Weekend Gold, Silver, Oil & Index Charts

From guest analyst Chris Vermeulen....

Three weeks ago on February 5th, we saw an extremely high level of fear in the market with selling vs. buying volume at a 9:1 ratio. We note that in 2009 this extreme level of fear occurred at the bottom of each significant pullback.

Since this panic selling low in February 2010 we have seen stocks and commodities work their way higher, which we expected. Overall the broad market looks as though it’s trying to make a move higher.

Below are some ETF charts of gold, silver, oil and the indexes.



Gold lead the market higher in 2009 and also lead the market lower in December of 2009. It looks as though gold could be starting a new trend higher.

You can see the clean breakout of the down channel and then a test of the channel at support. This type of price action also forms an inverse head and shoulders pattern for those who like trading patterns.  This is very bullish price action.

SLV Silver ETF – Daily Trading Chart
Silver has much of the same chart features as gold, but is slightly skewed. This is not particularly surprising though, as silver virtually always behaves with less defined chart patterns due to its characteristically funky price action.



USO Oil Fund – Daily Trading Chart

As with gold and silver, oil’s trading chart has formed a pivot low also, but the trend line is much steeper than what I am looking for. I prefer a flatter trend line as price growth is more sustainable.

As you can see in on the USO chart, back in December price rallied at almost the same angle as is currently the case, and then notice what happened. Once the momentum died out the price dropped straight back down. I call steep trends like this a Parabolic Rally.

Scroll up and look at the first chart (GLD) and observe the parabolic rally going into December. It too suffered a sharp drop straight back down when momentum died out.



Stock Indexes – SP500, Dow Jones, Russell 2000

Last week the market sold down the first half of the week, then bounced back up forming a possible pivot low. The daily chart for these indexes look virtually the same as the GLD, SLV and USO charts above for the past 5 trading sessions.

But, one little thing has me concerned….
When looking at the 5 minute intraday charts (posted below) you can see at the very last minute before the market closed HUGE selling volume flooded the ETFs. The market ended up losing all of its gain for the day.

With any luck this was just end of the month hedge, mutual fund, etc. portfolio rebalancing. But I am somewhat concerned that more of this selling could step back into the market Monday or Tuesday.



Weekend Trading Conclusion:

Overall, last week started on a negative note but ended strong after forming a reversal pattern.

It looks as though stocks and commodities have formed an ABC retrace pattern and are now ready to move higher.

How much higher you ask?

Well, I believe 2010 is going to be a traders market. I envision an 8-12 month sideways consolidation (large bull flag) forming. If this materializes then buying on over sold dips, as we did on Feb 5th, and scaling out on strength at resistance levels will be our goal in the coming months.

A bunch of 4-8% trades is what I’m figuring, but with leveraged etfs we can double and triple those type of returns. Now that is something to anticipate with delighted optimism!

If you would like to receive Chris Vermeulen's free weekly trading reports please visit The Gold And Oil Guy.


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Crude Oil Weekly Technical Outlook

Crude oil turned into consolidation after edging high to 80.51 initially last week and turned and dipped to as low as 77.05. Nevertheless, with 75.69 resistance turned support intact, rise from 69.05 should still be in progress. Indeed, Friday's strong rebound indicates that consolidation from 80.51 might have completed already. Initial bias is cautiously on the upside this week. Break of 80.51 will confirm rise resumption and should target a retest on 83.95 high next. On the downside, in case of another fall, outlook will remain bullish as long as 75.69 support holds. However, break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook 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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Weak Dollar Gives Crude Oil Bulls New Life

Crude oil closed higher due to short covering on Friday as it consolidates some of Thursday's decline. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top is in or is near.

Closes below the 20 day moving average crossing at 77.06 would confirm that a short term top has been posted. If May resumes this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target.

First resistance is Monday's high crossing at 81.15
Second resistance is the 75% retracement level of the January-February decline crossing at 81.63

First support is Thursday's low crossing at 77.44
Second support is the 20 day moving average crossing at 77.06

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Natural gas closed higher due to short covering on Friday as it consolidates above the 87% retracement level of the December-January rally crossing at 4.819. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends this week's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.257 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 5.110
Second resistance is the 20 day moving average crossing at 5.257

First support is today's low crossing at 4.803
Second support is December's low crossing at 4.656

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The U.S. Dollar closed lower on Friday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 80.27 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is the 20 day moving average crossing at 80.27
Second support is Tuesday's low crossing at 80.15


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Obama Administration Misses Deadline for Offshore Drilling Study

The Obama administration failed to meet a deadline for submitting a court-ordered analysis of the environmental effects of offering new leases to drill in Alaskan coastal waters, the oil industry said Thursday.

A federal appeals court last year had invalidated the Interior Department's current five year plan for offering oil and gas leases, saying that the government hadn't conducted an adequate review of the environmental impact in the Beaufort, Bering and Chukchi seas off the Alaskan coast. The Interior Department's Minerals Management Service has been conducting such a review and is supposed to respond to the court.

"We are disappointed MMS has again missed a deadline to provide the court with the analysis it ordered last April," Jack Gerard, the chief executive of the American Petroleum Institute, said in a statement. "This will delay investment decisions, delay the production of much-needed oil and natural gas and delay the creation of much-needed jobs."

An Interior Department spokeswoman said that the federal government was working on an approach to drilling in the Outer Continental Shelf soon.

"The secretary expects to be making an announcement about a comprehensive approach on the OCS in the coming weeks," spokeswoman Kendra Barkoff said.

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Crude Rises in New York as U.S. Economic Growth Signals Increased Demand

Crude oil rose after a report showed the U.S. economy grew at a 5.9 percent annual rate in the fourth quarter, signaling that fuel demand may climb in the world’s biggest energy consuming country. Oil increased as much as 2.3 percent after the Commerce Department said gross domestic product gained by the most in six years. The growth rate was higher than the government reported last month. Federal Reserve Chairman Ben S. Bernanke said this week that the U.S. economy is in a “nascent” recovery.

“The positive GDP number is putting upward pressure on prices,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “We are going to be focused on anything that gives an indication of where the economy is going.” Crude oil for April delivery rose $1.70, or 2.2 percent, to $79.87 a barrel at 10:41 a.m. on the New York Mercantile Exchange. The April contract is down 0.2 percent this week.

Gasoline for March delivery climbed 4.3 cents, or 2.1 percent, to $2.08 a gallon in New York. The increase in prices accelerated as the dollar dropped against the euro. A weaker U.S. currency bolsters the appeal of raw materials as an alternative investment. The greenback traded at $1.3627 per euro, down 0.6 percent from $1.3548 yesterday. Oil fell 2.3 percent yesterday after the number of Americans filing first time claims for unemployment benefits unexpectedly gained in the week ended Feb. 20, and durable goods orders excluding transportation dropped in January.....Read the entire article.


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Crude Oil Daily Technical Outlook For Friday Morning

Crude oil's consolidation from 80.51 continues today and intraday bias remains neutral. While deeper retreat cannot be ruled out, note that rise from 69.50 is in favor to continue as long as 75.69 support holds. Above 80.51 will target a retest on 83.95 high. However, break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Crude Oil Signals Show Overbought Condition, Do we Have a Top?

Crude oil closed lower on Thursday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top is in or is near.

Closes below the 20 day moving average crossing at 76.80 would confirm that a short term top has been posted. If May resumes this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target.

Thursday evenings pivot point, our line in the sand is 78.58

First resistance is Monday's high crossing at 81.15
Second resistance is the 75% retracement level of the January-February decline crossing at 81.63

First support is today's low crossing at 77.44
Second support is the 20 day moving average crossing at 76.80

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas closed lower on Thursday and tested the 87% retracement level of the December-January rally crossing at 4.819. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends this week's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.272 are needed to confirm that a low has been posted.

Natural gas pivot point for Thursday evening is 4.811

First resistance is the 10 day moving average crossing at 5.167
Second resistance is the 20 day moving average crossing at 5.272

First support is today's low crossing at 4.808
Second support is December's low crossing at 4.656

Just click here for your FREE trend analysis of natural gas ETF UNG

The U.S. Dollar closed lower due to profit taking on Thursday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are diverging but are neutral signaling that sideways to higher prices are possible near term.

If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 80.23 are needed to confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is the 20 day moving average crossing at 80.23
Second support is Tuesday's low crossing at 80.15

Just click here for your FREE trend analysis of the U.S. Dollar ETF UUP

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Gold GLD Outperforming Gold Mining Stocks GDX

Gold, the SPDR Gold Shares (NYSE: GLD) and the Market Vectors Gold Miners ETF (NYSE: GDX, have turned positive this morning, in the aftermath of intense selling pressure earlier in the session. This is a sign of meaningful relative strength in the sector, but the day is young yet. Looking at the GDX chart, today's spike low at 41.35 followed by a powerful upmove to 42.50, where it continues to sustain since the opening few minutes, has the look and the feel of the completion of the correction from the 2/18 high at 45.56. With that in mind, I am looking for confirmation of today's low upon an upside penetration of 43.05.



From Mike Paulenoff, author at MPTrader.com, a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.
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Phil Flynn: Bens Magic

Is Ben Bernanke losing his influence over the Energy Market? Oh sure bleak Ben told the market yesterday that interest rates would stay low for infinity and that the economy was not ready for the training wheels you come off but his words seemed to lack the wallop that his words had in the past. Oh sure we got a break in the dollar the stock market and oil dutifully rallied yet at the end of the day it does not seem to be a market game changer like Ben has given us in the past. Perhaps the reason in part that the market realizes that despite the promise low interest rates until the second coming Bens words will have less impact on the value of oil because his words will have less impact on the value of the dollar.

Over the past year it is obvious that Fed Monetary policy of negative interest rates has been the major factor in the rebound in oil. That was in part because the dollar got smashed and the imaginary belive that somehow the EURO was a better currency. Yet does anyone belive that now? On one TV screen you have Ben saying that low interest rates and are here to stay and on the other screen that Greek strikers on the other protesting financial reforms? When you look at that and no matter when you think the Fed will really raise interest rates, will it really make the dollar look worse against the Euro?

We have been living in a world of negative interest rates since last March and to be honest with you the dollar has priced in that scenario to death, Yet now that scenario is changing. Low interest rate promises by the Fed are no longer an excuse to trash the dollar and prop up the euro or even the yen for that matter. Yes the dollar may see some ups and downs yet based on the problems in the rest of the world it appears that the dollar even with low interest rates and record budget deficits the dollar is still undervalued against other global currencies. The Dollar took the brunt of the credit crisis and secretly Ben embraced that. The weak dollar set the stage for the carry trade and helped bail out global banks. Yet now despite bens pronouncement and commitment to low rates the market is showing that rates cannot stay low forever. We see record and near record spreads in the yield curve sending a signal that the market won’t stand for this forever and Ben wants to temper expectations so he can keep the carry trade money machine chugging a little longer. But with the increase in the discount rate and decision within the Fed we all know that we are getting closer to an exit every day so oil bulls cannot on the Fed and this Ben Bernanke inspired rally to go on forever

Oil bulls also bought because we are getting a winter storm in the Northeast, others because we saw an increase in gas demand. But won’t one offset the other? The Energy Information Agency reported a surge in refinery runs to an unimpressive level of 81.2%. The EIA reported that crude inventories increased by 3.0 million barrels, gasoline inventories decreased by 0.9 million barrels and distillate fuel inventories decreased by 0.6 million barrels.

Long term Phil is still bearish on oil. You can contact Phil by emailing him at pflynn@pfgbest.com! Also you can see Phil online today on Fox Business network online and on TV. Check it out!

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Crude Prices Decline, Following Equity Markets After U.S. Economic Reports

Crude oil fell the most in three weeks as U.S. jobless claims and manufacturing orders trailed forecasts, stirring concern that the global economic recovery may falter and crimp energy demand growth. Oil decreased as much as 3.7 percent to the lowest level in a week as the number of Americans filing first time claims for unemployment insurance unexpectedly increased last week, and durable goods excluding transportation declined in January.

“It’s going to take better jobs, better consumer confidence, better business confidence and getting everything going into a better direction before you can support crude oil in a $75 to $80 level,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington.

Crude oil for April delivery fell $2.71, or 3.4 percent, to $77.29 a barrel at 11:36 a.m. on the New York Mercantile Exchange, the biggest decline since Feb. 4. Earlier, it touched $80.32. Oil has dropped 2.6 percent this year.

Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and those receiving extended benefits decreased.

Orders for durable goods fell 0.6 percent, the biggest drop since August, figures from the Commerce Department showed today in Washington. Bookings for all goods meant to last several years rose 3 percent, more than anticipated and reflecting a jump in commercial aircraft.....Read the entire article.


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