David Banister: The Market Could Soon Bottom and Nobody Knows It

The prevailing universal sentiment is neutral to bearish by advisors and the general investing public.  Who can really blame them given the Euro Zone mess, the potential bank contagion collapse effect, and the weak economic trends both here and overseas.  However, the work I do is almost entirely behavioral based analysis looking at crowd or herd behavioral patterns. 

Right now, things are adding up to a market bottom as early as the October 7^th - 11^th window of time and no later than October 28^th . The figures I have had for a long time are 1088 for a bottom with a possible worst case spillover of 1055-1062 in the SP 500.  We are already eyeing the Gold stocks as bottoming out as well and have begun to nibble and will add on further dips.

Let’s examine some of the evidence and then look the charts as well:

1. Sentiment in recent individual investor surveys had only 25% of those polled bullish. Historically that average is 39% or higher.
2. The volatility index has been pegging  the 43-45 window recently and historically markets have major reversals anywhere from 45-50, with rare cases of that index  going over 50 without a major reversal
3. The German DAX index is carving out what looks like a bottom channel, and if it can hold the 5300 plus ranges, it could be a leading indicator of a US stock market run
4. Seasonally, markets tend to bottom in the September-October window with favorable patterns from November into March/April.
5. Historically, markets tend to correct hard with a “New Moon in Libra” which occurred last Tuesday, the same day the market peaked at 1196 and rolled over hard.  They often bottom with the following Full moon, which is scheduled for October 11^th.
6. Elliott Wave patterns I use indicate we are in the final 5^th wave stage since the 1370 Bin Laden highs, with a gap in the SP 500 chart at 1088 from September 2010 still to fill. That gap happens to coincide as 78.6% Fibonacci retracement of the 2010 lows to the 2011 highs.  It’s also has a 50% Fibonacci correlation with the 1356 high to 1101 swing move this summer.

Bottom line is the SP 500 has withstood a ton of pots and pans and bad news over the past 8 weeks.  The market tends to price in a soft patch in the economy way before it becomes evident in the data. To wit, when we topped at 1370 in May of this year, it was an exact 78.6% retracement to the upside of the 2007 highs to 2009 lows.  The pullback to 1101 is an exact 38% Fibonacci retracement of the 2011 highs and the 2009 lows.  

Markets are not as random as everyone things, and if you can lay out a roadmap in advance and understand where key pivots are, you can swing the opposite direction of the herd and profit quite handsomely.  This is what I do every week at my Active Trading Partners.com trading service; go against the crowd for handsome profits.

Below are two charts showing two likely outcomes in the SP 500 index in the coming several days to few weeks:

Forewarned is forearmed as they say.  If you’d like to stay ahead of the curve on Gold, Silver, and the SP 500 on a consistent basis, take a look at Market Trend Forecast.com, where you can sign up for occasional free reports and/or take advantage of a temporary 33% off coupon to join us!

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Phil Flynn: The Worst Is Over?

Is it possible that the worst is over? Despite the separation anxiety in the Euro Zone and a rouge trade that took away UBS profits, many markets are signaling that they believe that at least for now, all the bad news is out. Or maybe that things can't get any worse. It looks like the plunging euro currency, the British Pound and the Swiss franc, is turning the corner as well as crude oil, a market by the way that we have called that the low is in for the year. Stocks seem to have found a bottom and their lows look like they might be in as well. Do we deserve all this optimism? It seems that support from German Chancellor Angela Merkel and French President Nicholas Sarkozy, is making the markets think there may be a master plan to save the Euro zone and the global economy as well.

Is the market right ? Do we deserve a bottom? Well whether we deserve it or not the indicators from the technical side seem to be in alignment. Oil is gaining confidence and we are seeing signs that products are bottoming. Besides, the market is rebounding from sharply lower expectations from the likes of many of the major agencies like OPEC, the Energy Information Agency as well as the International Energy Agency. Besides lowering demand, the other key for the direction of oil may be when Libya's oil comes back to the market. The International Energy Agency says that, "As the fighting in Libya begins to wind down and the Transitional National Council (TNC) establishes itself as the internationally recognized government, it is timely to review the many factors that will affect the pace and timing of the restart of the Libyan oil industry.

The TNC leadership, which views oil revenues as a means to rebuilding the country, and participants in world oil markets, who continue to grapple with tightness in the global supply of high quality crude, share a common interest in restoring Libya's oil production and exports. When this will happen is uncertain and depends to a significant extent on the political, military, and security situation that will determine when companies can return to oil fields to repair and/or restart production. It is also worth noting that at the time of writing, only the European Union and United Nations had lifted sanctions on Libya; U.S. sanctions remain in place"......Read the entire article.

Commodities Bounce Back as Japanese Sell Off Euro Overnight

Reuters is reporting that the dollar came off it's seven month highs against major currencies after Japanese exporters were detected selling it. Falling 0.7 percent to 77.07, helping lift dollar denominated commodities such as gold, copper and crude oil.

The euro held firm on Tuesday morning after a choppy session overnight saw a wave of short covering lift it by more than two cents on hopes that China will bolster Italy by buying its bonds, but traders found few reasons to stay upbeat about the currency.

Read the entire Reuters article.

Chris Vermeulen: Crude Oil and Gold Thoughts....What is Next?

The past few weeks have been fast moving with fearful investors clearly in control. As we all know fear is the most powerful force in the financial market and when the hedge funds and the masses get spooked they all dart in one direction like a school of fish. Watching the charts and volume levels it’s clear that money was/is flowing out of stocks and into precious metals as the risk off safe play. 

To make a long story short, I feel as though Euro-Land is going through something similar to what we (the USA) went through in late 2008 and first quarter of 2009. Keeping my analysis simple and to the point it’s very likely that Euro-Land will resolve their financial issues and their stock markets will bottom in the next month or so… If their market bottoms, so will the US market, which will be perfect timing as the market is currently oversold, sentiment is now turning bearish and we have had a sizable pullback in line with normal bull market corrections.

My thinking looking forward 2-6 weeks is that stocks rally, financials rocket higher, bond prices fall, gold falls and oil rises as it will be a risk off trading environment again. Of course all this would happen after Euro-Land resolves some of their key financial issues. I’m being very optimistic here but we could be nearing a major low that could kick start another massive 1 year rally.

Stepping away from that longer term outlook let’s take a peek at the shorter term trends for oil, gold and stocks.

Crude Oil 60 Minute Chart (1 month view)
The recent price action for crude oil remains bearish/neutral in my opinion. We saw a drift higher into resistance with declining volume then a sharp pullback on heavy volume. This tells me oil remains in a down trend. It may be forming a base which would act as a launch pad in the coming weeks for higher prices but only time will tell and I will update as price unfolds.

Gold 4 Hour Chart (One Month View)
Gold has been performing very well for our entry point but the recent price action is starting to look toppy. Gold and many commodities regularly form this pattern of three wave pushes to new highs just before a sizable correction takes place. I am bullish on gold long term and for a few more weeks, but I do feel as though there will be a multi month correction in the price of gold (Read More) soon so be sure to tighten your protective stops as price moves higher.

SPY ETF Weekly Chart (Two Year View)
The stock market has been hit hard and a lot of damage has also been done to the charts on a technical stand point. The amount of damage and fear that has happening generally takes some time to stabilize and heal before another move takes place. Until Euro-Land resolves some of their major issues the US market will be held hostage and under pressure. So I anticipate several weeks of volatility and wild daily price swings similar to what we saw in July of 2010. This type of trading environment can work very well for options traders (Read More).

Weekly Trading Conclusion:
In short, the market price action is favoring very short term traders (day traders). We are seeing complete price swings which can normally be swing traded happen in just hours… Until we get another extreme setup or stabilization (less big headline news) in the market we will be more of a spectator than a trader to preserve capital.

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What the U.S. Dollar and the Euro Mean to the S&P 500

The buzz around the blogosphere and in the media is that Quantitative Easing II is scheduled to end in around 3 weeks. Already pundits are asking about Quantitative Easing III as a matter of when, not if. In reality a QE III Lite version is already in the cards as the Federal Reserve has stated they will be buying Treasuries and Mortgage Backed Securities (MBS) with maturing issues. The Fed also plans on reinvesting the interest earned from the existing portfolio (Roughly $15 billion/monthly).

When it comes to the application of financial principles, doing the opposite of what everyone else does generally leads to an extreme variation in the overall results. While the results are not always better, they are at the very least significantly different from what most lemmings within the group experience. In every aspect of my financial life I try to do the opposite of what the herd is doing. It takes experience and a significant level of discipline, but buying from the herd when they are selling and being willing to sell into a crowd when they are buying is a great way to trade. It sounds easy, but for most people it is not, myself included.

Right now financial markets are uncertain. I would be remiss if I did not point out the recent strength in the U.S. Dollar Index and the potential higher low that it has carved out on the daily and weekly charts. The weekly chart of the U.S. Dollar Index is shown below:

The current pattern on the U.S. Dollar Weekly chart is bullish. We could see the U.S. Dollar Index trade significantly higher from here as it has been under severe selling pressure for an extended period of time. While I believe technical analysis is just one context through which to view financial markets, it is uncanny how often market cycles and headline events line up. Is it merely a coincidence that the U.S. Dollar is potentially bottoming around the same time the Federal Reserve is ending the QE II asset purchase program?

Regardless of what camp economists are in, we presently live in a strange time for financial markets and capitalism in general. One of the more interesting charts to study is the Euro currency, which in contrast to the U.S. Dollar Index appears to have a more bearish pattern. Could it be that the U.S. Dollar is setting up to rally because of the perceived weakness of the Eurozone? The daily chart of the Euro ETF is shown below:

The Dollar may be firming up here based on the Euro’s weakness and it may have absolutely nothing to do with QE II ending. I always refer to price action and never question Mr. Market’s directional bias. If the U.S. Dollar begins to work higher what impact will it have on equities?

A stronger U.S. Dollar would certainly put pressure on risk assets, specifically equity and commodity prices. As it turns out, we are at an interesting juncture in financial markets at this point in time.

The 4 year stock market cycle is nearing an end, a presidential election will take place in less than 18 months, the U.S. government has a massive debt crisis developing, and the European debt crisis continues to mature in what will likely be a microcosm of what we will face here in the United States. The Middle East remains tense at the very least and the recent OPEC announcement to maintain supply levels has helped support oil prices.

Higher oil prices have obviously slowed down the U.S. economy as the consumer is strapped with higher costs on nearly everything, specifically food and energy. In addition, the unemployment numbers are seemingly not improving and housing appears to be rolling over . . . again.

Almost everywhere we look the news is bleak. Mr. Market has shrugged off bad news time and time again since the March 2009 lows. The long term shorts remain frustrated to say the least and those who were actively shorting along the way have likely been stopped out multiple times. Everywhere I look market commentary is bearish and pundits are talking about additional weakness as they point to a rallying Dollar and multiple economic headwinds facing domestic markets.

Traders and investors should be focused on a few specific price levels on the S&P 500. With the Dollar rallying, the S&P 500 index has remained under extreme selling pressure for multiple weeks. The S&P 500 (SPX) is likely going to test its 200 period moving average. From there I am expecting a bounce higher, although the bounce may be nothing more than a Dead Cat Bounce.

As always, time and price will be the final arbiter but if the Dollar continues to trade higher we could see the S&P 500 lose its 200 period moving average and eventually test a major support level which needs to hold up for the bulls. If the March 16, 2011 pivot lows are taken out to the downside, the next leg of the secular bear market may be under way. The daily chart of the SPX illustrated below shows the key price levels and the potential price action that may lead up to a key test of the March 2011 pivot lows:

Very rarely does the first mouse get the cheese, so I would anticipate a bounce off of the 200 period moving average which currently coincides with the March pivot lows. With not only the pivot lows but the 200 period moving average offering support a breakdown lower will be a large tell about the health and future price action of the S&P 500.

Right now I am just going to focus on how the S&P 500 handles the key support zone illustrated above. The forthcoming price action will tell traders everything we need to know about the health of financial markets. I have no idea if we are about to enter a double dip recession nor do I know whether price action will even test the March pivot lows.

What I do know is that price action in coming days around key support areas is going to be critical. I am convinced that Mr. Market will tell us whether the bullish party will continue or come to an end in the next few weeks/months. A breakdown of the March pivot lows in the future will likely initiate the launch sequence for the next secular bear market. I would keep the S&P 500 1,250 price level on the radar going forward. Risk remains high.

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Phil Flynn: Is Europe Too Big To Fail?

Forget about all of that stellar manufacturing data and jobs data. Ok sure, that may have helped rally the oil yet it was the story that the U.S. stands ready to bail out Europe that sent the dollar falling and the oil on a second wind rally. Reuters News reported that an unnamed US official said the U.S. was prepared to support the European Union’s rescue fund through the International Monetary Fund and the largest contributor is the U.S.. The official said the spread of contagion through the euro region would be a problem for the global economy and because of that I guess the U.S. printing presses are ready to roll.

In other words, it looks like the U.S. just said that we are going to make good on all of Europe’s bad debts and make sure that European citizens can retire when they are 50. Ok maybe they did not say that exactly and they defiantly did not say anything about Europeans retiring when they are 50.( Maybe it was 60) And later the story was denied but don’t you tell that to the investment world because once you make a statement like that it is hard to take it back. Based on the weakness in the dollar after the story broke, it seems the market is convinced that come hell or high water the U.S. will back Europe in their time of economic need.

If the market believes it then there is a lot of pressure on the IMF and the US to make it so. If you don’t think so then you have forgotten the lessons of Fannie and Freddie. They were entities that were supposed to be independent but investors like the Chinese were led to belive that the government sponsored entity was backed by the full faith and credit of the good old American taxpayer. The same taxpayers that we have found out have backed a wide......Read the entire article.


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Crude Oil Declines From Two Year High After Dollar Advances Against Euro

Crude oil retreated from its highest level in two years as the dollar strengthened against the euro, curbing crude’s appeal as an alternative investment. Oil fluctuated as the dollar advanced for a second day against the European single currency. Hedge funds increased bullish bets on oil to the highest level since at least June 2006, data from the U.S. Commodity Futures Trading Commission showed last week. “The dollar is stronger so the oil market may be taking its cue from that,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “The CFTC data from Friday shows that there are still plenty of bulls out there. We could turn at any moment.”

Crude for December delivery was unchanged from Nov. 5 at $86.85 a barrel at 12:52 p.m. on the New York Mercantile Exchange. Oil has gained 12 percent in the past year. Prices jumped 6.7 percent last week, the most since February, as the Labor Department said U.S. payrolls climbed by 151,000 workers in October following a revised 41,000 drop the prior month. New York oil futures reached $87.49 a barrel earlier today, the highest price since Oct. 9, 2008, on an intraday basis. Brent crude for December settlement rose 20 cents, or 0.2 percent, to $88.31 a barrel on the ICE Futures Europe exchange in London.

The world will “have to live with current oil prices,” Qatari Oil Minister Abdullah al-Attiyah said today in Doha. The market isn’t oversupplied with oil, he added. The dollar gained 0.6 percent to $1.3943 per euro from $1.4032 on Nov. 5 in New York. The currency has advanced 1.9 percent since Nov. 4. It rose today amid concern that Ireland will struggle to plug its budget deficit......Read the entire article.


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Stock Market and Commodities Commentary For Monday Evening Oct. 18th

The U.S. stock indexes closed higher today and hit or are near fresh multi month highs. The stock index bulls have the overall near term technical advantage as price uptrends are in place on the daily bar charts. Stock index bulls have been very pleased with price action so far this autumn a time which is normally not favorable to market bulls. My bias is that prices will trade mostly sideways, but with a slight upside bias, into the end of the year.

Crude oil closed up $1.86 at $83.11 a barrel today. Prices closed near the session high today. Trading has become choppy and sideways at the higher price levels. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the October high of $84.43 a barrel.

Natural gas closed down 11.8 cents at $3.417 today. Prices closed near the session low and hit another fresh contract low today. The bears have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $3.80.

Gold futures closed up $0.40 at $1,372.40 today. Prices today closed near the session high after being under profit taking pressure early on. Once again, bargain hunters stepped in to buy weakness in the gold market. The U.S. dollar index backed off its earlier highs today and that also allowed gold prices to move up from daily lows. The gold bulls still have the solid overall near term technical advantage. Prices are still in a 2 1/2 month old uptrend on the daily bar chart.

The U.S. dollar index closed down 10 points at 77.16 today. Prices closed nearer the session low today. Bears still have the solid overall near term technical advantage, as the bulls today could show no follow through strength from gains seen on Friday. There are still no early clues to suggest a market bottom is close at hand.



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Stock Market and Commodities Commentary For Friday Evening Oct. 15th

The S&P 500 index closed lower due to profit taking on Friday as it consolidates below the 87% retracement level of the April-July decline crossing at 1178.21. The mid range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging 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 1148.52 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Wednesday's high crossing at 1180.80. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1160.64. Second support is the 20 day moving average crossing at 1148.52.

Crude oil closed lower due to profit taking on Friday as it consolidates some of the rally off August's low. The low range close sets the stage for a steady to lower opening on Monday. 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 80.62 are needed to confirm that a short term top has been posted. Closes above last week's high crossing at 85.08 are needed to renew the rally off August's low. First resistance is last week's high crossing at 85.08. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support last week's low crossing at 80.98. Second support is the 20 day moving average crossing at 80.62.

Natural gas closed lower on Friday renewing this year's decline. The low-range close sets the stage for a steady to lower opening on Monday. However, stochastics and the RSI are oversold and turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.827 are needed to confirm that a low has been posted. If November extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.827. Second resistance is the reaction high crossing at 4.250. First support is today's low crossing at 3.520. Second support is weekly support crossing at 3.390.

Gold closed lower due to profit taking on Friday as it consolidates some of the rally off July's low. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project if it extends this year's rally into uncharted territory. Closes below the 20 day moving average crossing at 1324.30 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1388.10. First support is the 10 day moving average crossing at 1350.00. Second support is the 20 day moving average crossing at 1324.30.

The U.S. Dollar closed higher due to short covering on Friday and posted a key reversal up. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are oversold, diverging and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 78.66 would confirm that a short-term low has been posted. If December extends the decline off August's high, the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07 is the next downside target. First resistance is the 10 day moving average crossing at 77.61. Second resistance is the 20 day moving average crossing at 78.66. First support is today's low crossing at 76.34. Second support is the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07.

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Stock Market and Commodities Commentary For Thursday Evening Oct. 14th

The S&P 500 index closed lower due to profit taking on Thursday as it consolidates below the 87% retracement level of the April-July decline crossing at 1178.21. The mid range close sets the stage for a steady to lower opening on Friday. At the same time, stochastics and the RSI are overbought, diverging 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 1145.58 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Wednesday's high crossing at 1180.80. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1157.02. Second support is the 20 day moving average crossing at 1145.58.

Crude oil closed lower due to profit taking on Thursday but remains above the 10 day moving average crossing at 83.04. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral signaling that sideways to higher prices are possible near term. Closes above last week's high crossing at 85.08 are needed to renew the rally off August's low. Closes below the 20 day moving average crossing at 80.35 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 85.08. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support last week's low crossing at 80.98. Second support is the 20 day moving average crossing at 80.35.

Natural gas closed lower on Thursday ending a two day short covering bounce off Tuesday's low. The low range close sets the stage for a steady to lower opening on Friday. However, stochastics and the RSI are oversold and turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.860 are needed to confirm that a low has been posted. If November extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.860. Second resistance is the reaction high crossing at 4.250. First support is Tuesday's low crossing at 3.545. Second support is weekly support crossing at 3.390.

Gold closed higher on Thursday as it extends the rally off July's low. The mid-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project as it extends this year's rally. Closes below the 20 day moving average crossing at 1320.00 would confirm that a short term top has been posted. First resistance is today's high crossing at 1388.10. First support is the 10 day moving average crossing at 1345.40. Second support is the 20 day moving average crossing at 1320.00.

The U.S. Dollar closed lower on Thursday renewing the decline off August's high. The mid-range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold, diverging but are turning neutral signaling that additional weakness is possible near term. If December extends the decline off August's high, the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07 is the next downside target. Closes above the 20 day moving average crossing at 78.88 would confirm that a short term low has been posted. First resistance is the 10-day moving average crossing at 77.72. Second resistance is the 20 day moving average crossing at 78.88. First support is today's low crossing at 76.48. Second support is the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07.

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Phil Flynn: Can Rising Commodity Prices Derail QE 2?

The odds of quantitative easing continues to go up almost as fast as corn prices as the Fed Minutes confirmed that the Fed is getting ready to run the printing presses. The FOMC is worried that, “the recent and anticipated progress toward meeting the Committee’s mandate of maximum employment and price stability to be unsatisfactory”.

The Fed says that economic data had been mixed, with readings early in the period generally weaker than anticipated but the more recent data coming in on the strong side of expectations. So, “in light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus” But that they would consider it appropriate to take action soon.”

How soon? While the Fed is talking about more purchases of securities, European Central Bank Governing Council member Axel Weber is talking about an exit stagy. He said that the European Central Bank should stop its bond purchase program while our Fed is talking about stepping it up thus creating the potential for a larger wedge between the Euro and the dollar and a continuing spike in commodity prices......Read the entire article.


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Crude Oil Decline as Dollar Strengthens Against the Euro and Yen

Crude oil fell for a second day after the dollar strengthened, reducing the appeal of commodities as an investment, and as Saudi Arabia signaled that OPEC may leave oil production quotas unchanged. The dollar yesterday climbed from an eight month low against the euro and a 15 year low to the yen. The currency had retreated earlier on speculation the Federal Reserve will signal it’s willing to buy more government debt to spur economic growth.

OPEC may leave oil production quotas unchanged when it meets this week after Saudi Arabian Oil Minister Ali al-Naimi described the market as “very well balanced,” and said an oil price between $70 and $80 a barrel is “ideal.” “The dollar is so heavily sold at the moment, creating the opportunity for a bit of strength in the dollar and softness in oil,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said by phone. “You would be leaning toward a softer oil price this week.”

Crude for November delivery fell as much as 66 cents, or 0.8 percent, to $81.55 a barrel on the New York Mercantile Exchange, and was at $81.62 at 12:14 p.m. Singapore time. Yesterday, prices lost 0.5 percent to $82.21. Futures last week recorded a third consecutive weekly gain, the longest stretch since June. Brent crude for November settlement declined as much as 0.8 percent to $83.07 a barrel. The contract slipped 31 cents, or 0.4 percent, yesterday to $83.72 on the ICE Futures Europe exchange in London......Read the entire article.


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Commodity Corner: Weaker Dollar, Surging Equities Propel Dollar

Light, sweet crude for November delivery ended the day on a five month high Tuesday after the dollar weakened and equities markets surged. Crude futures settled at $82.82 a barrel Tuesday on the New York Mercantile Exchange, a $1.35 increase from the previous day. Oil prices tend to correlate with the dollar's relationship to the euro nowadays. On Tuesday the dollar lost ground against euro, supporting oil prices.

The dollar also plummeted against the yen Tuesday. Japan's Central Bank reported that it would cut benchmark interest rates to almost zero in an effort to boost that country's economy. By expanding its liquidity measures, growth oriented assets such as stocks and commodities become cheaper for investors to buy.

The Dow Jones Industrial Average increased more than 200 points in afternoon trading while both NASDAQ and S&P 500 rose more than two percent. Additionally, the disruption in crude shipments in the Houston Ship Channel and the strike at French terminals have also contributed to the increase in oil prices.

November crude oil fluctuated within a range from $81.15 to $82.99.

Henry Hub natural gas futures continued to weaken Tuesday as stockpiles remain abundant and mild weather lingers. Traders anxiously await the upcoming heating season, when cooler temperatures will increase demand for gas heating and hence natural gas fired electricity. Natural gas ended Tuesday's trading session at $3.74 per thousand cubic feet, up a penny from Monday. Natural gas traded from $3.69 to $3.78.

The reformulated gasoline blendstock futures price for November rose to $2.13 a gallon, a 4 cent improvement from Monday and its highest level since Aug. 5. Gasoline prices peaked at $2.13 and bottomed out at $2.08.

Courtesy of The Commodity Corner, Rigzone.Com

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Crude Oil Falls for Second Day as Dollar's Gain Dims Appeal of Commodities

Crude oil fell the most in a week as the euro tumbled against the dollar on speculation that Europe’s debt crisis may worsen. Oil dropped as much as 2.6 percent after German factory orders unexpectedly declined in July, causing the euro to weaken the most since Aug. 11. Equities declined, ending the Standard & Poor’s 500 Index’s longest winning streak since July, on concern the European situation will delay the global economic recovery.

“The euro’s broken down and the dollar’s gotten stronger,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “That’s helping to put some pressure on oil.” Crude for October delivery lost 60 cents, or 0.8 percent, to $74 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, it touched $72.63 a barrel, the biggest single day decrease since Aug. 31. Prices have dropped 6.8 percent this year.

U.S. oil markets were closed yesterday for the Labor Day holiday. Yesterday’s electronic transactions will be booked with today’s trades for settlement purposes. The euro fell 1.3 percent against the dollar to $1.2707 from $1.2876 yesterday, curbing the appeal of commodities as an alternative investment. The euro has declined 1.5 percent since Sept. 3. The S&P 500 lost 0.8 percent to 1,096.24, snapping a four day rally. The Dow Jones Industrial Average fell 72.73 points, or 0.7 percent, to 10,375.20.

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We Follow Up on Last Week's Euro Video

Earlier this week we produced a video on the Euro, Is the Euro on Shaky Ground?, making a case that the currency was very close, if not at its highs. Since then, we have had two significant events fall into place which made the dollar skyrocket against the euro.

This new video shows you exactly what transpired and where we are so far this week. We think you'll find it interesting and informative.

As always this video is free to watch and there is no need for registration. We would appreciate that if you have comments on this market that you please leave them for everyone to see.


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New Video: Is the Euro on Shaky Ground?

In this short video we take an in depth look at the euro and its relationship to the US dollar. The recent sharp rally in the euro, up from the 1.19 level, may be coming to an end.

We look at several indicators that are close to confirming that this market may be set to head lower.

As always our videos are free to watch and there is no need for registration.

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Phil Flynn: Dodge A Bullet

Tropical storm Alex most likely won’t be much of a problem for BP as its track is far south of the spill zone. Now let’s just hope that another storm does not develop. A second tropical wave dissipated and that is good news as it appears that BP may have dodged a bullet and can continue to collect oil and make progress on moving forward with the relief well.

The Wall Street Journal reports that BP said it recovered 22,750 barrels of oil on Saturday yet at the same time they do not expect to complete the relief well until early August. The question is will it work. The Financial Times says that the operation has no precedent at the depth that BP is operating, but a review of similar efforts in shallower waters and the opinion of geologists and petroleum engineers point to a discomforting possibility: the relief well might not work on the first try, leaving open the risk of delays. Delays that could turn out to be worst as hot air in the Atlantic could produce more storms.

Speaking of hot air, the G-20 met over the weekend and the world’s 20 most wealthy nations and their commitment to debt reduction and banking reform may have more influence over oil than the weather. The G-20 said that they plan to follow through on fiscal stimulus and communicating “growth friendly” fiscal consolidation plans for advanced countries that will be implemented going forward. The G-20 says that sound fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks, ensure the capacity to meet the challenges of aging populations, and avoid leaving future generations with a legacy of deficits and debt. The path of adjustment must be carefully calibrated to sustain the recovery in private demand.

They will commit to reducing debt. The G-20 said that there is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth. Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016. For the crude oil market the impact from the G-20 is apparent.

It will have as much impact on oil as it does on the euro and the dollar. Oil broke when the dollar broke and the euro rallied leaving it clear today where oil will take its marching orders from. Watch the currencies for the oil direction. And since the currency action will probably be light, it should be a good day to buy the breaks and sell the rallies.

Phil can be reached @ pflynn@pfgbest.com and make sure to catch him every day on the Fox Business Network

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Sure, we are Trading Oil....But Forex Should not be Foreign to You....Watch New Video

It's the biggest market in the world and is traded 24 hours a day, 6 days a week, and therefore one that is impossible to ignore. I'm speaking, of course, about the forex market.

The question is, is this the tail that's wagging the dog? Meaning, is the forex market, mainly the euro, dictating the trend in American and European equity markets.

The answer is yes, for the moment it is. Now, if you're not familiar with the forex markets and the euro, you should look at the ETF FXE, the spot euro, and also the euro futures market at the Chicago Mercantile Exchange (CME), as they are all tradable.

In today's short video we show you exactly how we think this currency will play out in the future. And as always, our videos are free to watch and there is no need for registration. Please leave us a comment on your thoughts on this video and the current market.


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Crude Oil Advances Above $75 a Barrel Before Inventory Report

Crude oil rose to a one month high in New York as the euro gained against the dollar, bolstering the appeal of commodities, and on forecasts that a government report will show U.S. supplies fell for a third week. Oil climbed as much as 2.1 percent after the 16 nation currency strengthened, following increases in global stock markets. U.S. crude oil inventories probably declined 1 million barrels in the week ended June 11, according to the median of 13 analyst responses in a Bloomberg News survey.

“The euro is higher and oil is following,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “There’s been a very strong correlation between currencies and oil recently.” Crude oil for July delivery rose $1.51, or 2 percent, to $76.63 a barrel at 11:05 a.m. on the New York Mercantile Exchange. Oil touched $76.70, the highest level since May 12. Futures are up 8.5 percent from a year ago.

Brent crude oil for July settlement climbed $1, or 1.3 percent, to $76.20 a barrel on the London based ICE Futures Europe exchange. The July contract expires today. The more active August futures increased $1.15, or 1.5 percent, to $76.81 a barrel. The euro strengthened to $1.2316, up 0.8 percent from $1.2221 yesterday. The currency touched $1.1877 on June 7, the lowest level since March 2006, on concern that the debt crisis in Greece will spread to other countries in the region.

“The bulls are trying to move oil higher, and they’ve been getting intermittent support from the euro and dollar,” said Peter Beutel, president of energy adviser Cameron Hanover Inc. in New Canaan, Connecticut.....Read the entire article.


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Crude Oil Falls for Third Day on Concern Slower Growth to Cut Fuel Demand

Oil fell for a third day as Chinese equities dropped, highlighting concerns about flagging fuel demand in the world’s second largest crude user, and as the euro fell against the dollar, limiting the appeal of commodities. Oil gave up earlier gains as China’s Shanghai Composite Exchange slumped to a 13 month low on concerns about banks’ abilities to raise funds. The country’s manufacturing index yesterday showed less than expected growth. The euro declined for a second day following reports yesterday European unemployment reached a 12 year high in April.

“The market is very sensitive to any news right now,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “The dollar and euro exchange has been very volatile so that translates to the oil price. The soft euro will impact the dollar and that will hurt China’s export sector.” Crude oil for July delivery dropped 50 cents, or 0.7 percent, to $72.08 a barrel at 12:38 p.m. Singapore time on the New York Mercantile Exchange. Prices have swung between gains of 0.5 percent and losses of as much as 1.1 percent today.

Yesterday, the contract lost $1.39, or 1.9 percent, to $72.58. Futures fell 14 percent in May. The euro retreated as much as 0.3 percent today after hitting a four year low of $1.2111 yesterday. It was at $1.2191 at 12:39 p.m. Singapore time.
China’s purchasing manager’s index declined to 53.9 in May from 55.7 in the previous month. It fell short of a median 54.5 estimate from 18 economists surveyed by Bloomberg News. A gauge of manufacturing in the 16 member euro region declined to 55.8 from 57.6 the previous month, London based Markit Economics said.....Read the entire article.

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