S&P 500, Treasuries, Gold, & Dollar are At Key Price Levels

Thursday was another example of Mr. Market playing games with traders and investors as equities and precious metals took part in a strong rally. Some market prognosticators noted short term oversold conditions across the board while others discussed the potential for a strong reversal that could potentially take out recent highs. In addition to the regular banter, to the average retail investor the market sure looks rigged when the government decides to sell a large stake in a massive IPO offering and a shaky tape suddenly becomes stronger than garlic.

There is a lot going on in the news as of late, and the expiration of the Bush tax cuts looms large on the minds of many, particularly small business owners. So the real question becomes, what should traders be watching or paying attention to before the light volume Thanksgiving week? The answer is simple, watch the tape! The market will provide plenty of clues and it will eventually tip its hand, experienced traders will wait for this process to unfold.

At this point in time, it is a bit early to begin making predictions as to which direction the equities market will go. What we do know is that the market was oversold in the short-term, so this could be a pause before prices turn lower. In contrast, this could be the beginning of another bullish move breaking recent highs on its way to a “Santa Claus” rally. My stance is neutral at this point in time; S&P 1200 should offer significant overhead resistance while S&P 1170 / 50 period moving average is near term support.

Here is the charts that illustrates these key levels > "S&P 500, Treasuries, Gold, & Dollar are At Key Price Levels"


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What is Next for the Dollar, SP500 and Gold

The equities market reversed to the upside Wednesday posting a light volume broad based rally. Remember light volume tends to have a neutral to upward bias on stocks, But it was mainly the sharp drop in the dollar which spurred stocks and commodities higher.

Today’s bounce was not much of a surprise for several reasons…
• Overall trend is up, one day sell offs are generally profit taking
• Panic selling on the NYSE tipped us off that the market was oversold
• I don’t think they will let the market fall before the November election
• Intermediate cycle is turning up this week, 3 weeks of upward momentum…

US Dollar Index – 4 Hour Chart
The dollar put in a big bounce this week filling its gap window… Remember most gaps get filled with virtually every investment vehicle so when you see them remember this chart....

SPY ETF – Daily Chart
SP500 has been riding the key moving average up and Tuesday’s sell off tagged the 14MA along with extreme market internal readings telling intraday traders that a bounce is about to take place.

Gold Futures – Daily Chart
You can see gold has done much the same… A sharp profit/stop running sell off, which took the price back down to support. We took a long position to catch this bounce and hopefully a larger move going forward.

Market Sentiment Readings
Tuesday’s pullback was a great reminder of just how over extended the equities market was. These heavy volume sell offs are typical in a bull market. Without regular pauses in price, traders tend to place trailing stops moving them up each day. With traders chasing stocks higher bidding them up instead of waiting for a pullback we get a very large number to stop orders following the price up each day. Then, it’s only a matter of time before a key short term support level is broken at which point the flood gates open and everyone’s stops turn to market orders flooding the stock exchanges with sell orders causing a rapid decline and panic selling. This is exactly what happened on Tuesday which I show in the chart below.

Understanding how to read market internals provides great insight for short term traders looking to make quick high probability trades every week… Market internals are just part of the equation but very powerful on their own with proper money/position management. Both of these intraday extremes were bought on Tuesday in the advanced chatroom (FuturesTradingSignals.com).. We quickly booked profits and moved our stops up in order to protect our capital as the market surged higher.

Mid-Week Market Trend Analysis:
In short, the US Dollar is still in a down trend overall. The Fed’s I would think will continue to hold the market up into the election. It works well for them… they print money which devalues the dollar, and in return boosts stocks and commodities, plus they get trillions of dollars to spend… I’m sure its like kids in a candy store over there.

While everyone is trying to pick a top in this over extended market I think it is crucial to stick with the overall trend and to not fight the Fed. Using the key moving averages on the daily chart as shown in the charts above, continue to buy on dips until the market closes below the 20 day moving average at which point you should abandon ship.

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Oil N' Gold: Crude Oil Weekly Technical For Saturday

Crude oil rose further to as high as 84.32 last week, but formed a temporary top ahead of 161.8% projection of 70.76 to 78.04 from 72.75 at 84.53 and retreated. Initial bias is neutral this week and some sideway trading would be seen below 84.43 first. At this point, there is not sign of reversal in crude oil yet and further rise could still be seen. However, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and turn focus back to this support level.

In the bigger picture, the stronger than expected rally from 70.76 dampened the immediate bearish view and suggests that rise from 64.23 is still in progress. Nevertheless, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Hence, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

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MF Global: Oil Rally May Falter at $82

Crude oil’s rally to a two month high may sputter around $82 a barrel as the commodity’s relative strength index signals that gains have been excessive, according to technical analysis by MF Global Ltd. Oil advanced for an eighth day in New York today, trading above $81 a barrel for the first time since November, as freezing temperatures around the Northern Hemisphere bolstered the outlook for fuel demand. The surge will probably founder before it reaches last year’s peak of $82 a barrel, MF Global said in a report.

The relative strength index for crude oil indicates that prices may have overshot, according to the brokerage. An asset’s RSI is a ratio based on daily closing prices that measures how far prices have advanced or dropped during a specified period. An RSI reading of 70 or above typically suggests an asset has risen too far, too fast. The last 14 day reading for crude was 67.8, the highest since October. “Technically, most complexes are approaching the upper bands of the trading range,” said Edward Meir, an MF Global analyst in Connecticut. “Crude is approaching overbought territory. We find it unlikely that prices will take out $80.50- $82 resistance”.....Read the entire article.

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Phil Flynn: Is This Santa For Real?

Oil prices get swept up in a Santa Claus rally as light volume a strong stock market as well as a surprise drawdown in inventory gives the illusion of strong demand. Ho, Ho, Ho! Yet we may find out that yes, Virginia, indeed this Santa rally, despite my better judgment, may be real if oil closes above $79 a barrel.

Last week the market got a bullish boost on a surprise draw down in oil supply when the Energy Information Agency, an arm of the Department of Energy, reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. That caught the market by surprise because we also saw a drawdown in the supply of distillates to the tune of 3.1 million barrels. Don’t try to reason that supply is way above normal or that most likely the draws are skewered due to bad weather conditions impacting imports because none of these justifications seem to matter. You just have to believe. You really will have to believe if oil closes above $79 a barrel.

Now some think the rally is for real because of the early blast of winter. Despite the worries over global warming, it is cold weather that is inspiring demand. In other words even though supplies are above the five year average, weather may be colder this winter than the five year average. The EIA on demand said that over last four weeks, total products supplied by refiners came in at an average 18.9 million barrels per day which was down by 1.1 percent compared to last year. For gasoline, over the last four weeks demand averaged 9.0 million barrels per day, up by 0.8 percent from the same period last year. Distillate fuel demand has averaged 3.7 million barrels per day over the last four weeks, down by 3.9 percent from the same period last year despite the fact that it was colder.....Read the entire article.

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Record Supplies Have Not Deterred Natural Gas Bulls

The old saying 'every dog has its day' could certainly apply to the Natural Gas futures market as the December futures contract has risen to highs not seen since June, despite a record amount of natural gas in storage. It is still too early to tell to what extent the recent rally may be due to speculative short covering. The most recent Commitment of Traders report shows large non commercial traders were holding a net short position of 64,050 contracts as of October 13th. This was a decline of 1,902 contracts for the week and does not take into account the activity that occurred during the nearly 0.750 point rally since the report was released. Also adding a bit of bullish fuel to the recent rally are predictions that a weak El Nino weather pattern may result in a colder than normal winter.

If true, it may cause utilities Gas usage for heating demand to increase, helping to cut into the current burdensome supplies. Traders are also beginning to anticipate an uptick in industrial demand now that there are signs that the worst of the recession is behind us and an improvement in industrial production may not be far off. However, until we start to see fresh buying entering the market, any major rally attempts could be met with eager sellers, especially with futures trading above cash prices. Traders should monitor government data to gauge the extent of any economic recovery, as Natural Gas futures have been acting as a barometer to economic conditions here in the U.S......read the entire article and charts.

Crude Oil Retreats as U.S. Equities Decline on Earnings Concern

Crude oil retreated as U.S. equities declined on concern that the recent stock-market rally has outpaced the outlook for financial company earnings. Oil dropped and stocks declined for a third day as analysts said insurance company shares had risen too far. Prices climbed as much as $1.41 a barrel earlier today when reports showed that manufacturing in the U.S. and China, the two biggest energy consuming countries, expanded in August. Crude oil for October delivery fell 46 cents, or 0.7 percent, to $69.50 a barrel at 11:21 a.m. on the New York Mercantile Exchange. Futures are up 56 percent this year. Brent crude oil for October settlement slipped 6 cents to $69.59 a barrel on the London based ICE Futures Europe exchange.....complete article

Will Oil Spark A Market Upturn?

Lipow Oil Associattes President, Andy Lipow, talks to Fox Business about why he feels that the oil rally is on the brink of pushing the general markets higher.




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Bears Seem To Have The Near Term Advantage

Crude oil was lower in overnight trading as it extends Monday's decline below the 20 day moving average crossing at 69.54. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If crude oil extends this week's decline, the 38% retracement of this spring's rally crossing at 62.25 is the next downside target. Closes above the 10 day moving average crossing at 70.91 are needed to confirm that a short term low has been posted.

Tuesday's pivot point, our line in the sand is 68.05

First resistance is the 20 day moving average crossing at 69.54
Second resistance is the 10 day moving average crossing at 70.91

First support is the overnight low crossing at 66.37
Second support is the 38% retracement level at 62.25

Today’s Stock Market Club Trading Triangles

Natural gas was higher due to short covering overnight as it consolidates some of Monday's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

Closes below the 20 day moving average crossing at 3.938 would temper the near term friendly outlook in the market.

If July renews this month's rally, May's high crossing at 4.690 is the next upside target.

First resistance is last Tuesday's high crossing at 4.387
Second resistance is May's high crossing at 4.690

First support is Monday's low crossing at 3.860
Second support is the reaction low crossing at 3.550

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Crude Consolidates Decline With High Range Close

Crude oil closed higher due to short covering on Wednesday as it consolidated some of this week's decline. The high range close sets the stage for a steady to higher opening on Thursday.

Stochastics and the RSI are turning bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 67.43 would confirm that a short term top has been posted.

If July extends the rally off April's low, the 38% retracement level of the 2008-2009 decline crossing at 82.38 is the next upside target.

First resistance is last Thursday's high crossing at 73.23
Second resistance is the 38% retracement level crossing at 82.38

First support is today's low crossing at 69.00
Second support is the 20 day moving average crossing at 67.43

Oil Prices Rise On Supply Decline, Morgan Stanley Trader Banned

"Oil Rises Above $62 on Larger Than Forecast U.S. Supply Decline"
Crude oil rose above $62 a barrel for the first time in six months after a government report showed that U.S. inventories declined more than forecast. Stockpiles dropped 2.11 million barrels to 368.5 million in the week ended May 15, the Energy Department said today. A 400,000-barrel decline was forecast, according to a Bloomberg News survey. Prices also climbed after refinery fires and unrest in Nigeria threatened supplies and the falling dollar spurred investors to purchase raw materials.

“We’re off to the races,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The crude and gasoline inventory drops are very supportive to the market. The problems in Nigeria and refinery disruptions are contributing to the rally.....Complete Story

"Valero Energy Agrees to Acquire Interest in European Refining Assets"
Valero Energy Corporation has entered into an agreement to acquire The Dow Chemical Company's 45% interest in the Total Raffinaderij Nederland N.V. (TRN) for an enterprise value expected to be approximately $725 million, including working capital and inventories. TRN owns a crude oil refinery located in the Zeeland region of The Netherlands on the river Scheldt and has total throughput capacity of 190,000 barrels per day.

The transaction is subject to regulatory approval as well as a right-of-first refusal held by Total S.A., the refinery operator and owner of the remaining 55% interest in TRN. The transaction is expected to close in the third quarter of 2009.
Originally built in 1973, TRN's refinery received major upgrades in the mid-1980s, mid-1990s, and.....Complete Story

"Ex Morgan Stanley Trader Banned for Hiding Position"
A former oil trader at Morgan Stanley in London, who shorted oil futures without permission after an alcohol-fuelled lunch, has been banned by Britain’s financial regulator for trying to conceal his trades, the second time in a week it took action against one of the bank’s employees.

The Financial Services Authority banned David Connor Redmond, a former trader on the freight desk of Morgan Stanley’s commodities division, the regulator said today in a statement. Redmond built a “substantial” short position in WTI Futures on the ICE Futures Web-based trading platform in February 2008, concealing the position overnight and exposing Morgan Stanley to “the risk of incurring a significant loss,” the FSA said.....Complete Story

Crude Oil Rally Struggling Against Future Demand Concerns

June crude oil was higher overnight as it extended the rally off April's low and are still holding up despite future demand threats from worse than expected retail numbers this morning. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally, the reaction high crossing at 65.00 is the next upside target. Closes below the 20 day moving average crossing at 53.18 are needed to confirm that a short term top has been posted.

Wednesday's pivot point, our line in the sand is 58.91

First resistance is Tuesday's high crossing at 60.08
Second resistance is the reaction high crossing at 65.00

First support is the 10 day moving average crossing at 56.10
Second support is the 20 day moving average crossing at 53.18

Today’s Stock Market Club Trading Triangles

The June Dollar was steady to lower overnight as it consolidates below the 75% retracement level of the December-March rally crossing at 827.50. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If June extends the decline off April's high, the 87% retracement level of the December-March rally crossing at 81.49 is the next downside target. Closes above the 20 day moving average crossing at 84.75 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 83.62
Second resistance is the 20 day moving average crossing at 84.75

First support is the overnight low crossing at 81.98
Second support is the 87% retracement level crossing at 81.49

Today’s Stock Market Club Trading Triangles

The June S&P 500 index was lower overnight and is testing initial support marked by the 10 day moving average crossing at 901.93. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 877.90 are needed to confirm that a short term top has been posted.

If June renews the rally off March's low, January's high crossing at 937.00 is the next upside target.

Our pivot point for Wednesday is 905

First resistance is last Thursday's high crossing at 916.75
Second resistance is January's high crossing at 927.50

First support is the 10 day moving average crossing at 895.75
Second support is the 20 day moving average crossing at 884.50

The June S&P 500 Index was down 4.50 points. at 902.30 as of 6:00 AM CST. Overnight action sets the stage for a lower opening by the June S&P 500 index when the day session begins later this morning.

10:30 AM ET. May 15

US Energy Dept Oil Inventories

Crude Oil Stocks (previous 375.3M)

Crude Oil Stocks (Net Change)(expected +1.3M; previous +600K)

Gasoline Stocks (previous 212.4M)

Gasoline Stocks (Net Change)(expected 0; previous -200K)

Distillate Stocks (previous 146.5M)

Distillate Stocks (Net Change)(expected +1.3M; previous +2.4M)

Refinery Usage (expected 85.4%; previous 85.3%)


Today’s Stock Market Club Trading Triangles



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Crude Oil Hits Fresh 5 1/2 Month High

June crude oil closed up $0.23 at $58.73 a barrel today. Prices closed near mid range today and did hit a fresh 5 1/2 month high. Bulls do still have the near
term technical advantage. A steep three week old uptrend is in place on the daily bar chart.

June heating oil closed up 66 points at $1.5075 today. Prices closed near mid range again today. Prices hit a fresh four month high today. Bulls and bears are on a level near term technical playing field.

June unleaded gasoline closed down 130 points at $1.6672 today. Prices closed nearer the session low today. Bulls still have some upside technical momentum. However, the market is still short term overbought, technically.

June natural gas closed up 18.8 cents at $4.49 today. Prices closed near the session high today and hit a fresh six week high. Bulls have gained upside near term technical momentum recently to finally suggest that a major market low is in place.

The June U.S. dollar index closed down 37 points at 82.42 today. Prices closed nearer the session low and hit a fresh 4 1/2 month low today. Prices are in a nine week old downtrend on the daily bar chart. Bears have the near term technical advantage.


Today’s Stock Market Club Trading Triangles


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Crude Oil Appears To Be Consolidating Friday's Rally

Crude oil is trading lower as we close in on the regular trading session and was steady to slightly lower overnight as it consolidates some of last Friday's rally but remains above the 20 day moving average crossing at 51.46. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If June extends last week's rally, the reaction high crossing at 54.81 is the next upside target. Closes below the 10 day moving average crossing at 50.69 are needed to confirm that a short term low has been posted.

Monday's pivot point for crude oil is 52.21

First resistance is last Friday's high crossing at 53.65.
Second resistance is the reaction high crossing at 54.81.

First support is the 20 day moving average crossing at 51.46.
Second support is the 10 day moving average crossing at 50.68.

Our weekly forecast is to buy the dips this week, selling into the 54.50 area as long as we continue trading this current range.

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The June S&P 500 index was higher overnight as it extends the rally off March's low. Stochastics and the RSI are diverging but are neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally off March's low, January's high crossing at 937.00 is the next upside target. Closes below the 20 day moving average crossing at 851.44 are needed to confirm that a short term top has been posted.

Monday's pivot point, our line in the sand is 873

First resistance is last Thursday's high crossing at 887.10.
Second resistance is January's high crossing at 937.00.

First support is the 10 day moving average crossing at 860.52.
Second support is the 20 day moving average crossing at 851.44.

The June S&P 500 Index was up 5.60 points. at 881.70 as of 5:45 AM CST. Overnight action sets the stage for a higher opening by the June S&P 500 index when the day session begins later this morning.

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The June Dollar was steady to slightly higher overnight as it consolidates some of last week's decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term.

If June extends last week's decline, March's low crossing at 83.14 is the next downside target. Closes above the 20 day moving average crossing at 85.54 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 85.42.
Second resistance is the 10 day moving average crossing at 85.54.

First support is last Thursday's low crossing at 84.03.
Second support is March's low crossing at 83.14.


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Oil Rises on Stock Rally, Caps Biggest Monthly Gain Since May

"Oil Rises on Stock Rally, Caps Biggest Monthly Gain Since May"
Crude oil rose, heading for its biggest monthly gain since May, as equities increased and a weaker dollar enhanced the appeal of commodities. Oil climbed as much as 3.3 percent after U.S. and European stocks rebounded....Complete Story

SocGen Technical Analyst Says "Oil May Fall to $28 a Barrel"
Crude oil is set to drop to $28 a barrel in New York in the second quarter, according to technical analysis by Societe Generale SA. Prices may rally until meeting resistance at $71 a barrel and....Complete Story

"Petrobras Invests Heavily in Offshore Drilling"
With massive deepwater finds in the pre-salt layer, as well as the Campos and Santos Basins, Brazilian state-owned Petrobras pledged an investment of $174.4 billion for 2009 to 2013. With a firm commitment to....Complete Story

"Kuwait Raises Oil Output Capacity"
OPEC member Kuwait has boosted its oil production capacity to three million barrels per day and aims to raise it to four million by 2020, a top oil executive said on Monday. "We have the capability to....Complete Story

Crude Oil Signals Short Term Top May Be In, 1st Resistance Is $48.83

April crude oil looks to extend Thursday's rally. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at $42.72 are needed to confirm that a short term top has been posted.

If April renews the rally off February's low, the reaction high crossing at $50.88 is the next upside target.

First resistance is Monday's high crossing at $48.83.

Second resistance is the reaction high crossing at $50.88.

First support is the 10 day moving average crossing at $44.56.

Second support is the 20 day moving average crossing at $42.72.

Crude Oil Rally Continues, Next Upside Target Is $47.99

April crude oil closed higher on Monday as it extends the rally off February's low.

The high range close sets the stage for a steady to higher opening on Tuesday.

Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If April extends this month's rally, February's high crossing at $47.99 is the next upside target.

Closes below the 20 day moving average crossing at $42.30 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at $48.83.

Second resistance is the reaction's high crossing at $47.99.

First support is the 10 day moving average crossing at $43.53.

Second support is the 20 day moving average crossing at $42.31.

Crude Oil Lower Overnight On Profit Taking, Higher Prices Still Possible Near Term

April crude oil was lower overnight due to profit taking as it consolidates some of Wednesday's rally.

Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If April extends Wednesday's rally, February's high crossing at $47.99 is the next upside target.

Closes below Tuesday's low crossing at $39.44 are needed to confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at $45.70.

Second resistance is February's high crossing at $47.99.

First support is the 20 day moving average crossing at $42.32.

Second support is Tuesday's low crossing at $39.44.

Crude Oil Lower Overnight, All Indicators Show Higher Prices Possible Near Term

April crude oil was lower overnight due to profit taking as it consolidates some of last week's rally but remains above the 20 day moving average crossing at $42.49.

Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If April extends last week's rally, the reaction high crossing at $47.99 is the next upside target.

Closes below the 10 day moving average crossing at $40.96 are needed to confirm that a short term top has been posted.

First resistance is last Thursday's high crossing at $45.30.

Second resistance is the reaction high crossing at $47.99.

First support is the 20 day moving average crossing at $42.49.

Second support is the 10 day moving average crossing at $40.96.