signals. The market sentiment is the most bullish it has been since 2007, just a little higher than the Jan & March highs this year. This makes me step back and think twice about taking any sizable long positions. Any day now the market could roll over. Another bearish signal is the fact that we just had a very strong reversal day for stocks and metals to the down side. That typically leads to more selling.

But if we look at the positive side of things, the trend is still up, this is typically a strong time for stocks as we go into Christmas/Holiday season, also the market breadth is really strong with the number of stocks hitting new highs has really taking off.

SP500 – Daily Chart
Below you can see the reversal candles along with short term and intermediate support levels. Although the market sentiment is screaming a correction is near, we must realize that sentiment can remain at this level for an extended period of time while the market continues to trend. This is one of the reasons why we say “The Trend Is Our Friend”.

I am hoping for a pullback and would like to see market sentiment shift enough on an intraday basis to give us a low risk entry point.

Gold – Daily Chart
A reversal candle is seen as a sell signal or a profit taking pattern. Short term aggressive trades use these to lock in quick price movements. With so many traders watching gold, it caused a flood of sell orders to push gold down today.

Mid-Week Conclusion:
In short, each time we see some decent selling in the market its get bought back up. Today was another perfect example as we had an early morning sell off, then a light volume rally for the second half of the session and a end of day short squeeze during the last 30 minutes. Gold has pulled back to the first short term support level. Because of the large following in gold I would like to see if there will be another day of follow through selling before possibly looking to take a trade.

If you would like to get my daily pre-market trading videos, intraday updates, chart analysis and trades just subscribe to my trading service here at The Gold and Oil Guy.com

Chris Vermeulen



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Is This all the Crude Oil Bulls Have Got?

Crude oil traders continue their push in this higher trading range but can't seem to push through critical resistance at the 90+ level. Crude oil bulls are supported by newfound optimism on the street that the economic environment in the U.S. will continue to improve. But worries loom about the Ireland and the Euro as Fitch downgrades Ireland's credit rating despite the recent bail out deal. Precious metals have rebounded slightly but sediment has grown extremely bearish on the street across the whole metals sector. Here your trading numbers for Thursday morning.

Crude oil was higher overnight as it consolidates some of this week's decline. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 85.32 would confirm that a short term top has been posted. If January extends the rally off November's low, May's high crossing at 93.29 is the next upside target.

First resistance is Tuesday's high crossing at 90.76
Second resistance is May's high crossing at 93.29

Crude oil pivot point for Thursday morning is 88.20

First support is the 10 day moving average crossing at 87.25
Second support is the 20 day moving average crossing at 85.32

Natural gas was higher overnight as it extends the rally off November's low. Stochastics and the RSI are diverging but are bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. Closes below the 20 day moving average crossing at 4.294 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 4.637
Second resistance is the 38% retracement level of the June-November decline crossing at 4.654

Natural gas pivot point for Thursday morning is 4.523

First support is the 10 day moving average crossing at 4.384
Second support is the 20 day moving average crossing at 4.294

Gold was slightly higher overnight as it consolidates some of the decline off this week's high. However, stochastics and the RSI have turned bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 1377.10 would confirm that a short term top has been posted. If March extends this year's rally into uncharted territory, upside targets will now be hard to project.

First resistance is Tuesday's high crossing at 1432.50
Second resistance is 1455.30

Gold pivot point for Thursday morning is 1392.40

First support is the 20 day moving average crossing at 1377.10
Second support is the reaction low crossing at 1352.00


Watch our latest video "After a Tough 2010, What's Next for Crude Oil Traders?"


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Is THIS Oil Rally For Real?

Every time crude oil has shown the ability to rally in 2010 experienced commercial traders have scratched their heads in disbelief as tankers fill with crude oil continue to stack up in ports and harbors around the world. Never have we seen oil rally in this way when there has been such a glut of inventory.

Is it different this time? Will the "Obama Claus" rally push crude oil [and commodities in general] through the critical 90+ levels? It's looking like these markets have played out their run and light volume December trading is about to set in. Swing traders and investors beware, this looks like a day traders market for December. Here's your trading numbers for Wednesday....


Crude oil was lower due to profit taking overnight as it consolidates some of the rally off November's low. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 85.30 would confirm that a short term top has been posted. If January extends the rally off November's low, May's high crossing at 93.29 is the next upside target.

First resistance is Tuesday's high crossing at 90.76
Second resistance is May's high crossing at 93.29

Crude oil pivot point for Wednesday morning is 89.16

First support is the 10 day moving average crossing at 86.75
Second support is the 20 day moving average crossing at 85.30

Natural gas was higher overnight as it consolidates some of Tuesday's decline. Stochastics and the RSI are diverging but are bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. Closes below the 20 day moving average crossing at 4.267 would confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 4.545
Second resistance is the 38% retracement level of the June-November decline crossing at 4.654

Natural gas pivot point for Wednesday morning is 4.440

First support is the 10 day moving average crossing at 4.345
Second support is the 20 day moving average crossing at 4.267

Gold was lower due to profit taking overnight as it consolidates some of the rally off the mid-November low. Stochastics and the RSI are becoming overbought, diverging and turning neutral hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 1378.50 would confirm that a short term top has been posted. If March extends this year's rally into uncharted territory, upside targets will now be hard to project.

First resistance is Tuesday's high crossing at 1432.50

Gold pivot point for Wednesday morning is 1412.70

First support is the 10 day moving average crossing at 1389.70
Second support is the 20 day moving average crossing at 1378.50



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Merry Christmas Crude Oil Bulls...From President Obama!

Is the second term of the Clinton presidency back? Even Bill couldn't have timed a better trade as President Obama let's it be known that he is willing to extend the Bush era tax breaks for an extension of unemployment benefits. This as our world currency [crude oil of course] hovers around the most critical level of 90+ a barrel. Is $90 our new support number? Is $100 a barrel in the cards in December? The rest of the week and especially Fridays close will tell us a lot, but for now here is your support, resistance and pivot numbers for Tuesdays trading.

Crude oil was higher overnight as it extends the rally off last week's low. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off last week's low, the 87% retracement level of May's decline crossing at 90.62 is the next upside target. Closes below the 20 day moving average crossing at 84.34 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 90.46
Second resistance is the 87% retracement level of May's decline crossing at 90.62

Crude oil pivot point for Tuesday morning is 89.23

First support is the 10 day moving average crossing at 86.23
Second support is the 20 day moving average crossing at 85.34

Natural gas was higher overnight as it extends the rally off November's low. Stochastics and the RSI are diverging but have turned bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. Closes below the 20 day moving average crossing at 4.271 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 4.545
Second resistance is the 38% retracement level of the June-November decline crossing at 4.654

Natural gas pivot point for Tuesday morning is 4.471

First support is the 10 day moving average crossing at 4.357
Second support is the 20 day moving average crossing at 4.271

Gold was higher overnight as it continues to rebound off the mid November low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If March extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the 20 day moving average crossing at 1380.30 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 1429.40.
Second resistance is at 1438.10

Gold pivot point for Tuesday morning is 1418.40

First support is the 10 day moving average crossing at 1390.00.
Second support is the 20 day moving average crossing at 1380.30.



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Crude Oil, Natural Gas, Gold and Dollar Commentary For Friday Morning Dec. 3rd

Crude oil was higher overnight as it extends the rally off last week's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off last week's low, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 84.54 would temper the near term friendly outlook.

First resistance is the overnight high crossing at 88.33
Second resistance is November's high crossing at 89.10

Crude oil pivot point for Friday morning is 87.47

First support is the 20 day moving average crossing at 85.07
Second support is the 10 day moving average crossing at 84.54

Natural gas was slightly lower overnight as it consolidates some of the short covering gains of the past two days. In the meantime, stochastics and the RSI are turning neutral to bullish hinting that sideways to higher prices are possible near term.

Closes above the reaction high crossing at 4.515 are needed to renew the rally off November's low. If January renews the decline off the reaction high crossing at 4.515, November's low crossing at 3.853 is the next downside target.

First resistance is the overnight high crossing at 4.370
Second resistance is last week's high crossing at 4.515

Natural gas pivot point for Friday morning is 4.306

First support is Tuesday's low crossing at 4.126
Second support is November's low crossing at 3.853

Gold was higher overnight as it continues to rebound off the mid-November low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If March extends the rebound off the mid-November low, November's high crossing at 1426.00 is the next upside target. Closes below the 10 day moving average crossing at 1375.60 would confirm that a short term top has been posted.

First resistance is Thursday's high crossing at 1399.70
Second resistance is November's high crossing at 1426.00

Gold pivot point for Friday morning is 1,390.90

First support is the 10 day moving average crossing at 1375.60
Second support is the reaction low crossing at 1331.10


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Do You Really Understand How to Use Market Sentiment and Herd Mentality in Your Trading

We don't know of any trader better suited to teach us how to take advantage of market psychology then Chris Vermeulen of The Gold and Oil Guy.Com. In this report Chris is going to teach you how to read market sentiment so you can day trade and swing trade consistently to earn 3-5% per month trading ETFs. I remember always hearing the pro’s say “if you want to make money, you need to trade against the herd (masses)”. This sounds easy but just how do we go about doing that? I am about to show you…

In short, you must start looking at the market completely backwards. I focus on buying into heavy volume sell offs (panic) and selling position into heavy volume breakouts (greed). This was a very tough transition for me to make and its best to paper trade it for while until you are comfortable with buying into fear and selling into greed. It will feel completely wrong at the beginning but the profits speak for themselves!

The Four Charts I Follow Closely
The 4 main tools need to make money from trading against the herd. While this is only one of my trading strategies it is my favorite. I trade the ES futures contract and some sometimes the SDS and SSO exchange traded funds. This may seem basic at first glance but when you combine them you end up with a highly effective trading strategy.

SP500 - 5 Minute Chart
Here is a 5 minute chart of the SP500 showing where I went short. It is important to know that over the past 2 years the SP500 has provided a 1.25% profit on average each time one of these extreme sentiment readings occur on the charts.

The red indicator on the chart is a simple volume based indicator which measures fear and greed in the market and is very powerful for picking market tops and bottoms. It’s calculated by taking the NYSE up volume and dividing it by the down volume. In short, when you see this indicator start to rise it tells us the majority of traders (the herd) are buying and we should start to look at taking a short position.

Let me show you how to find the trade using the market sentiment....

The NYSE advance/ decline line
Is the most easy to understand. How I use this is simple, when there are 1500+ stocks trading up on the day then the market is getting overbought meaning too many stocks have moved up in a short period of time and traders will most likely start taking profits or exit their positions. I also look at the intraday chart for topping patterns or resistance levels then wait for the other two indicators to confirm Selling Volume on the chart above and the put/call ratio before going short the market.

The last indicator I follow is the put/call ratio
This indicator can be a little tougher to use at times because when the market is trending down the ratio tends to fluctuate near the top or bottom of its range during up or down trends. In a down trend is stays near the top which the chart below shows.

When the broad market bounces and we see the put/call ratio drop into the lower band it’s telling me the majority of traders have finally become bullish. This tends to happen once a previous high is broken as it triggers short covering and breakout traders start to buy.

Trading Market Sentiment Conclusion:
All you need to use these indicators, focus on the 15 minute charts, trade only with trend, and take profits at 1%, 2% and keep a small position open for much larger gains.

It is critical that once you take partial profits once you reach a 1% gain then you must start moving your protective stop into the money to lock in a profit for the balance of the position. All three indicators need to reach the extreme levels at the same time for a trade to be triggered. I have seen the market trend in the extreme levels for several weeks continuing to move up day after day and you will get stuck in that situation if you jump the gun entering a trade before each indicator signals an extreme level.

Final thoughts, his strategy works just as well in a bull market but there are some minor changes required on each of the indicators. Also I use inter market analysis following the US Dollar, Gold, Bonds and the Volatility Index for other trading strategies which I incorporate using the market sentiment.

If you would like to get Chris Vermeulen's ETF Trade Alerts for Low Risk Setups checkout his service at The Gold And Oil Guy.com



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