CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Monday, March 15, 2010
Crude Oil Market Commentary For Monday Evening
Crude oil closed lower on Monday and below the 20 day moving average crossing at 80.44 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. If May extends today's decline, the reaction low crossing at 77.44 is the next downside target. Closes above the 10 day moving average crossing at 81.44 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 81.44. Second resistance is last Friday's high crossing at 83.47. First support is today's low crossing at 80.89. Second support is the reaction low crossing at 77.44.
Natural gas closed higher due to short covering on Monday as it consolidates some of this winter's decline. The high range close sets the stage for a steady to higher opening on Tuesday. 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 4.824 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.614. Second resistance is the 20 day moving average crossing at 4.824. First support is today's low crossing at 4.407. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed higher on Monday as it rebounds off the lower boundary of the trading range of the past six weeks. The high range close sets the stage for a steady to higher opening on Tuesday. 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 Friday's low crossing at 79.95. Second support is the reaction low crossing at 79.92.
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New Video: A Sneak Peek At The S&P 500
This week could be shaping up to be an extraordinary week in the markets. We strongly recommend that traders everywhere take precautionary measure measures to protect capital.
While the S&P 500 made new highs for the year last week, it did not do so in a very convincing manner. In today's short video we show you some of the elements that we think should be cause for concern.
Just click here to watch todays video and as always our videos are free to watch and there are no registration requirements. Please feel free to leave a comment and let us know what you think about the video and the direction of the SP 500.
Is The US Dollar Reversing Again?
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Oil Drops to One Week Low Below $80 a Barrel as Dollar Gains
Crude oil fell to the lowest level in more than a week as the dollar gained, curbing demand for most commodities as an alternative investment.
Oil decreased as much as 2.3 percent as the dollar index, which tracks the U.S. currency against six others, advanced for the first time in four days and as crude broke through a technical-support level at $80 a barrel.
“There’s some dollar buying, which is putting some pressure on commodities,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. The selling “is more technical than anything else.”
Crude oil for April delivery fell $1.70, or 2.1 percent, to $79.54 a barrel at 11:06 a.m. on the New York Mercantile Exchange. Earlier, it touched $79.40 a barrel, the lowest price since March 2 on an intraday basis. Crude has risen 73 percent in the past year.
The dollar index climbed 0.4 percent to 80.184, its first increase since March 9.
Equities retreated, led by emerging markets, and commodities declined on concern that China and India will seek to restrict economic growth to curb inflation.
“That kind of sets up for a possible topping scenario in crude oil,” said Richard Ilczyszyn, a Chicago-based senior market strategist with Lind-Waldock, a division of MF Global Ltd.
The Standard & Poor’s 500 Index, which rose to a 17-month high on March 11, lost 0.5 percent to 1,144.39 at 11:08 a.m. in New York. The Shanghai Composite Index closed at the lowest level in five weeks.
China Growth
China will account for almost a third of global oil-demand growth this year, the International Energy Agency said last week as it raised its forecast for global oil demand this year by 70,000 barrels a day to 86.6 million. Economies outside the Organization for Economic Cooperation and Development will continue to lead a recovery in energy consumption, it said.
The Organization of Petroleum Exporting Countries will maintain existing production at a meeting this week as it awaits further confirmation of a recovery in demand, according to a Bloomberg News survey of analysts. The group, which pumps 40 percent of the world’s oil, meets for the first time this year on March 17.
Brent crude oil for April settlement dropped $1.81, or 2.3 percent, to $77.65 a barrel on the London-based ICE Futures Europe exchange.
Reporter Margot Habiby can be contacted at mhabiby@bloomberg.net
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Oil decreased as much as 2.3 percent as the dollar index, which tracks the U.S. currency against six others, advanced for the first time in four days and as crude broke through a technical-support level at $80 a barrel.
“There’s some dollar buying, which is putting some pressure on commodities,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. The selling “is more technical than anything else.”
Crude oil for April delivery fell $1.70, or 2.1 percent, to $79.54 a barrel at 11:06 a.m. on the New York Mercantile Exchange. Earlier, it touched $79.40 a barrel, the lowest price since March 2 on an intraday basis. Crude has risen 73 percent in the past year.
The dollar index climbed 0.4 percent to 80.184, its first increase since March 9.
Equities retreated, led by emerging markets, and commodities declined on concern that China and India will seek to restrict economic growth to curb inflation.
“That kind of sets up for a possible topping scenario in crude oil,” said Richard Ilczyszyn, a Chicago-based senior market strategist with Lind-Waldock, a division of MF Global Ltd.
The Standard & Poor’s 500 Index, which rose to a 17-month high on March 11, lost 0.5 percent to 1,144.39 at 11:08 a.m. in New York. The Shanghai Composite Index closed at the lowest level in five weeks.
China Growth
China will account for almost a third of global oil-demand growth this year, the International Energy Agency said last week as it raised its forecast for global oil demand this year by 70,000 barrels a day to 86.6 million. Economies outside the Organization for Economic Cooperation and Development will continue to lead a recovery in energy consumption, it said.
The Organization of Petroleum Exporting Countries will maintain existing production at a meeting this week as it awaits further confirmation of a recovery in demand, according to a Bloomberg News survey of analysts. The group, which pumps 40 percent of the world’s oil, meets for the first time this year on March 17.
Brent crude oil for April settlement dropped $1.81, or 2.3 percent, to $77.65 a barrel on the London-based ICE Futures Europe exchange.
Reporter Margot Habiby can be contacted at mhabiby@bloomberg.net
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Crude Oil Daily Technical Outlook For Monday
Crude oil drops further to as low as 80.44 and momentum continues to turn to the downside with 4 hours MACD turned negative. However, with 80.16 minor support intact, there is still no confirmation of topping yet and another rise could still be seen to retest 83.95 resistance before topping. However, break of 80.16 will suggest that a short term top is already formed at 83.16 with bearish divergence condition in 4 hours MACD and deeper fall should then be seen to 38.2% retracement of 69.50 to 83.16 at 77.94 next.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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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Sunday, March 14, 2010
Technical View of What’s Next for Precious Metals, Stocks & the Dollar
From guest analyst Chris Vermeulen.....
Last weeks price action unfolded just as we expected. Money poured into stocks with the focus being on small cap, banks and technology stocks. The fact that these sectors are showing strength while utilities, health care and consumer staples lag is a good sign that investors are once again taking risks in the market.
Because investors and traders are bullish on the stock market again the money flow into the safe havens like Gold and Silver decrease. I believe this is the reason stocks moved up last week while precious metals drifted lower.
Below are three charts (Dollar, Gold and Silver) showing what I think is most likely to happen in the coming week or two.
US Dollar Index – Daily Chart
The US Dollar has put in a very nice bounce/rally since the low in November 2009. Last month the dollar finally reached a key resistance level of 81. I have been talking about this major resistance level since January as the Dollar would find it difficult to break above this level.
Take a look at the daily chart below. You can see a head & shoulders pattern and a neckline which appears to have broken late Friday afternoon. There is a strong chance we could see 78 reached which is the measured move down. If we get follow through selling this week then I would expect 78 to be touched within 5-10 days.
GLD & SLV ETF Trading Charts
Precious metals have been moving very well for us recently. From looking at the charts using technical analysis we were able to catch the Feb. 5th low and also the Feb. 25th low on a several ETF’s.
As you can see from the GLD and SLV charts, both metals are not in an uptrend showing bullish chart patterns and trading at support. If we see the US Dollar break down next week then be ready to go long gold, silver and stocks.
Precious Metals, Stocks and the Dollar Trading Conclusion:
As a technical analyst the above charts are pointing to higher prices in the coming day’s which is exciting for us all. BUT when things are this perfect looking we must be very cautious as the market has way to suck people into setups like this and spit them out a couple days later for a nasty loss.
Understanding how the market moves is crucial for avoiding and/or minimizing losses when trades go against us. That is why I continue to wait for my signature low risk setup before putting any money to work.
My focus is to take the least amount of trades possible each year, only focusing on the best of the best setups. My low risk setups require downside risk to be under 3% for the investment of choice when the broad market shows signs of strength, as well. I use several different types of analysis to confirm if a setup has a high probability of winning and those which do are the trades I take along with my subscribers.
It is very important to wait for the market to confirm a move higher before taking a position with this type of setup. The market could go either way quickly and jumping the gun is not a safe bet.
Just click here to get Chris Vermeulen's Precious Metals and Index ETF Trading Alerts.
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Last weeks price action unfolded just as we expected. Money poured into stocks with the focus being on small cap, banks and technology stocks. The fact that these sectors are showing strength while utilities, health care and consumer staples lag is a good sign that investors are once again taking risks in the market.
Because investors and traders are bullish on the stock market again the money flow into the safe havens like Gold and Silver decrease. I believe this is the reason stocks moved up last week while precious metals drifted lower.
Below are three charts (Dollar, Gold and Silver) showing what I think is most likely to happen in the coming week or two.
US Dollar Index – Daily Chart
The US Dollar has put in a very nice bounce/rally since the low in November 2009. Last month the dollar finally reached a key resistance level of 81. I have been talking about this major resistance level since January as the Dollar would find it difficult to break above this level.
Take a look at the daily chart below. You can see a head & shoulders pattern and a neckline which appears to have broken late Friday afternoon. There is a strong chance we could see 78 reached which is the measured move down. If we get follow through selling this week then I would expect 78 to be touched within 5-10 days.
GLD & SLV ETF Trading Charts
Precious metals have been moving very well for us recently. From looking at the charts using technical analysis we were able to catch the Feb. 5th low and also the Feb. 25th low on a several ETF’s.
As you can see from the GLD and SLV charts, both metals are not in an uptrend showing bullish chart patterns and trading at support. If we see the US Dollar break down next week then be ready to go long gold, silver and stocks.
Precious Metals, Stocks and the Dollar Trading Conclusion:
As a technical analyst the above charts are pointing to higher prices in the coming day’s which is exciting for us all. BUT when things are this perfect looking we must be very cautious as the market has way to suck people into setups like this and spit them out a couple days later for a nasty loss.
Understanding how the market moves is crucial for avoiding and/or minimizing losses when trades go against us. That is why I continue to wait for my signature low risk setup before putting any money to work.
My focus is to take the least amount of trades possible each year, only focusing on the best of the best setups. My low risk setups require downside risk to be under 3% for the investment of choice when the broad market shows signs of strength, as well. I use several different types of analysis to confirm if a setup has a high probability of winning and those which do are the trades I take along with my subscribers.
It is very important to wait for the market to confirm a move higher before taking a position with this type of setup. The market could go either way quickly and jumping the gun is not a safe bet.
Just click here to get Chris Vermeulen's Precious Metals and Index ETF Trading Alerts.
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Phil Flynn: Absolutely Astonishing
Oil prices are on the rise again as the International Energy Agency is the latest forecaster to increase their expectations for China oil demand. Yet the IEA went far beyond just increasing demand expectations for China they said that the demand growth that we have seen so far is astonishing. The IEA beat all the other forecasters by predicting that world demand will increase by 70,000 barrels a day to 86.6 million barrels or close to 1.6 million barrels more than a year ago.
Yet what have captured the imagination of the marketplace were their comments that Chinese demand surged by an “astonishing,” 28 percent year on year in January. That led to the IEA astonishing forecast for a growth in China demand to increase by 130,000 barrels a day to 9 million barrels a day, representing an increase of 6.2 percent from 2009.
Of course at the same despite all of these rising demand expectations are China on an unsustainable path? First it was the Department of Energy, then it was the OPEC cartel and now it is the International Energy Agency. Yet this demand growth is not without risks both political and economic and the White House may be raising the stakes and the pressure on the Chinese to let some air out of this risky China bubble and adding to tensions.
China’s economy is leading to a global recovery but also is adding to tension between China and the Obama administration. Yesterday the Obama administration promised a mini cabinet to focus on imports. He also called on the Chinese to embrace a "market oriented" exchange rate policy .President Obama also said he would start to enforce existing trade deals but what made the Chinese mad was that was the currency comment.
Long story short, the Chinese bubble may the biggest threat to the global economic recovery.
Analyst Phil Flynn can be reached at pflynn@pfgbest.com
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Saturday, March 13, 2010
Crude Oil Weekly Technical Outlook
Crude oil edged higher to 83.16 last week but upside was again limited by loss of momentum. Nevertheless, there is no confirmation of topping yet with 80.16 minor support intact and current rally from 69.50 could still continue to retest 83.95 high. On the downside, however, note that break of 80.16 will indicate that a short term top is already in place and deeper fall should then be seen to 38.2% retracement of 69.50 to 83.16 at 77.94 next.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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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Friday, March 12, 2010
Crude Oil Market Commentary For Friday Evening
Crude oil closed lower due to profit taking on Friday as it consolidated some of this rally off February's low. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging and are turning neutral to bearish hinting that a short term top might be in place. Closes below the 20 day moving average crossing at 80.18 would confirm that a short term top has been posted. If May extends the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is today's high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is the 10 day moving average crossing at 81.35. Second support is the 20 day moving average crossing at 80.18.
Natural gas closed lower on Friday as it extends some of this winter's decline. The low range close sets the stage for a steady to lower 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 winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.875 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.640. Second resistance is the 20 day moving average crossing at 4.875. First support is today's low crossing at 4.443. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed lower on Friday and is challenging the lower boundary of the trading range of the past five weeks. The low range close sets the stage for a steady to lower opening on Monday. 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 today's low crossing at 79.95. Second support is the reaction low crossing at 79.92.
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Oil Falls the Most in Two Weeks After Consumer Sentiment Drops
Crude oil declined the most in two weeks after a report showed that confidence among U.S. consumers unexpectedly dropped this month. Oil fell as much as 1.7 percent as the Reuters/University of Michigan preliminary consumer sentiment index dropped to 72.5 from February’s reading of 73.6. A gain to 74 was forecast, according to the median of 68 estimates in a Bloomberg News survey. Prearranged orders to sell oil at specific prices, known as stops, may have been triggered when oil breached today’s low.
“The selling started after the consumer confidence numbers were released,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The market has been tenuous and once we started working lower the move gathered strength. We’ve taken out some stops and are looking to test more.” Crude oil for April delivery fell $1.16, or 1.4 percent, to $80.95 a barrel at 12:27 p.m. on the New York Mercantile Exchange. Prices touched $83.16, the highest level since Jan. 11. Futures are little changed this week and are 72 percent higher than a year ago.
Brent crude oil for April delivery declined $1.24 cents, or 1.5 percent, to $79.04 a barrel on the London based ICE Futures Europe exchange. Prices climbed earlier as retail sales gained. The Commerce Department reported that purchases gained 0.3 percent last month. A 0.2 percent decline was projected, according economists surveyed by Bloomberg News. “There’s a rush to interpret every new piece of economic data,” said Michael Fitzpatrick, vice president of energy at MF Global in New York. “We did reach $83.16, a new high, but otherwise today is a sleeper.”
Reporter Mark Shenk can be reached at mshenk1@bloomberg.net
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