ExxonMobil to Buy XTO for $41 Billion

Fox Business Networks's Shibani Joshi on ExxonMobil's acquisition of XTO Energy.



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Cardium Oil Play Valuations Setting Up Big Year for M&A in 2010

The new Cardium oil play in Alberta is rapidly approaching the stature of Saskatchewan’s famous Bakken play, and this is very good news for investors in Canada’s junior oil and gas sector. The four year old Bakken play has created huge shareholder wealth for investors, as companies like Crescent Point Energy and Petrobank bought out junior after junior after junior to increase their land base and production profile.

The same thing is now starting to happen in Alberta’s Cardium play. And valuations (read: stock prices) are getting much richer, much faster than what happened in the Bakken. As an example, TSX listed Result Energy is a Cardium focused play that was just taken over and re-capitalized by the management team from TriStar Oil and Gas, a Bakken play that itself was bought out in August 2009.

Brett Herman and his TriStar team announced several acquisitions immediately, and one Canadian analyst estimated they paid $275,000 per flowing barrel for them. As comparison, the average Canadian listed junior trades at about $60,000, the intermediates at $71,000, and if it’s a natural gas weighted producer, it can be as low as $30,000. Even the leading juniors in the more profitable Bakken play – Painted Pony Explorations would be a good example of this – trade at $140,000 per flowing barrel.....Read the entire article.


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Crude Oil Continues Lower as World Markets Rebound on Dubai Bailout

Crude oil was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 75.67 are needed to confirm that a short term low has been posted.

Monday's pivot point, our line in the sand is 70.18

First resistance is the 10 day moving average crossing at 73.37
Second resistance is the 20 day moving average crossing at 75.67

First support is the overnight low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas was higher overnight as it extends last week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If January extends last week's rally, the 62% retracement level of the October-December decline crossing at 5.565 is the next upside target.

Closes below the 20 day moving average crossing at 4.896 would temper the near term bullish outlook in the market.

Natural gas pivot for Monday is 5.22

First resistance is last Friday's high crossing at 5.375
Second resistance is the 62% retracement level of the October-December decline crossing at 5.565

First support is the 20 day moving average crossing at 4.896
Second support is this month's low crossing at 4.432

The Fibonacci Tool Fully Explained

The U.S. Dollar was lower due to profit taking overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near.

If March extends last week's rally, November's high crossing at 77.27 is the next upside target. Closes below the 20 day moving average crossing at 75.76 would temper the near term bullish outlook in the market.

First resistance is last Friday's high crossing at 77.12
Second resistance is November's high crossing at 77.27

First support is the 10 day moving average crossing at 76.05
Second support is the 20 day moving average crossing at 75.76


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What’s Next for Stocks, Gold, Silver, Oil & Natural Gas?

The past three weeks have been interesting to watch as the Dow (DIA ETF) has broadened causing traders to be shaken in and out of positions. Commodities have been under pressure as the US dollar has risen. Below are some charts of these investments and what I think could happen in the next couple weeks.

DIA – Exchange Traded Fund
As you can see the broadening formation is bearish as it results in a short term pullback. This type of price action is what frustrates breakout and novice traders. As traders jump into positions once the previous high is broken, they hope for a rally. Instead the market briefly moves higher then reverses and moves down to penetrate the previous pivot low. This is where breakout traders place their stops and as the market knows this, it obliges by moving below this level to shake out these traders before it rallies again.

That being said, it looks like stocks could make a new high this week, just enough to suck in more short term breakout traders before rolling over once again to test a deeper support level. A pullback to the $99-100 level would make for a great buy point.


GLD – Gold Exchange Traded Fund
The strengthening dollar is putting pressure on precious metals with gold testing the first support level. Depending on what the dollar does in the coming days we could see gold test the second support level.

In my opinion gold can test the second support level without triggering any major sell signals for traders and investors. The trend will still be up and it is important to know the horizontal support level is more important than a trend line support level.



SLV – Exchange Traded Fund
Silver is in the same boat at gold. Only time will tell if we get a bounce or a further test lower. Either way, the underlying trend is still up and we will be able trade it.



USO – Oil Exchange Traded Fund
Oil broke down out of its bull flag last week and is currently testing both trend line support and horizontal support levels. We could see a short term bounce here to the $37, 38 or 40 levels. Taking money off the table at each resistance level and raising your stop is an important money management strategy I use for this type of play.

This is a high risk type of play which I am not taking part in. But I do find it fun to track plays like this for educational reasons.



UNG – Natural Gas Exchange Traded Fund
The natural gas fund is a touchy topic with so many traders. I get emails every day asking why I trade UNG because of the contango and the fact that so many people have lost money with it; they don’t want to touch it again. My answer is very simple, it works perfectly fine for short term trading which lasts 1-20 days. “If it works, Don’t Fix It”.
I do agree UNG is tougher than other ETFs to trade, but it still makes money and that is what our goal is.

Anyways natural gas has found some support and is bouncing around. We could see it trend sideways or up until a test of our blue resistance trend line is reached. From there we can asses the situation for a possible trade.

The underlying trend is down on the monthly and weekly charts so do not get too excited about going long anytime soon.



ETF Trading Conclusion:
Overall the market feels a little top heavy and the price action on the charts are saying the same thing. My short term indicators are telling me the Dow (DIA fund) is over bought and ready for a couple days of selling. With any luck we will see a test of support which will flush out most short term traders this week, then a nice low volume rally going into Christmas. On the other hand, the market has been holding up well and prices could continue to drift higher from here. If that is the case we simply continue to hold our current long positions and enjoy the ride.

Silver and gold are testing support levels and if the market continues to rally here, I figure precious metals will follow. But if we see stocks pull back and test support, then we will most likely see the metals pull back further also.

Crude oil has formed a scary looking chart as it flushes out traders on this recent drop. My general rule for spec plays is to buy when the chart looks scary, but is trading at multiple support levels. It is very difficult to buy at these levels but as my good buddy David Banister from ActiveTradingPartners.com always says, “Buy when they Cry, Sell when it’s Loud”. Meaning buy when everyone is panicking out of their positions, and sell when everyone is buying into the move usually seen by high volume levels and much higher prices.

Natural Gas is jumping around like crazy. We continue to wait for a tradable price pattern to form in conjunction with a support or resistance level to help put the odds more on our side.


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Crude Oil Weekly Technical Outlook

Crude oil dived further last week and closed below 70 level at 69.87. Break of the medium term trend line support serves as another indication of medium term reversal. Initial bias will remain on the downside this week for 65.05 support first. On the upside, above 71.50 minor resistance will turn intraday bias neutral and bring recovery. But upside should be limited well below 79.04 resistance and bring fall resumption.

In the bigger picture, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. The break of medium term trend line support last week affirms this case and should pave the way to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. As noted before, rise from 33.2 is treated as part of the correction pattern that started at 147.27. Firmed break of 58.32 support will argue that the down trend from 147.27 might be resuming for another low below 33.2. On the upside, break of 79.04 is needed to invalidate this view, otherwise, outlook will remain bearish.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....
Nymex Crude Oil Continuous Contract 4 Hours Chart .



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Where is Crude Oil Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.




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Crude Oil Falls Hard, Bears Continue to Hold the Near Term Advantage

Crude oil closed lower on Friday and below the 75% retracement level of this fall's rally crossing at 70.23 as it extended the decline off October's high. The low range close sets the stage for a steady to lower opening on Monday. If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 76.05 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 74.16. Second resistance is the 20 day moving average crossing at 76.05. First support is today's low crossing at 69.46. Second support is the 87% retracement level of this fall's rally crossing at 68.16.

Natural gas closed lower due to profit taking on Friday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If January extends this week's rally, the 62% retracement level of this fall's decline crossing at 5.565 is the next upside target. Closes below the 20 day moving average crossing at 4.866 would temper the near term friendly outlook in the market. First resistance is today's high crossing at 5.375. Second resistance is the 62% retracement level of this fall's decline crossing at 5.565. First support is the 20 day moving average crossing at 4.866. Second support is the 10 day moving average crossing at 4.859.

The U.S. Dollar closed sharply higher on Friday as it extended this week's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends its current rally, November's high crossing at 77.27 is the next upside target. Closes below the 20 day moving average crossing at 75.68 would temper the near term friendly outlook in the Dollar. First resistance is today's high crossing at 77.12. Second resistance is November's high crossing at 77.27. First support is the 10 day moving average crossing at 75.89. Second support is the 20 day moving average crossing at 75.68.


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When Will Real Oil Demand Growth Appear?

How do you know when the economic recovery really begins? It is when real oil demand growth appears? Not just artificial demand growth being propped up with smoke and mirrors but demand growth that comes with solid economic activity and global growth. Growth that hopefully will be ignited by the low prices that will come when we start to remove the life supports to the economic system and global currency exchange rates start to normalize. Oil demand growth will be the thermometer that will take the economy's temperature and tell us that we are indeed getting healthy.

Believe it or not these are some of the same sentiments that are being expressed by the International Energy Agency. Well at least partly. Today the advisor to 24 consuming nations said while increasing it oil consumption forecast globally by 1.5 million barrels per day to 86.3 million barrels that demand from major consumers may herald an economic recovery. Of course while I agree that things are getting better I still wonder whether this oil demand growth is solid enough to grow on its own. Can it continue to grow without the massive stimulus and will it continue when demand goes away.

The IEA says that oil demand will increase a little bit mainly due to demand growth in China. Yet at the same time the growth out of China is as mysterious as the country.....Read the entire article.


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Oil Rises After Report Shows Record Runs at Chinese Refineries

Oil rose for the first time in eight days after China said the country’s refineries processed a record amount of crude last month. Refining volume in China, the world’s second largest energy consumer, climbed 21 percent from a year earlier to 33.4 million metric tons, or 8.1 million barrels a day, according to government statistics. China’s industrial production grew more than estimated in November. “This is the fastest growth in Chinese oil demand since 2004,” Amrita Sen, a London based oil analyst at Barclays Capital, said by phone. “China has really surprised to the upside this year.”

Crude oil for January delivery rose as much as 66 cents, or 0.9 percent, to $71.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $71.03 a barrel at 1:31 p.m. London time. Oil prices have fallen 8 percent since the beginning of this month and dropped 3 percent on Dec. 9, when a U.S. government report showed U.S. gasoline inventories rose to the highest level since April. Futures are up 59 percent this year. “China’s oil imports just don’t stop growing,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “China will sell more cars than the U.S. this year, and that is pushing up gasoline demand”.....Read the entire article.


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Crude Oil Higher Overnight, Today's Close Becomes Critical for the Bull's

Crude oil was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 76.11 are needed to confirm that a short term low has been posted.

Friday's pivot point, our line in the sand is 70.58

First resistance is the 10 day moving average crossing at 74.28
Second resistance is the 20 day moving average crossing at 76.11

First support is Thursday's low crossing at 69.81
Second support is the 87% retracement level of this fall's rally crossing at 68.16

Is The S&P 500 Getting Ready to Skyrocket or Collapse?

Natural gas was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends this week's rally, the 62% retracement level of the October-December decline crossing at 5.565 is the next upside target. Closes below the 20 day moving average crossing at 4.873 would temper the near term bullish outlook in the market.

Natural gas pivot for Friday is 5.161

First resistance is Thursday's high crossing at 5.347
Second resistance is the 62% retracement level of the October-December decline crossing at 5.565

First support is the 20 day moving average crossing at 4.873
Second support is this month's low crossing at 4.432

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The U.S. Dollar was lower due to profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near.

If March extends this week's rally, November's high crossing at 77.27 is the next upside target. Closes below the 20 day moving average crossing at 75.64 would temper the near term bullish outlook in the market.

First resistance is Wednesday's high crossing at 76.66
Second resistance is November's high crossing at 77.27

First support is the 10 day moving average crossing at 75.83
Second support is the 20 day moving average crossing at 75.64


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