Phil Flynn: You've Got A Friend

When your down and troubled and you need a helping hand and nothing oh nothing is going right. Just close your eyes and think of Ben and soon he will be there to brighten even your darkest night. You’ve got a friend! The Fed has been the oil bull best friend but is that friendship going to start to become a little strained. With a better than expected jobs report and dissension within the committee the possibility of laying the groundwork for change is in the language in the much debated Fed Statement is rising. Let’s face it oil has been dependant on Fed policy and for all intents and purposes it has been a one sided relationship.

Now with the Fed feeling pressure to change the language about rates staying low for an extended period oil bulls may have their dreams of $85 or $90 dollar barrel oil squashed despite the illusion of their peak oil fantasies. Oh yes there are some that are betting on a change in the language even though the majority think things will not change but any hint of a softening in Fed resolve will be a big blow to oil bulls.

Oil broke the sharp intermediate uptrend and despite the fact that the move on a short term bias makes us look oversold and on target for an attempt at a recovery rally at least on a day trade basis the truth is that without more help by the Fed the oil bulls have failed to break out of the wider trading range with the highs established earlier this year. With the cheaters in the OPEC cartel beginning to meet and the Chinese more than likely to raise reserve requirements on their banks (assuming their egos and politics do not get in the way) the bulls will need a friend in Ben if they are going they have the fortitude to take oil to the next level If not then repeated failures to take out the mid eighties we will then eventually go and test the lower end of the range. Does this sound familiar?

The other help to the bulls may come from the Chinese. Now that President Obama has politicized the Chinese’s currency peg to the dollar in the eyes of the Chinese it makes it less likely that they will let the Yuan float .The Chinese says in effect that the policy of devaluing our currency to improve our competitive advantage. Well they might have a point if it were not for the fact the china pegged their currency to the dollar when the dollar was strong as well. The AFP reports that China on Tuesday dismissed calls from US lawmakers for Beijing to be labeled a currency manipulator, saying the value of the Yuan was not to blame for global trade imbalances. The comments echoed those by Premier Wen Jiabao at the weekend, who said Beijing would not yield to foreign pressure to allow the Yuan to appreciate, and warned other countries to stop "finger-pointing".

The AFP says that on Monday, a group of 130 Democratic and Republican lawmakers called on US Treasury Secretary Timothy Geithner to single out China's Yuan policy in a report due next month, saying Beijing was in effect subsidizing exports. "The impact of China's currency manipulation on the US economy cannot be overstated," the lawmakers said in the letter submitted to Geithner and US Commerce Secretary Gary Locke."Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors." us Chinese commerce ministry spokesman Yao Jian said the strong Yuan, effectively pegged to the dollar since mid-2008, was not the reason for China's trade surplus.


Energy analyst Phil Flynn can reached at pflynn@pfgbest.com


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Crude Oil Daily Technical Outlook For Tuesday

With 4 hours MACD crossed below signal line again, an intraday top is in place at 80.51 and bias is turned neutral. Some consolidations could be seen, with risk of retreat to 4 hours 55 EMA (now at 77.40). But downside should be contained above 75.69 support and bring another rise. Above 80.51 will target a retest on 83.95 high. However, note that Break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support is now needed to indicate that crude oil has topped out.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Secrets of the 52 Week High Rule

From guest blogger Adam Hewison.....

Over 30 years ago I learned from a very successful trader, a trade secret I’ve never shared on the web before. In fact, I only shared this trading secret with a few friends during that time.

I learned this trading secret from a trader named Bill… I am keeping his last name private as Bill is a very low key guy and shuns any publicity.

Using his special trading technique, Bill made millions and millions of dollars from his office. Now for the first time, I am going to share with you the exact same technique that Bill used so successfully for so many years. The best part is that this technique is still working more than 30 years after I learned about it. Now it’s time for the next generation of traders to learn Bill’s secret.

Bill didn’t even have a name for this killer trading technique. I named
it “The 52 week new highs on Friday rule”.

Just click here to learn this trading secret and please take a minute to leave a comment and let us know what you think.

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