Some Things Never Change, Another Summer Of Rising Gas Prices

Just like every other summer, gas prices will likely be rising. Gas prices will likely be a thorn in the side of consumers who are starting to feel more optimistic about the U.S. economic recovery.

Market Rally Takes Crude Oil Along For The Ride

July crude oil closed higher on Monday and tested the 25% retracement level of the 2008-2009 decline crossing at 68.49 as it extends this spring's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term.

Tread lightly here, this is no place or time to open full long positions in crude. Commercials continue to add to their short positions as they take longs off the table to take profits.

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. Closes below the 20 day moving average crossing at 60.58 would confirm that a short term top has been posted.

First resistance is today's high crossing at 68.68
Second resistance is the 38% retracement level crossing at 82.38

First support is the 10 day moving average crossing at 63.01
Second support is the 20-day moving average crossing at 60.58

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The June Dollar closed lower on Monday as it extended last Friday's decline below the 62% retracement level of the 2008-2009 rally crossing at 79.80. A short covering rally tempered early losses and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold, diverging but are neutral signaling that sideways to lower prices are possible near term.

If June extends this spring's decline, the 75% retracement level of the 2008-2009 rally crossing at 77.55 is the next downside target. Multiple closes above the 20 day moving average crossing at 81.74 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 80.37
Second resistance is the 20 day moving average crossing at 81.74

First support is today's low crossing at 78.62
Second support is the 75% retracement level crossing at 77.55

Today’s Stock Market Club Trading Triangles


The June S&P 500 index closed sharply higher on Monday and above May's high crossing at 929 thereby renewing the rally off March'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 June extends today's rally, the 38% retracement level of the 2008-2009 decline crossing at 1040.33 is the next upside target. Closes below the reaction low crossing at 875.40 would confirm that a top has been posted.

First resistance is today's high crossing at 947.00
Second resistance is the 38% retracement level crossing at 1040.33

First support is the 20 day moving average crossing at 904.17
Second support is the reaction low crossing at 875.40

Crude Oil Rises to Highest Since November on Manufacturing Gain

Crude oil rose to the highest level since November as China’s manufacturing expanded and U.S. industrial output shrank less than forecast, signaling that fuel demand may increase. Oil advanced as much as 3.6 percent and equities rallied after China’s Purchasing Manager’s Index showed that manufacturing in May climbed for a third month. The U.S. dollar fell to its lowest against the euro since December, enhancing the appeal of commodities as an alternative investment.

“This is all about recovery expectations,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “It looks like manufacturing is recovering in a number of countries, which is feeding into the belief that the worst is behind us. It doesn’t hurt.....Complete Story



Today’s Stock Market Club Trading Triangles

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SP 500 Takes Crude Oil For A Ride Up, Commercials Increasing Short Positions

Even with the bull rush in crude oil commercials, which are the bulk of crude trading volume, are decreasing their open interest and increasing their short positions. Telling me they have no intention of being the ones caught holding crude oil at $72. Also, many traders believe that $70 dollars is the new "cheat" level for OPEC. The level where it becomes acceptable by their peers to ignore the production agreements.

Crude oil will get a free ride from the SP 500 Monday morning as we get a bullish spike in the markets. All of this will be slammed by any recovery on the U.S. Dollar and foreign currencies are all over bought at this point. Inventories will be big as always but Friday's unemployment numbers will be our biggest indicator of future demand.

Stochastics and the RSI are bullish in the SP 500 signaling that sideways to higher prices are possible near term. From a broad perspective, June needs to close above 929.00 or below 875.40 to clear up near term direction in the market.

Monday's pivot point, our line in the sand is 65.99

1st resistance is 67.29
2nd resistance is 67.95
3rd resistance is 69.25

1st support is 65.33
2nd support is 64.03
3rd support is 63.37

Natural Gas pivot point for Monday is 3.93

Stochastics and the RSI are turning bullish for natural gas signaling that a short term low might be in or is near. Closes above the 20 day moving average crossing at 4.057 are needed to confirm that a short term low has been posted. If July renews last week's decline, April's low crossing at 3.395 is the next downside target.

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Have You Missed The Move In Crude?

Have you missed the move in crude oil? Here's a quick score card on ticker DXO. You be the judge.

Feel free to leave a comment to let our readers know where you think crude is headed.

MACD
DXO is trading above its 200 minute moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

Bollinger Bands
DXO is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Parabolic SAR
Today, DXO closed above the trigger point for the Parabolic SAR and is currently registering a bullish signal. The current Significant Point, below which a reversal to the bearish side would occur, is 4.12.

Williams %R
According to the %R which is currently at -6.67% and above the critical level of -20, DXO may be overbought. While a stock that is overbought may continue to rally, investors should be especially careful when DXO begins to lose strength and the %R dips below -20.

Directional Movement Index
The +DI line is above the -DI line and the ADX is greater than 20. This is a bullish signal that indicates the stock is in a confirmed uptrend.

Today’s Stock Market Club Trading Triangles


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Artic May Hold More Undiscovered Oil

Is the Artic the new frontier for crude oil discoveries. The Heritage Foundation's Ben Lieberman talks about the possibilty of the Artic holding 40-160 billion dollars worth of crude oil beneath the polar ice caps.

Crude Oil Market Winners For This Week

~~~~Company~~~~~~~~~Friday's Close~~~~~%Gain Based on 2 Days
1. Hess Corporation.......65.65...................6.96..........
2. Marathon Oil............31.01...................6.05..........
3. Husky Energy...........33.89...................5.25..........
4. Petro-Canada...........48.49...................4.82..........
5. Suncor...................34.82...................4.75..........

Current Futures Prices Click Here

Sunday Morning Reading

"China to Raise Gasoline, Diesel Prices 6-7%" [Reuters]

"Crude Oil Caps Biggest Monthly Gain Since 1999 on Dollar Drop" [Bloomberg]

"Tullow, Heritage Face Tough Choices on Uganda Oil Development" [Rigzone]

"Oil Reserves Could Thaw U.S.- Cuba Tie" [Philly .Com]

"Iran Encourages Japanese Companies To Invest in Oil Sector" [Tehran Times]

"Zoellick Warns Stimulus ‘Sugar High’ Won’t Stem Unemployment" [Bloomberg]

"Lower Highs... Topping or bull flag?" [xtrends]

"Edison Sees Difficulties Boosting Renewable Energy" [Bloomberg]

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The Price of Oil Companies vs. Crude Oil, Why The Disconnect?

There seems to be a lot of traders baffled by the disconnect between the rising price of oil as a commodity and the price action in the oil companies themselves. While the oil companies have enjoyed the recent rally in crude oil they have not had the same percentage of gains that crude oil has. I don't see it as that big of a mystery.

Institutional buyers and hedge funds have for years used the oil market and commodities in general as their own little playground. And their being hesitant to ramp up the oil companies along with the price of crude says more to me about where the likes of Goldman Sachs and various mutual funds see [plan] on this market going.

Sure, a lot of smart people see crude easily trading up to $70, but then what. There is absolutely nothing to keep us trading at that range and believe it or not the dollar will not continue straight down, nothing does. What isn't definite is the direction of the SP 500. I am personally leaning towards the bearish side, breaking below 875. And if we do crude will retrace it's steps quickly.

Keep your stops tight, don't be the only one left holding crude at $70 dollars.


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