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While upside momentum is diminishing in crude oil, further rise is still in favor with 80.16 minor support index. Current rally from 69.50 could extend further to retest 83.95 high. Nevertheless, break of 80.16 will indicate that a short term top is already in place and deeper pull back should be seen to 38.2% retracement of 69.50 to 83.03 at 77.86 and below.
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 69.50 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.
Crude oil closed unchanged on Thursday as it consolidates above the 75% retracement level of the January-February decline crossing at 81.63. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 79.93 would confirm that a short term top has been posted. First resistance is Tuesday's high crossing at 83.36. Second resistance is the 87% retracement level of the January-February decline crossing at 83.53. First support is the 10 day moving average crossing at 81.20. Second support is the 20 day moving average crossing at 79.93.
Natural gas closed lower on Thursday as it extends some of this winter's decline. 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 winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.924 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.682. Second resistance is the 20 day moving average crossing at 4.924. First support is today's low crossing at 4.487. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed lower on Thursday as it extends the trading range of the past five weeks. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Wednesday's low crossing at 80.14. Second support is the reaction low crossing at 79.92.
Crude oil was little changed along with the dollar after U.S. government reports showed that the country’s trade deficit narrowed, indicating a slowing economic recovery, and jobless claims decreased. Oil fluctuated as the U.S. currency changed direction against the euro on the conflicting economic news. The strength of the dollar has guided commodity prices over the past three years as investors look at raw materials as a store for value. U.S. equities were little changed.
“We aren’t doing much because the dollar is consolidating and equities have been covering the same ground for the last three days,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “There’s a consensus that the economy is growing, but also a great deal of uncertainty about the strength of the recovery.” Crude oil for April delivery increased 2 cents to $82.11 a barrel on the New York Mercantile Exchange, the highest settlement price since Jan. 11. Futures are up 94 percent from a year earlier.
The dollar traded at $1.3677 against the euro, down 0.2 percent from $1.3657 yesterday. The Standard & Poor’s 500 Index gained 4.63, or 0.4 percent, to 1,150.24. The S&P 500 dropped as much as 0.6 percent earlier today. The index has risen 1 percent so far this week. “We don’t trade on oil-market news anymore, instead we look at what’s happening with the stock market and dollar,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.....Read the entire article.
HOT! HOT! HOT! Inflation in China may be getting too hot to handle! Don't touch or you could get burned. Could emerging China bubbles turn the commodities bull market into rubble? China’s inflation rate for consumer prices came out at a much hotter than expected 2.7 percent. That was sizzling compared to Januarys 1.5 percent rise and it was also a 16 month high. This sharp increase will make Chinese officials worry about potential trouble spots and may make them more aggressive trying to battle those inflationary demons.
So far it is obvious that steps by the Chinese government to let some air out of their rapidly expanding bubble have been a failure. Despite the aggressive move to raise reserve requirements on banks and step back from standing behind regional banks, it's obvious China is going to have to take away more of the punch bowel to help extinguish these inflationary flames. Heck they may need to pour the contents of the entire punch bowel over the flames to put it out. Of course the problem is that once you put out one fire another one seems to creep up.
Take for example this wonderful piece in today’s Financial Times titled, “Fears grow over China property bubble despite efforts at cooling." The FT says that, “Chinese real estate prices accelerated last month, rising by their fastest pace in two years despite government efforts to cool the market amid fears of a looming property. Prices of commercial and residential property in China's 70 largest cities rose 10.7 per cent in February from the same period a year earlier, up from the 9.5 per cent year-on-year gain in January, according to China's statistics bureau.
Since the start of the year, Beijing has introduced a series of policies aimed at cooling soaring property prices and a procession of senior officials has warned of overly fast price rises and bubbles in some markets. The figures released yesterday include subsidized and rent-controlled housing, where low price increases drag down the overall increase, as well as commercial real estate, where prices have been subdued or falling. Analysts say housing price increases are significantly higher - and this is what mostly concerns the government because they have a direct impact on people's lives and their satisfaction with Communist party rule.” A must read in today’s FT.
Of course at the same time China’s exports surged rising a whopping 45.7 percent from last year. Those strong numbers are going to increase pressure on China to allow their currency to increase in value as it is obvious that the dollar peg at this point is hurting other exporters. What is clear is that if the Chinese government fails to reign in these inconsistencies then the Chinese economy is on an unsuitable trek destined to crash. Oh sure I have heard that this time it is different, China is bubble proof! We hear it every time there is a bubble.
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So far this week has been pretty slow. Large cap stocks continue to lag the market which can be observed by looking at the Dow Jones Industrial Average which still has room to move higher before breaking the January high.
One important thing to note is that volume has picked up this week considerably, particularly on the SP500 and OEX. It’s difficult to say if this volume is a good sign or not.
A lot of stocks and sectors are trading near their January high and this gives traders a reason to unload shares. On the flip side, the several sectors and indexes have broken their January high and this triggers a surge in volume as breakout traders try to take advantage of the new high and momentum. So you can see how the surge of volume is not a useful indicator right now.
Here are some charts of what I think we could see in the coming weeks.
US Dollar Index – Daily Trading Chart I follow the US dollar index very closely simply because it affects the prices of stocks and commodities. I used a line chart below in order to take out the daily candle stick noise which made it very difficult for our eyes to pick up this pattern.
The chart shows a possible head & shoulders pattern and if that is the case then we should see the dollar start to slide lower. In turn, this would boost stocks and commodities. This is the fuel that I think could really move the market sharply higher in the coming weeks.
GLD Gold ETF – Daily Trading Chart The price of gold looks to be setup for a nice bounce off support and the timing could just work out if the US Dollar starts to drop over the next few days. There could be a low risk setup just around the corner.
SLV Silver ETF – Daily Trading Chart Silver has held up well but today’s reversal candle to the downside scares me a little. The odds are that silver will carry this strong momentum selling down for another 1-2 days. Again, with any luck, it will test support and the US Dollar will start to slide lower.
Crude Oil – Daily Trading Chart Oil has had a great run the past month but as you can see it’s currently trading at the top of a large trading range. I would like to see a sideways move before it takes another run at the $84 level, but the 7 day bull flag that formed two weeks ago may have been enough to maintain the upward momentum. Again, if the Dollar drops we will see oil rally.
Natural Gas – Daily Trading Chart This chart is actually very attractive looking. Even if you do not understand how to read charts I think it’s safe to say this one is a no brainer.
I will be closely watching for a potential low risk setup in the coming days.
Mid-Week Trading Conclusion: In short, stocks and indexes are trading at resistance levels with many of them making new highs and that is great to see.
A lot of things are trading in limbo waiting to see what the US Dollar is going to do. Several months ago I posted some charts showing that 81 would be a key resistance level for the dollar. If it broke above that then 84 would be the next key level to watch. So we just have to wait and see… the hardest part of trading is the waiting.
Gold, silver, oil and natural gas all look like they could continue higher in the next few days if things unfold that quickly. But the market always finds a way to drag out moves so we could still be a 2-3 weeks away.
I hope this report helps give you an idea of where things are at in the market.
Crude oil is still staying in tight range as consolidations continues. Upside momentum is clearly diminishing with bearish divergence condition in 4 hours MACD. But still, another rise is in favor as long as 80.16 minor support holds. Current rally might still extend further for retesting 83.95 high. However, break of 80.16 minor support will argue that a short term top is already formed. In such case, deeper pull back should be seen to 38.2% retracement of 69.50 to 83.03 at 77.86 and below.
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 69.50 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
Crude oil closed higher on Wednesday as it consolidates above the 75% retracement level of the January-February decline crossing at 81.63. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 79.53 would confirm that a short term top has been posted. First resistance is today's high crossing at 83.36. Second resistance is the 87% retracement level of the January-February decline crossing at 83.53. First support is the 10 day moving average crossing at 80.79. Second support is the 20 day moving average crossing at 79.53.
Natural gas closed higher due to short covering on Wednesday as it consolidates some of this winter's decline. The high range close sets the stage for a steady to higher opening on Thursday. 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 winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.974 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.715. Second resistance is the 20 day moving average crossing at 4.974. First support is today's low crossing at 4.512. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed lower on Wednesday as it extends the trading range of the past five weeks. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Wednesday's low crossing at 80.14. Second support is the reaction low crossing at 79.92.
Every Wednesday, spot crude oil traders look to one the most significant fundamental data pieces; the weekly crude oil inventories report. The crude oil inventories report has the ability to sway the price of spot crude oil to a new swing high, or a new session low.
The crude oil inventories report that is released by the U.S. Energy Information Administration can move the price of spot crude oil on average of $1.90 the day the report is released. But the direction of the price move varies. The change in price is not dependant on higher or lower inventory numbers, nor is it dependant on the levels of gasoline or other distillates that the report measures. We would expect that a lower level of crude oil inventories would help to increase the price of spot crude oil. However, there is no significant trend correlation between the price direction and the release of the report, telling traders in which direction the price will move, up or down. We do know that price volatility is typically higher the day the report is published.
When trading spot crude oil during the release of the crude oil inventory numbers, traders also need to be looking at the direction of the general price trend of the commodity. Traders should also be tracking other markets that can significantly influence the price of spot crude oil. The movements of the U.S. dollar and crude oil typically have an inverse relationship; as the USD strengthens, the price of spot crude oil falls. The opposite is true in relation to the S&P 500. As the value of the U.S. stock index rises, so does spot crude oil prices.
This is only a small list of the factors that can affect spot crude oil trading. Traders need to make sure they are taking in all relevant information when trading spot crude oil. The EIA crude oil inventories report is a significant factor, but certainly not the only influencer on the market.
Crude oil fell from an eight week high after a government report showed that U.S. inventories climbed for a sixth week, the longest stretch since May.
Stockpiles rose 1.43 million barrels to 343 million in the week ended March 5, according to the Energy Department report. Imports tumbled 8.1 percent to an average 8.49 million barrels a day, the biggest one week drop since October.
Crude oil for April delivery fell 13 cents to $81.36 a barrel at 12:25 p.m. on the New York Mercantile Exchange. Futures reached $83.03, the highest level since Jan. 11.
Brent crude for April delivery declined 35 cents, or 0.4 percent, to $79.56 a barrel on the London based ICE Futures Europe exchange. Futures touched $81.46, the highest level since Jan. 11.
From Mark Shenk at Bloomberg news. You can contact Mark at mshenk1@bloomberg.net.
Intraday bias in Crude oil remains neutral for the moment as consolidation from 82.41 continues. Another rise is still mildly in favor with 79.75 minor support intact and above 82.41 will target a retest on 83.95 high. However, considering bearish divergence condition in 4 hours MACD, break of 79.75 support will indicate that a short term top is formed and will bring deeper fall to 38.2% retracement of 69.50 to 82.41 at 77.48 next.
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 69.50 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
