Year End Commodity & ETF Trend Trading Signals

Well, here we are with only hours left before the year is over. Virtually every investment is up other than the US dollar. Not much has changed since my last gold market trends report. But I have provided some interesting charts that show us what is possible in the coming weeks for the dollar, gold and natural gas.

US Dollar Trend Analysis – Resistance Levels
The dollar has shown some strength in the past month. It was a no brainer trade for 2009. You were either long gold or short the dollar. The chart below shows the key resistance levels for the $USD. I have a feeling we are going to see the dollar test the 80 -81 levels before rolling over and heading south again.

If this happens then gold and silver will continue to pull back. I am actually hoping the dollar moves higher and gold drops back to test the $1000-1060 level. This would clear the way for gold and the dollar to continue with their longer term trends with increased momentum (dollar collapses, gold goes parabolic).



GLD Gold ETF – Daily Chart
The daily gold swing trading chart is really starting to look attractive for a buy signal. Depending on what the US dollar does in the coming days will set the tone for gold.

We could see gold start to rally starting tomorrow or it will become volatile and start to sell off sharply in the coming days. Right now we have very light volume so any moves/breakouts cannot be taken seriously or with a large position.

If the dollar starts to rally we could see the GLD ETF drop to the $97.50 – $103 level.



Spot Gold Trend Analysis – 18 Day, 1hr Bar Chart
Starting in 2010 I will be providing futures trading analysis and signals so I thought I would provide a chart of the spot gold trend I have been day trading over the holidays.

This may seem like I am going against my #1 trading Rule – Never Trade Against the Trend, but the trend changes depending on time frame and trading style you are using. In short, gold reversed very strong 18 days ago just as we anticipated it would. The selling momentum was so strong it made for excellent gold futures day trading setups which I took advantage of over the past 10 trading days.

The chart below is of the 100 ounce gold GC Feb 10 futures contract which I traded. The chart is shrunk down and does not show my setups, nor does the chart look very sexy, but it clearly shows the direction of the trend and the BIG SELLING VOLUME.

The table shows my recent trades and if you take a close look all of the trades I did were Short Trades. Because the momentum and trend is down on this time frame I only traded perfect short setups (profiting from gold as it loses value).



UNG Natural Gas Trading Fund
UNG appears to be trading at resistance and starting to look like its rolling over. It did move above last weeks high which voids the reversal candle we had Tuesday and Thursday, or else it would have been a short setup for us. I don’t chase a trade, that’s my #2 rule, so I am waiting for a possible bounce here, test of resistance then another reversal back down.



Commodity & ETF Year End Trends
In short, we continue the waiting game for more setups in the coming weeks as volatility and volume creep back into the market. The dollar and gold are currently trading at pivot points and no one knows which way to play them.

Trading futures run virtually 24 hours a day and have provided some excellent trading opportunities that I will be providing in the coming weeks for traders.

Natural Gas is trading at pivot point and looking ready for another move down.

Crude oil and the board market I feel will top out in the next 2-5 days but nothing worth putting any money on at this time.

I would like to thank everyone for their kind words and support over the past 12 months. I wish you all a happy and safe New Years!

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Crude Oil to Record the Strongest Annual Gain in a Decade

Crude oil edged higher to settle at 79.28, up +0.5%, Wednesday as the EIA report showed inventory draw in crude and major oil products. Tension between Iran and the Western world, potential oil exports from OPEC and market optimism after strong macro-economic data also boosted price. The February contract, currently trading at 79.6, is prone to record the third weekly gain. Crude oil price, surging almost +80% in 2009, will probably record the biggest annual increase since 1999. According to the US Energy Department, crude inventory drew -1.54 mmb to 326 mmb in the week ended December 25. Cushing stock also drew -0.19 mmb. For oil products, distillate stockpile dipped -2.06 mmb (consensus: -2.23 mmb) to 159.3 mmb. This an initial sign of moderation in the pace of inventory draw. Gasoline inventory also dropped -0.37 mmb to 216 mmb.

Decline in inventory levels in recent weeks has been sending a positive signal to investors that the energy market is improving. This is also the major reason for oil's rally these 2 weeks. However, details in fuel demand suggest we should be more cautious. 4 week averaged demand for gasoline was 9.024M bpd, compared with 9.041M bpd the same period in 2009, while the 4-week averaged demand for distillate, at 3.689M bpd , was -8.8% below the same period last year. Since the protest began on December 27 in Tehran, the Iranian government has detained about 1000 people. At the same time, Iran accuses Western countries of spurring the demonstrations. Oil prices usually get supported when turmoil occurs, especially in the Middle East as the region in rich in oil. Iran, the world's second largest oil producer, may threaten to suspend oil exports if the tension escalates.....Read the entire article.

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Crude Oil and Natural Market Commentary For Thursday Morning

Crude oil was higher overnight as it extends the rally off this month's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends this rally, the reaction high crossing at 80.40 is the next upside target. Closes below the 20 day moving average crossing at 75.47 are needed to confirm that a short term top has been posted.

Thursday's pivot point, our line in the sand is 79.18

First resistance is the overnight high crossing at 79.98
Second resistance is the reaction high crossing at 80.40

First support is the 10 day moving average crossing at 76.77
Second support is the 20 day moving average crossing at 75.47

Just click here for your FREE trend analysis of USO

Natural gas was higher due to short covering overnight as it consolidates some of Wednesday's decline but remains below broken support marked by the 10 day moving average crossing at 5.801. Stochastics and the RSI are overbought, diverging and are turning bearish signaling that sideways to lower prices are possible near term.

Closes below the 20 day moving average crossing at 5.475 are needed to confirm that a short term top has been posted. If February resumes this month's rally, the 87% retracement level of the October-December decline crossing at 6.077 is the next upside target.

Natural gas pivot point for Thursday is 5.770

First resistance is Tuesday's high crossing at 6.038
Second resistance is the 87% retracement level of the October-December decline crossing at 6.077

First support is the overnight low crossing at 5.679
Second support is the 20 day moving average crossing at 5.475

Just click here for your FREE trend analysis of UNG

The U.S. Dollar was lower overnight and is trading below initial support marked by the 10 day moving average crossing at 78.20. Stochastics and the RSI have turned bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 77.36 are needed to confirm that a short term top has been posted. If March renews this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is Tuesday's low crossing at 77.67
Second support is the 20 day moving average crossing at 77.36

Just click here for your FREE trend analysis of UUP


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Do I Hear Six Days? Crude Oil Closes Higher Yet Again

Crude oil closed higher for the sixth day in a row on Wednesday as it extends the rally off this month's low. Tighter crude oil inventories were the primary factor behind today's strength in the crude oil market. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are becoming overbought but remain bullish signaling that sideways to higher prices are possible near term.

If February extends this rally, the reaction high crossing at 80.40 is the next upside target. Closes below the 20 day moving average crossing at 75.40 would confirm that a short term top has been posted.

First resistance is today's high crossing at 79.80
Second resistance is the reaction high crossing 80.40

First support is the 10 day moving average crossing at 76.26
Second support is the 20 day moving average crossing at 75.40

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Natural gas closed lower due to profit taking on Wednesday and below the 10 day moving average crossing at 5.774 signaling that a short term top has likely been posted. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought but are neutral signaling that sideways to higher prices are possible near term.

If February extends this month's rally, the 87% retracement level of this fall's decline crossing at 6.077 is the next upside target. Closes below the 20 day moving average crossing at 5.416 would confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 6.038
Second resistance is the 87% retracement level of this fall's decline crossing at 6.077

First support is today's low crossing at 5.695
Second support is the 20 day moving average crossing at 5.416

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The U.S. Dollar closed higher due to short covering on Wednesday as it consolidated some of the decline off last week's high. Profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 77.22 are needed confirm that a short term top has been posted. If March renews the current rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is Tuesday's low crossing at 77.67
Second support is the 20 day moving average crossing at 77.22

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OPEC Has Way Too Much Oil For 2010

According the Energy Information Administration's (EIA) latest energy outlook, while world energy consumption is expected to grow in 2010, it will only be adding 1.1 million barrels of consumption and will remain below its past peak consumption.
This tepid demand growth will butt against production increases for many non OPEC oil producers, which means that OPEC will be under substantial pressure to limit its output, and obviously will.

Yet this will require massive discipline for the member nations given that OPEC's surplus crude oil production capacity will actually rise in 2010, after a huge increase is surplus capacity during 2009. 2010 will see the worst OPEC overcapacity situation since 2002.....Let's go to the charts!.

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Natural Gas Producers Seek Long Term Contracts

In a sign that low natural gas prices are probably here to stay, big U.S. energy companies are pushing to sign long term contracts with electric utilities and other customers. Major producers such as Chesapeake Energy Corp. and Devon Energy Corp. are trying to reach multiyear deals, likely five or 10 years long, that would guarantee them buyers for their gas but would deny them the benefits from any sudden price increases.

For a decade, energy companies have shunned such agreements because they wanted to profit when gas prices soared, as they often did, especially in advance of rising winter demand for gas heat. But huge new gas fields in Texas, Louisiana, Pennsylvania and elsewhere have led to a surge in U.S. natural gas production, glutting the market even as the recession has sapped demand for all forms of energy. Prices have plummeted to less than $6 per million British thermal units, less than half their price in July 2008.....Read the entire article.

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Crude Oil Set for Biggest Annual Gain in Decade Amid Iran Political Unrest

Crude oil was little changed, heading for its biggest annual gain in a decade, on forecasts that U.S. stockpiles are narrowing while unrest in Iran sows concerns supply will be disrupted. U.S. crude inventories likely fell by 1.85 million barrels last week, according to analysts surveyed by Bloomberg News before an Energy Department report due today at 10:30 a.m. in Washington. Iran, holder of the world’s second largest crude reserves, detained about 1,000 people after the biggest anti- government demonstrations in six months.

“Stocks are showing the market is getting towards a more balanced situation, though it will take time,” said Alexandra Kogelnig, a consultant with JBC Energy GmbH in Vienna. “Tensions in Iran are always a factor even if there is nothing immediately happening, as if something major happens it will affect exports.” Crude oil for February delivery was at $78.73 a barrel, 14 cents lower in electronic trading on the New York Mercantile Exchange, as of 12:57 p.m. London time. It earlier rose as much as 32 cents, or 0.4 percent, to $79.19 a barrel. Futures are set for a 77 percent gain this year, the biggest since 1999. Prices have tripled in the past decade.....Read the entire article.

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Crude Oil and Natural Gas Technical Outlook For Wednesday Morning

Nymex Crude Oil (CL)

Upside momentum in crude oil remains unconvincing with 4 hours MACD staying below signal line. Bias remains neutral for the moment and some more sideway consolidation could be seen. But still, downside should be contained by 76.19 support and bring another towards 82.0 resistance. However, a break of 76.19 will argue that rebound from 68.59 has completed and deeper fall should then be seen to 71.21 support first.

In the bigger picture, the strong rebound from put crude oil back above 55 days EMA and dampens the bearish view that it has topped out at 33.2. We'll stay neutral for the moment with focus on 82.0 resistance. Break there will indicate that whole medium term rise from 33.2 is still in progress. Nevertheless, focus will remain on reversal signal as we'd expect such rise to conclude inside 76.77/90.24 fibo resistance zone.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas retreats again after rising to 6.035 and continues to lose upside moment. Intraday bias is turned neutral for the moment. Considering bearish divergence conditions in 4 hours MACD, a short term top might be in place at 6.035 already. Break of 5.76 will bring deeper pull back towards 5.29 resistance turned support. On the upside, though, above 6.035 will indicate that recent rise is still in progress for 38.2% retracement of 13.694 to 2.409 at 6.72.

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 is still in progress and should target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. On the downside, break of 4.157 support is needed to indicate that medium term rise from 2.409 has completed. Otherwise, outlook is neutral at worst even in case of deep pullback.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Bulls Maintain The Advantage Despite Profit Taking

Crude oil was slightly lower due to light profit taking overnight as it consolidates some of its recent gains. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If February extends this rally, the reaction high crossing at 80.40 is the next upside target. Closes below the 20 day moving average crossing at 75.38 are needed to confirm that a short term top has been posted.

Wednesday's pivot point, our line in the sand is 78.76

First resistance is Tuesday's high crossing at 79.39
Second resistance is the reaction high crossing at 80.40

First support is the 10 day moving average crossing at 76.20
Second support is the 20 day moving average crossing at 75.38

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

If February extends this month's rally, the 87% retracement level of the October-December decline crossing at 6.077 is the next upside target. Closes below the 20 day moving average crossing at 5.423 would confirm that a short term top has been posted.

Natural gas pivot point for Wednesday is 5.900

First resistance is Tuesday's high crossing at 6.038
Second resistance is the 87% retracement level of the October-December decline crossing at 6.077

First support is the 10 day moving average crossing at 5.787
Second support is the 20 day moving average crossing at 5.423

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The U.S. Dollar was higher overnight as it consolidates above initial support marked by the 10 day moving average crossing at 78.15. However, stochastics and the RSI are turning neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 77.22 are needed to confirm that a short term top has been posted. If March renews this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is Tuesday's low crossing at 77.67
Second support is the 20 day moving average crossing at 77.22

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Phil Flynn: New Year Traditions

Energy disputes between the Ukraine and Russia are becoming as much of a New Year’s tradition as the Waterford ball falling in Times Square. Once again as the new year approaches, we have another dispute between Russia and the Ukraine that may or may not be settled and rising tensions in and around Iran may cause more caution from sellers as we get ready to celebrate another holiday.

Sometimes the price gets ahead of the fundamentals. Other times the fundamentals catch up to the price. Last week in a holiday shortened trading week, oil got too excited about cold weather and a flawed weekly inventory report as the marketplace lacked the type of perspective it has when there is more volume. Yet yesterday I feared that the market might not be taking seriously enough the threats that were evolving in Europe and Iran. Of course if you assume that last week went too high and now we are holding gains it looks like once again the market had it right in the first place. It seems that rising geo-political heat is in part helping justify the extended rise.....Read the entire article.

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