Crude Oil Bulls Hold The Near Term Advantage

Crude oil closed higher on Thursday while extending the trading range of the past seven days. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off this month's low, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 89.04 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32. Second resistance is the 62% retracement level of the May-October decline crossing at 100.08. First support is the 20 day moving average crossing at 89.04. Second support is the reaction low crossing at 83.40.


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Crude Oil, Gold and Natural Gas Market Commentary For Friday Morning

Crude oil was lower due to light profit taking overnight but remains above the 38% retracement level of the May-October decline crossing at 90.56. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short term gains are possible.

If December extends this month's rally, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 86.22 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32 Second resistance is the 62% retracement level of the May-October decline crossing at 100.08

Crude oil pivot point for Friday morning is 92.98

First support is the 10 day moving average crossing at 89.61
Second support is the 20 day moving average crossing at 86.22

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Natural gas was higher due to short covering overnight while extending this month's trading range. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If December renews this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the reaction high crossing at 4.039 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 4.039
Second resistance is the 25% retracement level of the June-October decline crossing at 4.133

Natural gas pivot point for Friday mornings trading is 3.774

First support is Thursday's low crossing at 3.724
Second support is monthly support crossing at 3.225

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Gold was lower due to light profit taking overnight but remains above the 50% retracement level of September's decline crossing at 1729.40. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If December extends the aforementioned rally, the 62% retracement level of September's decline crossing at 1775.20 is the next upside target. Closes below last week's low crossing at 1604.70 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 1754.00
Second resistance is the 62% retracement level of September's decline crossing at 1775.20

Gold's pivot point for Friday morning is 1735.40

First support is last week's low crossing at 1604.70
Second support is September's low crossing at 1535.00


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Crude Oil Opens Tuesday Trading Higher

Crude oil was sharply higher in Monday evenings overnight session as it extends this month's rally. Stochastics and RSI are overbought, diverging but are turning bullish. If December extends this month's rally, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target.

Closes below the 20 day moving average crossing at 84.57 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32
Second resistance is the 62% retracement level of the May-October decline crossing at 100.08

First support is the 10 day moving average crossing at 87.72
Second support is the 20 day moving average crossing at 84.57

Crude oil pivot point for Tuesday morning is 90.05


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Crude Oil Closes The Week in Overbought Mode

Crude oil closed higher on Friday and above the May-July downtrend line crossing near 87.33. The mid range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought 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 83.57 are needed to confirm that a short term top has been posted. If December extends the rally off this month's low, the 38% retracement level of the May-October decline crossing at 90.65 is the next upside target.

The crude oil market continues to mirror the action in the equity markets. The highs seen on Wednesday in the December contract at $89.69 a barrel remains to be taken out if this market is going to move higher. With mixed Trade Triangles and a Chart Analysis Score of +55, there is no clear cut direction for this market at the moment.

Crude oil is very overbought on the Williams % R indicator. We would not rule out a pullback to the $80 a barrel level, which would represent a 61.8% Fibonacci retracement. Our long term Trade Triangle continues to be negative and we expect it will once again dictate the tone of this market. Intermediate term traders should be on the sidelines and long term traders should continue to be short the crude oil market.


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Gold, Crude Oil and Natural Gas Trading Numbers For Tuesday Morning

Crude oil opened lower Tuesday morning as it consolidates below the May-July downtrend line crossing near 87.11. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

Multiple closes above the aforementioned downtrend line would confirm a trend change while opening the door for a possible test of the 38% retracement level of the May-October decline crossing at 90.65. Closes below the 20 day moving average crossing at 82.61 are needed to confirm that a short term top has been posted.

First resistance is the aforementioned downtrend line crossing near 88.40.
Second resistance is the 38% retracement level of the May-October decline crossing at 90.65.

First support is the 20 day moving average crossing at 82.61.
Second support is this month's low crossing at 74.95.

Crude oil pivot point for Tuesday mornings trading is 86.81.

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December gold opened lower as it consolidates some of the rally off September's low. Stochastics and the RSI are overbought but remain neutral to bullish hinting that a short term low might be in or is near. Closes above last

Wednesday's high crossing at 1693.90 are needed to confirm that a short term low has been posted. If December renews the decline off September's, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target.

First resistance is Monday's high crossing at 1696.80. Second resistance is the 50% retracement level of September's decline crossing at 1729.40.
First support is September's low crossing at 1535.00.
Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20.

Golds pivot point for Tuesdays trading is 1679.60.

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Natural gas was lower overnight as it consolidates around the 20 day moving average crossing at 3.671. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

Multiple closes above the 20 day moving average crossing at 3.671 are needed to confirm that a short term low has been posted. If November renews this year's decline, monthly support crossing at 3.225 is the next downside target.

First resistance is the 25% retracement level of the June-October decline crossing at 3.859.
Second resistance is the reaction high crossing at 3.926.

First support is last Thursday's low crossing at 3.446.
Second support is monthly support crossing at 3.225.

Natural gas pivot point for Tuesday morning is 3.702.


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Gold, Crude Oil and Natural Gas Numbers For Monday Morning Trading

Crude oil was higher overnight and is challenging the May-July downtrend line crossing near 88.40. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

Multiple closes above the aforementioned downtrend line would confirm a trend change while opening the door for a possible test of the 38% retracement level of the May-October decline crossing at 90.65. Closes below the 20 day moving average crossing at 82.90 are needed to confirm that a short term top has been posted.

First resistance is the aforementioned downtrend line crossing near 88.40
Second resistance is the 38% retracement level of the May-October decline crossing at 90.65

First support is the 20 day moving average crossing at 82.90
Second support is this month's low crossing at 74.95

Crude oil pivot point for Monday morning is 86.00

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Natural gas was higher overnight as it extends last Friday's rally above the 20 day moving average crossing at 3.685. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Multiple closes above the 20 day moving average crossing at 3.685 are needed to confirm that a short term low has been posted. If November renews this year's decline, monthly support crossing at 3.225 is the next downside target.

First resistance is the 25% retracement level of the June-October decline crossing at 3.859 Second resistance is the reaction high crossing at 3.926

First support is last Thursday's low crossing at 3.446
Second support is monthly support crossing at 3.225
Natural gas pivot point for Monday morning is 3.653

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Gold was slightly higher overnight as it extends the rally off September's low. Stochastics and the RSI remain bullish hinting that a short term low might be in or is near. Closes above last Wednesday's high crossing at 1693.90 are needed to confirm that a short term low has been posted.

If December renews the decline off September's, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target.

First resistance is the overnight high crossing at 1696.80
Second resistance is the 50% retracement level of September's decline crossing at 1729.40

First support is September's low crossing at 1535.00
Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20
Gold pivot point for Monday morning is 1677.00

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Adam Hewison: Harrisburg, PA. Seeks Bankruptcy..... Is America Next in Line?

It’s not difficult to believe that Harrisburg Pennsylvania is filing for bankruptcy with overwhelming debt of almost half $1 billion. It shows once again that politicians have no clue when it comes to spending money, particularly when it’s someone else’s money.

The question we must all ask ourselves is what’s next? In our home state of Maryland we have $20 billion unfunded liability for entitlements. I’m sure it’s the same across the country. We have had reckless politicians spending too much money and not being held responsible for when things go wrong. It was interesting to see what was happening in the Ukraine, where they’re jailing their former prime minister, Yulia Tymoshenko, to a seven year jail term for abuse of power during term as prime minister.

Just imagine how that would play out in other countries, including the United States. It certainly would make politicians think before committing and spending money that we don’t have. At the moment, no one is held responsible.

It also looks like the politicians in the Euro Zone have kicked the can down the road. This just moves the financial disaster to future generations. No one politician wants to assume responsibility for the incredible amount of future debt they are creating. What does this all have to do with the markets?

We will rely on our Trade Triangle technology to keep us in the loop and in the markets at the right time.

Let's check out the action in the crude oil markets today.....

With both weekly and monthly Trade Triangles in place, we see little enthusiasm to go long this market at the present time. Presently this market is overbought and we expect to see a pullback from current levels. As you know this market has been closely tied in to the movements of the S&P 500. Overall we still view the trend in this market as negative. Intermediate and Long term traders should continue to be short the crude oil market. Please note that we are switching to the December contract for crude oil.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 65

November crude oil posted an inside day with a slightly lower close on Wednesday as it consolidated some of the rebound off last week's low. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to lower prices are possible near term. If November extends the rally off last week's low, September's high crossing at 90.69 is the next upside target. Closes below the 10 day moving average crossing at 81.64 would temper the near term friendly outlook.

First resistance is September's high crossing at 90.69.
Second support is July's high crossing at 101.39.

First support is the 20 day moving average crossing at 82.95.
Second support is the 10 day moving average crossing at 81.65.

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Crude Oil, Natural Gas and Gold market Commentary For Thursday Oct. 6th

Crude oil was higher overnight due to short covering as it rebounds off Monday's low. 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 83.64 are needed to confirm that a short term low has been posted. If November extends this year's decline, the 75% retracement level of the 2009-2011 rally crossing at 72.20 is the next downside target.

First resistance is the 20 day moving average crossing at 83.64. Second resistance is the reaction high crossing at 84.77. First support is Monday's low crossing at 74.95. Second support is the 75% retracement level of the 2009-2011 rally crossing at 72.20. Crude oil pivot point for Thursday morning trading is 78.84.

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Natural gas was lower overnight as it extends the decline off June's high. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If November extends the aforementioned decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.826 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 3.707. Second resistance is the 20 day moving average crossing at 3.826. First support is the overnight low crossing at 3.531. Second support is monthly support crossing at 3.225. Natural gas pivot point for Thursday morning is 3.605.

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December gold was higher in overnight trading as it extends the trading range of the past seven days. Stochastics and the RSI have turning bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1718.60 are needed to confirm that a short term low has been posted. If December renews this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target.

First resistance is Monday's high crossing at 1681.50. Second resistance is the 20 day moving average crossing at 1718.60. First support is last Monday's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20. Gold pivot point for Thursday morning is 1629.00.


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J.W. Jones: Is The S&P 500 on the Verge of a Big Rally

Only 5 short months ago the S&P 500 was trading at the 2011 highs around the 1,370 price level on the S&P 500 Index. Since then, the price action has devastated investors and traders alike. As of the close on Monday, the S&P 500 had worked over 270 handles lower in 5 months. The price action since September 27^th has been a bloodbath.

It is true that the S&P 500 could be carving out a double bottom on the daily chart, but I am of the opinion that there may be more work to do to the downside. We are oversold on the daily and weekly price charts, but I have yet to see the kind of panic level selling that typically precedes a price reversal. The chart below illustrates the number of stocks that are currently trading above the key 50 period moving average:



While most market participants are concerned about a trap door that causes prices to cascade lower, I am concerned that at some point news will come out that could rip the bears’ faces off. The majority of retail investors are running for cover. The sentiment levels are decidedly bearish and the last thing most traders are looking for is a rally. The contrarian trader in me cannot deny that a rally would do a lot of damage in the near future, but Mr. Market needs to suck in a few more bears in order to do the most harm.

One sound bite out of Europe could alter the price action almost instantly in favor of the bulls. The ECB could suddenly cut interest rates or announce that Eurobonds are going to be made available. Either two headlines or a combination of both headlines would most likely drive prices significantly higher.

After the nasty downside probe today, there are layers of buy stops above current price levels. If price worked high enough, the stops would be triggered and an all out rally could play out. Anything coming out of the Eurozone that appears to be either stimulative or that appears to push an ultimatum out on the time spectrum will be viewed as positive.

Often news and price action play out together at key support/resistance levels and it would make sense that some form of announcement will be made when the S&P 500 price is sitting right at a long term support level. As can be seen from the weekly chart of the S&P 500 Index ($SPX) below, the 1,008 – 1,050 price level is of critical importance.



The primary support levels I am watching on the S&P 500 if it continues lower are the 1,080 price level which should act as short term support. If that level breaks the 1,050 area will become a major support level that bulls will likely defend fervently. Additional long term support will come in around 1,008. I would be shocked to see the S&P 500 push through both the 1,050 and the 1,008 price level on the first attempt, but stranger things have happened.

If price works down to the 1,008 – 1,050 support zone it would not be shocking to see a strong reversal higher. With the recent carnage we have seen in the S&P 500, I find it hard to believe that we could see another 10 – 15% more downside before a reversal plays out. The 1,008 – 1,050 price zone seems ripe for a test, but one other scenario would be a test of the 1,080 support zone that fails intraday and by the close is regained. The chart below illustrates the two most probable scenarios:



Financial markets do not offer a sure thing, however it is without question that bulls will aggressively defend the 1,008 – 1,050 price level on the S&P 500. If that level fails, the price action is going to get far worse and an all out crash could be underway. For now, I am of the opinion we are within 7% – 8% of an intermediate term bottom which could produce a strong multi month rally into the holiday season.

As always anything could happen, but traders need to keep their eye on both sides of the price action. A rally would do a lot of damage to the bears as well as the under invested retail traders and investors. Ultimately the price action is in the hands of Mr. Market, but it is a well known fact that Mr. Market likes to trap traders and inflict pain on as many market participants as possible. A forthcoming rally  would offer yet another opportunity for a lot of traders to eat another slice of humble pie.

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Crude Oil Market Commentary For Monday October 3rd

Crude oil is trading lower this morning as it extends the trading range of the past two months. Traders are all but convinced that Greece will default on debt payments, leading the way to slower global economic growth and less demand for fuel. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are still possible near term.

If November extends last week's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 85.13 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 81.89. Second resistance is the 20 day moving average crossing at 85.13. First support is last Monday's low crossing at 77.11. Second support is August's low crossing at 76.61. If crude cannot hold the 75.71 level we see a quick move to the psychological 70 dollar level. Crude oil pivot point for Monday morning is 80.32.


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Commodities Collapse as Fed Operation Twist Sends Oil to 4 Week Low

No surprise to us, the Feds operation twist has failed to lift market sentiment and it's showing in any commodity that trades against the dollar. Crude oil was sharply lower in the overnight session as it extends this week's breakout below August's uptrend line. Stochastics and the RSI are bearish signaling that lower prices are likely near term.

So now we shift our focus to the Eurozone. Greece announced a new round of austerity measures. Pensions above 1200 euro will be cut by -20%, pensions paid to those younger than 55 will be trimmed by 40% for the amount exceeding 1000 euro and wages will be reduced for 30,000 state employees. While fiscal consolidation accelerates, protests also intensify. Public services will be suspended for 24 hours in Athens today. Flights to and from the Athens International Airport will also be disrupted as staff walk out for 3 hours proving that getting the Greek public to play along and play nice will prove near impossible.

If crude oil extends this week's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 87.58 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 87.58. Second resistance is last Tuesday's high crossing at 90.60. First support is the reaction low crossing at 79.76. Second support is August's low crossing at 76.61. Crude oil pivot point for Thursday morning trading is 86.19.

Oil N' Gold: Crude Oil, Natural Gas, Gold and Silver Market Commentary

Crude Oil posted an inside day with a higher close on Tuesday as it consolidated some of Monday's decline but remains below August's uptrend line crossing. The high range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI have turned bearish signalling that sideways to lower prices are possible near term.

Natural Gas closed lower on Tuesday as it extends the decline off last week's high. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near term. If it extends this summer's decline, monthly support crossing is the next downside target. Closes above the 20 day moving average crossing would signal that a short term low has been posted.

Gold posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. If it renews this year's rally into uncharted territory, upside target are hard to project.

Silver posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the July-August uptrend line crossing. The high-range close set the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. Closes above the 20 day moving average crossing would temper the near term bearish outlook.

Crude Oil Markets Welcome Ben and Irene over for Friday Trading

Crude oil was slightly lower in Thursday overnight trading as traders watched Hurricane Irene bear down on North Carolina threatening at least 10 oil refineries. But traders seemed to be more concerned with overall demand and how Ben Bernanke will spin the markets from Jackson Hole Wyoming today.

We are giving the oil bulls a slight near term advantage as the Stochastics and RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 89.19 are needed to confirm that a short term low has been posted. If October renews the decline off May's high, the 75% retracement level of the 2009-2011 rally crossing at 71.73 is the next downside target.

First resistance is the 20 day moving average crossing at 86.27. Second resistance is the reaction high crossing at 89.19. First support is last Friday's low crossing at 79.38. Second support is this month's low crossing at 76.15. Crude oil pivot point for Friday morning trading is 84.96.

Crude Oil Bulls Struggle to Gain Momentum in Thursdays Session

Crude oil closed lower on Thursday as it consolidates some of this week's rally. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are bullish hinting that a low might be in or is near.

But the bulls have a lot of work ahead of them as closes above the reaction high crossing at 89.19 are needed to confirm that a low has been posted. If October renews this summer's decline, the 75% retracement level of the 2009-2011 rally crossing at 71.72 is the next downside target.

First resistance is the 20 day moving average crossing at 86.82. Second resistance is the reaction high crossing at 89.19. First support is this month's low crossing at 76.15. Second support is the 75% retracement level of the 2009-2011 rally crossing at 71.73.

Warren Buffett and Lower Inventories Boost The Markets

Crude oil prices were rallying this morning as news of Warren Buffett buying 5 billion dollars worth of troubled Bank of America preferred stock hit the news wires. Rumors were already supporting the markets as traders suspect Federal Reserve Chairman Ben S. Bernanke may announce steps to boost the economy in his speech tomorrow from Jackson Hole.

Crude oil was slightly higher in overnight trading as it extends this week's short covering bounce. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 89.19 are needed to confirm that a short term low has been posted. If October renews the decline off May's high, the 75% retracement level of the 2009-2011 rally crossing at 71.73 is the next downside target.

First resistance is the 20 day moving average crossing at 86.85. Second resistance is the reaction high crossing at 89.19. First support is last Friday's low crossing at 79.38. Second support is this month's low crossing at 76.15. Crude oil pivot point for Thursdays trading is 85.43.

Dave Blais: History Suggests Gold is Topping Out Soon

Today The Crude Oil Trader would to introduce Dave Blais. David recently left a six-figure salary to trade the markets full time since his real passion is gold and silver stocks. We have great respect for Dave’s insights, and the fact he backs up his insights and philosophies with his own money. Here's what Dave is thinking this week........

Gold has been on an upward tear lately – no surprise given the uncertainty over how the western world will deal with its debt. What could be a surprise for investors (but mostly traders) is that history suggests the odds are high that gold will top for the year sometime in the next three weeks.

A feature of the current gold strength is it is happening in the heart of summer, a time when gold is usually weak. Though rare, this "out of season" strength in gold has happened before. When it does, something interesting occurs, gold makes a top that will not be bettered for the rest of the year, in August or early September.

In the last 30 years, gold has had only two summers with the type of outsized gains gold is making this summer (a rise of about 20 percent or more). In both cases, gold topped out for the year on either side of Labour Day.

In 1982, gold had a surprisingly strong summer – rising more than 50 percent – and gold topped for the year in early September. The news then driving the gold price was the threat of a Mexican debt default … sound familiar?

In 1990, gold had another unusually strong run in the summer and was up almost 20 percent, which is closer in magnitude of the current rise (up about 22 percent when gold briefly topped $1800). That summer run in 1990 topped out in late August, and gold did not exceed that top during the rest of that year.

In 1990, gold had another unusually strong run in the summer and was up almost 20 percent, which is closer in magnitude of the current rise (up about 22 percent when gold briefly topped $1800). That summer run in 1990 topped out in late August, and gold did not exceed that top during the rest of that year.

There are other factors hinting gold will need to take a breather soon.


Of note, the gold mining shares are not confirming this rise in gold. Take the bellwether gold mining stock Newmont Mining for example. As of this writing, Newmont is still wellbelow the high of $65.50 it made last year, even as gold is hitting new record highs day after day. This is a potential warning called "divergence" that should not be ignored.

Overall, Canaccord Genuity research shows that the senior and intermediate gold stocks in their coverage universe are discounting a gold price of $1,409 per ounce.

Then there is the curious chart for gold that is making what looks like a “blow-off” top.

The current chart formation for gold is eerily similar to that of silver’s chart when it went into a terminal rise earlier this year. That steep rise in silver quickly gave way to a punishing decline that knocked some 30 percent off the silver price in a matter of days. In turn, the stocks of silver miners were pounded.



These types of blow-off tops are usually not sustainable – and they don’t tend to end well because of what causes them. The rapid rise we are seeing now appears to be fuelled in part by a “short squeeze."

Fundamentals like the debt crises in Europe or the recent downgrade of US debt can explain some of the factors behind the rise, but the news is not the sole cause of this fast, wild part of the current rise.

Wrong-footed traders who made a mistake by going short (betting on a decline in price) in a big way– are being forced to buy back gold to close (or “cover”) their short positions that have gone horribly wrong as gold relentlessly rises. Their urgent buying of gold to close their short positions (and cut their losses) causes the gold price to rise further, causing more shorts to cover in panic, creating a feedback loop, and a price spike, that may quickly exhaust itself.

That a short squeeze has been evident in the gold market lately, in particular, after gold recently broke above $1680, has been noted by some market watchers who monitor the trading of gold future contracts. Ed Steer, who publishes Ed Steer’s Gold and Silver Daily for Casey Research, commented in his August 13 bulletin: “the open interest numbers were indicating for the reporting week, the rally in gold was pretty much all caused by short covering.”

Short squeezes tend to end abruptly when the short covering finally exhausts itself.

If gold does turn tail soon, how far could it fall? A good target for a drop is the area that has held anytime gold has declined during the last two and a half years, its 150 day moving average. Currently gold’s 150 day moving average stands just below $1500/ounce.

History is a guide, not a bible.  But there are some recent and longer term charts that suggest the gold price could top out in the next few weeks. And of course, long time gold followers know it's just at times like these, when excitement is running high, and everybody thinks they know what to expect that gold turns tail, and breaks the hearts, and wallets,  of the unwary.

How Many Times Have we Seen This Movie.....Goldman Sachs says Oil Going Much Higher!

Analysts from Goldman Sachs are declaring that oil prices will likely increase in the near to intermediate term. Price action so far on Tuesday has just about totally negated the nasty red candle from Monday. Oil continues to consolidate near the lows and will eventually either breakdown to new lows and possibly test the 200 period moving average or we will see an extension higher to the $103 – $105 / barrel price level. The daily chart of oil futures is shown below:

In the longer term, we remain extremely bullish on energy as the fundamentals indicate that oil demand will likely continue to rise while supply levels remain flat or begin to increase. Oil prices are likely to go much higher than what most analysts are expecting. For now, I’m going to be watching the key support level illustrated above. If oil prices continue to consolidate at these levels a breakout is nearly inevitable. The question remains which way will oil break?



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Market Commentary For Tuesday Morning Crude Oil, Gold, Natural Gas, U.S. Dollar

Crude oil was lower during Mondays overnight session due to light profit taking as it consolidates some of the rally off March's low. 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 106.19 would confirm that a short term top has been posted. If May extends the rally off March's low, the 75% retracement level of the 2008-2009 decline crossing at 121.09 is the next upside target. First resistance is Monday's high crossing at 113.46. Second resistance is the 75% retracement level of the 2008-2009 decline crossing at 121.09. First support is the 10 day moving average crossing at 108.71. Second support is the 20 day moving average crossing at 106.19. Crude oil pivot point for Tuesday morning trading is 110.69.

Natural gas was lower overnight as it consolidates some of Monday's short covering rally. Stochastics and the RSI are oversold but remain neutral to bearish signaling that a short term top might be in or is near. If May extends the aforementioned decline, the 87% retracement level of March's rally crossing at 3.899 is the next downside target. Closes above the 20 day moving average crossing at 4.253 would confirm that a short term top has been posted. First resistance is the 10 day moving average crossing at 4.206. Second resistance is the 20 day moving average crossing at 4.253. First support is Monday's low crossing at 3.990. Second support is the 87% retracement level of March's rally crossing at 3.899. Natural gas pivot point for Tuesday morning trading is 4.083.

Gold was lower due to profit taking overnight as it consolidates some of this year's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. Last week's breakout above the neckline of March's inverted head and shoulders pattern projects a potential upside target of 1514.90 later this spring. It will take closes below the 20 day moving average crossing at 1436.10 to confirm that a top has been posted. First resistance is Monday's high crossing at 1478.00. Second resistance is the head and shoulders upside target of 1514.90. First support is the 10 day moving average crossing at 1450.20. Second support is the 20 day moving average crossing at 1436.10. Golds pivot point for Tuesday morning trading is 1468.80.

The U.S. Dollar was lower overnight and poised to extend this year's decline. The low-range close sets the stage for a steady to lower opening during the day session. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If June extends this year's decline, weekly support crossing at 74.21 is the next downside target. Closes above the 20 day moving average crossing at 76.00 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 76.00. Second resistance is the reaction high crossing at 76.87. First support is last Friday's low crossing at 75.06. Second support is weekly support crossing at 74.21.




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Could One Fed President Spoil The Crude Oil Bull Run

It appears the first shot has been taken at QE2 as Richmond Fed President Lacker, not a voting member, has become the first to call for a roll back in the program. A program that virtually every investor believes the recent bull market relies on 100%. Lacker got the markets attention this week when he said the central bank should consider unwinding QE2, the 600 billion dollar asset buying program announced last November.

He said the "distinct improvement in the economic outlook since the program was initiated suggests taking revaluation quite seriously". But Lacker tried to make it clear he is still not ready to stop the program entirely right now since "strong readings on jobs and sustained consumer spending would warrant a rethink on growth".

World oil and commodity traders did consolidate oil prices overnight as most expect to see the same upward revisions in OPEC's and IEA's reports on Thursday as they saw in the US Energy Departments monthly report published yesterday which predicted increases in oil price and global demand.

Retail gas customers may get some relief this week as gasoline supplies gained 3.2 million barrels to 239.7 million barrels, the API said. The higher inventory numbers would put stockpiles at the highest level since February 26th 1993. Motor fuel inventories also increased 2.6 million barrels from 236.2 million a week earlier.

Here's your pivot, resistance and support numbers for Wednesdays trading.....

Crude oil was higher due to short covering overnight as it consolidates some of the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends the decline off last week's high, January's low crossing at 85.11 is the next downside target. Closes above the 20 day moving average crossing at 89.60 would signal that a short term low has been posted. First resistance is the 10 day moving average crossing at 89.00. Second resistance is the 20 day moving average crossing at 89.60. First support is Tuesday's low crossing at 85.88. Second support is January's low crossing at 85.11. Crude oil pivot point for Wednesday morning is 86.98.

Natural gas was lower overnight as it extends the decline off January's high. Stochastics and the RSI are oversold but remain bearish signaling that additional weakness is possible near term. If March renews the decline off January's high, the 87% retracement level of the October-January rally crossing at 3.975 is the next downside target. Closes above the 20 day moving average crossing at 4.405 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.262. Second resistance is the 20 day moving average crossing at 4.405. First support is the overnight low crossing at 3.996. Second support is the 87% retracement level of the October-January rally crossing at 3.975. Natural gas pivot point for Wednesday morning is 4.065.

Gold was slightly lower due to light profit taking overnight as it consolidates some of Tuesday's rally but remains above the 20 day moving average crossing at 1351.50. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends the rebound off January's low, the reaction high crossing at 1394.70 is the next upside target. Closes below the 20 day moving average crossing at 1344.60 would temper the near term bullish outlook. First resistance is Tuesday's high crossing at 1368.70. Second resistance is the reaction high crossing at 1394.70. First support is the 10 day moving average crossing at 1344.50. Second support is January's low crossing at 1309.10. Gold pivot point for Wednesday morning is 1360.60.


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Peoples Bank of China "Resets" Crude Oil and Commodity Prices

Yes, that is about what it amounts to, the Chinese will determine world commodity prices. We are reminded again what really matters when it comes to oil and commodity prices now and in the future as the People's Bank of China announced it will raise the one year yuan lending rate to 6.06% from 5.81%, and the one year yuan deposit rate to 3.00% from 2.75%. Obviously the government in China is showing that they are much more serious about the recent inflationary issues that are threatening their economy than most investors thought. And the traders in the crude oil pits are paying attention.

This is shaping up to be a trade war and currency battle like has never been seen before as the U.S. Federal Reserve policy of QE2 keeps driving commodity inflation and demand while emerging markets around the world and especially the Chinese are looking to reel in their inflation woes and drive down those same commodity prices. So who is really in the drivers seat, who has the upper hand? We say the bank is the one that calls the shots and we all know who that is, this is what we get for depending on China to buy our debt while maintaining such a trade imbalance.

Crude oil was lower overnight as it extends the decline off last week's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends the decline off last week's high, January's low crossing at 85.11 is the next downside target. Closes above the 20 day moving average crossing at 89.82 would signal that a short term low has been posted. First resistance is the 10 day moving average crossing at 88.95. Second resistance is the 20 day moving average crossing at 89.82. First support is the overnight low crossing at 85.88. Second support is January's low crossing at 85.11. Crude oil pivot point for Tuesday morning is 88.07.

Natural gas was lower overnight as it extends the decline off January's high. Stochastics and the RSI are oversold but remain bearish signaling that additional weakness is possible near term. If March renews the decline off January's high, the 87% retracement level of the October-January rally crossing at 3.975 is the next downside target. Closes above the 20 day moving average crossing at 4.430 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.316. Second resistance is the 20 day moving average crossing at 4.430. First support is the overnight low crossing at 4.069. Second support is the 87% retracement level of the October-January rally crossing at 3.975. Natural gas pivot point for Tuesday morning is 4.160.

Gold was higher overnight and trading above resistance marked by the 20 day moving average crossing at 1350.90. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1350.90 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is last Friday's high crossing at 1360.00. Second resistance is the reaction high crossing at 1394.70. First support is January's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Tuesday morning is 1348.90.


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