Trade ideas, analysis and low risk set ups for commodities, Bitcoin, gold, silver, coffee, the indexes, options and your retirement. We'll help you keep your emotions out of your trading.
Crude oil fell for the first time in three days as the dollar strengthened against the euro, limiting the appeal of commodities as a currency hedge. Crude gained as the dollar rose to a three month high against the euro as Greece’s latest debt downgrade fanned concern that spiralling national debts may hamper the global economic recovery. The U.S. currency also gained after the Federal Reserve said yesterday the economy is strengthening and the deterioration in the labor market is abating.
“It is the dollar mainly because even though the Fed kept interest rates unchanged they did admit things are stabilizing in the U.S. economy,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Sentiment in the dollar is turning positive.” Crude oil for January delivery fell as much as $1.01, or 1.4 percent, to $71.65 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.05 a barrel at 11:35 a.m. London time. Yesterday, the contract added $1.97 to $72.66 in New York, the biggest gain in a month, after the Energy Department said U.S. crude inventories declined to the lowest since the week ended Jan. 9. Prices have gained 61 percent this year.....Read the entire article.
It’s been a great week so far. Stocks and commodities are moving as expected from my weekend trading report. I like to see the market unfold in a calm collected manner.
The US dollar has made a nice move in the past couple weeks. Although it has broken out of its down channel I think there is a lot of short covering going on making this bounce more powerful than others. Also it is important to note that it is near resistance which could dampen things around the $77-77.5 level. If the dollar heads back down I expect gold to start making a move back up which it started to do Wednesday.
Below are my thoughts and charts about what I think is unfolding for both stocks and commodities.
DIA – Dow Jones Index Fund The DIA fund has performed just the way I thought it would. Push to a new high then sell down. Generally I would expect this move down to test my support level or trade near that level, but because we are heading into the holiday season and volume is light the market has a natural tendency to drift higher. I’m sure this is why it’s still trading near the high.
This new yearly high was enough to suck in breakout traders and only time will tell if they get follow through or get shaken out of this trade also. Oh, the joys of buying a breakout in an over bought market condition.
GLD – Gold Exchange Traded Fund Gold broke down sharply from its trend channel and has settled into a support zone. Wednesday we saw a nice bounce but the question is, is this a rally or a sucker’s bounce? I’ve found the best setups and moves occur after an ABC retrace. The black lines on the chart show exactly that type of price action. These retraces shake out most short term traders before starting a new rally. There is a thin dotted blue line showing a possible resistance trend line which would need to be broken after the ABC retrace pattern has formed if we want a low risk setup with a sizable win/loss ratio.
SLV – Silver ETF Trading Fund Silver is in the same boat as its big sister (Yellow Gold). We just need to wait for a high probability setup to present its self before putting any of our hard earned money to work.
USO – Crude Oil Fund USO has provided some great short term gains for anyone who used my analysis from my Sunday night report. The quote and chart below covers my thoughts for USO.
Sunday night report: “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.”
UNG – Natural Gas Trading Fund Natural gas is still very much a speculative play as everyone thinks they will make huge money from this commodity.
This means two things in my opinion: 1. It’s still headed lower 2. After rallies the sellers jump back in.
UNG is trading near resistance and it could provide a great shorting opportunity in the coming days.
ETF Trading Conclusion: Although it’s been a quite week in the market, I have really enjoyed it. Not sure if it is related to everything unfolding in a controlled manner or the holiday season nearing, or maybe both?
November and December have been quiet for our ETFs but I know we are on the verge of either a large move up or down in the coming weeks. Let’s watch the market and funds unfold and see if we can get another trade or two in before year end.
Crude oil closed higher due to short covering on Wednesday and above the 10 day moving average crossing at 72.24 thereby signaling that a short term low has likely been posted. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold and are turning bullish with this week's rally signaling that sideways to higher prices are possible near term.
Closes above the 20 day moving average crossing at 74.89 are needed to confirm that a short term low has been posted. If January resumes the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.
First resistance is today's high crossing at 73.55 Second resistance is the 20 day moving average crossing at 74.89
First support is Monday's low crossing at 68.59 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 Wednesday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.
If January extends this month's rally, the 75% retracement level of this fall's decline crossing at 5.807 is the next upside target. Closes below the 20 day moving average crossing at 4.949 would temper the near term friendly outlook in the market.
First resistance is today's high crossing at 5.569 Second resistance is the 75% retracement level of this fall's decline crossing at 5.807
First support is the 10 day moving average crossing at 5.080 Second support is the 20 day moving average crossing at 4.949
The U.S. Dollar closed slightly higher on Wednesday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Thursday. 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, the reaction high crossing at 77.82 is the next upside target. Closes below the 20 day moving average crossing at 75.91 would temper the near term friendly outlook in the Dollar.
First resistance is Monday's high crossing at 77.57 Second resistance is the reaction high crossing at 77.82
First support is the 10 day moving average crossing at 76.52 Second support is the 20 day moving average crossing at 75.91
Exxon Mobil Corp.'s acquisition of XTO Energy Inc. is the latest sign of a changing of the guard in the U.S. oil patch, as the small companies that led an exploration boom in the past decade start to give way to the international giants. XTO, based in Fort Worth, Texas, was one of dozens of independent producers that pioneered a revolution in the U.S. natural gas industry in recent years. While global companies like Exxon and Chevron Corp. largely stayed on the sidelines, independents like XTO, Chesapeake Energy Corp. and Devon Energy Corp. leased millions of acres of land across the U.S. in search of new sources of gas and, to a lesser extent, oil.
But pumping the gas is proving to be a lot more expensive than finding it, which has led to an increasing number of joint ventures between the independent companies and the major multinational oil players, and with the acquisition announced Monday, an outright company sale. More deals are likely, analysts say, though they suggest that it may be hard to find buyers large enough to absorb the biggest independent companies.....Read the entire article.
Crude oil futures extended gains after the U.S. Energy Department released its report on stockpiles. Crude oil for January delivery rose $1.49, or 2.1 percent, to $72.18 a barrel at 10:31 a.m. on the New York Mercantile Exchange. Oil traded at $71.71 before the release of the report at 10:30 a.m. in Washington.....From Bloomberg News.
Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near.
Closes above the 20 day moving average crossing at 74.82 are needed to confirm that a short term low has been posted. 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.
Wednesday's pivot point, our line in the sand is 70.38
First resistance is the 10 day moving average crossing at 72.10 Second resistance is the 20 day moving average crossing at 74.82
First support is Monday's low crossing at 68.59 Second support is the 87% retracement level of this fall's rally crossing at 68.16
Natural gas was higher overnight as it extends last week's rally and tested the 62% retracement level of the October-December decline crossing at 5.565. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.
If January extends this month's rally, the 75% retracement level of the October-December decline crossing at 5.807 is the next upside target. Closes below the 20 day moving average crossing at 4.953 would temper the near term bullish outlook in the market.
Natural gas pivot point for Wednesday is 5.459
First resistance is the overnight high crossing at 5.569 Second resistance is the 75% retracement level of the October-December decline crossing at 5.807
First support is the 10 day moving average crossing at 5.088 Second support is the 20 day moving average crossing at 4.953
The U.S. Dollar was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought but remain neutral signaling that additional gains are possible near term.
If March extends this month's rally, the reaction high crossing at 77.81 is the next upside target. Closes below the 20 day moving average crossing at 75.90 would confirm that a short term top has been posted.
First resistance is Tuesday's high crossing at 77.58 Second resistance is the reaction high crossing at 77.81
First support is the 10 day moving average crossing at 76.50 Second support is the 20 day moving average crossing at 75.90
Crude oil's break of 71.35 resistance suggests that a short term bottom is in place and stronger rebound should now be seen towards 38.2% retracement of 82.0 to 68.58 at 73.71 and possibly above. Nevertheless, upside should be limited by 61.8% retracement at 76.87 and bring fall resumption. Below 68.58 will target 65.05 key support next.
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 resistance is needed to invalidate this view, otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
Nymex Natural Gas (NG)
Natural gas's rally extends further as expected and reaches as high as 5.569 so far. At this point, intraday bias remains on the upside as long as 5.37 minor support holds and further rise should be seen to 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, below 5.37 minor support will turn intraday bias neutral and bring retreat, probably to 4 hours 55 EMA (now at 5.159). Nevertheless, downside should be contained above 4.837 support and bring rally resumption.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 resumes as expected after consolidations from 5.318 completed. Current rally should now be targeting 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Break of 4.432 support is needed to indicate that natural gas has topped. Otherwise, outlook will remain bullish.....Nymex Natural Gas Continuous Contract 4 Hours Chart.
