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Trichet trashed Greece. ECB head Jean Claude Trichet read Greece the riot act reversing course on the strengthening Euro and making the world think twice about a happy outcome after this Greek tragedy. Trichet scolded that Euro zone states need to be more responsible. ‘Everything going in the direction of euro zone members shying away from responsibilities is bad in our eyes”. How bad? Well “If the IMF or some other body exercises the responsibility in lieu of the Euro group or instead of governments, it is evidently very, very bad," he said. (Gee I wonder who he’s talking about.)
Trichet also said that the “mistake” of giving false figures must not be repeated. (Mistake? We have people in jail that made that type of mistake.) Trichet warned that Euro Zone countries must not an abandon an inch of their current responsibility (which probably confused many members that are on the metric system. He should have said that they should not abandon 2.54 centimeters of their current responsibility).
Of course that responsibility is to the Maastricht Treaty. You know that the one that led to the creation of the euro currency and also created what is called “the pillar structure of the European Community”. It was also the treaty that says countries belonging to the common currency zone year on year borrowing could not exceed 3 percent of GDP and that a country's total debt could not exceed 60 percent of its economic output.....Read the entire article.
Crude oil fluctuated after a government report that the U.S. economy in the fourth quarter of 2009 rose less than analysts forecast and the dollar weakened, increasing the investment appeal of commodities. Oil traded within a range of $1.87 a barrel as the Commerce Department reported gross domestic product expanded at a 5.6 percent annual rate, less than the median estimate of 5.9 percent by analysts in a Bloomberg News survey. The dollar dropped as much as 1.1 percent against the euro.
“Since the GDP number came out, the market has struggled a bit” because it didn’t meet the consensus, said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Crude oil for May delivery dropped 14 cents to $80.39 a barrel at 10:26 a.m. on the New York Mercantile Exchange. Futures have increased 48 percent from a year earlier. Oil declined 0.7 percent this week.
The dollar fell for the first time in four days versus the euro after European Central Bank President Jean-Claude Trichet toned down his opposition to the International Monetary Fund’s involvement in a Greek rescue plan. The U.S. currency dropped 1 percent to $1.3407 from a 10 month high of $1.3273 yesterday.
“People are watching the dollar as they await clear direction from inventory numbers,” Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. Brent crude oil for May settlement rose 14 cents to $79.75 a barrel on the London based ICE Futures Europe exchange.....Read the entire article.
It has been a while since we looked at the dollar index, so today we decided to dissect this market and look at it step by step.
What is happening in this market is very interesting and we think you will see in this short video just what we have in mind.
Just click here to watch "Dollar Index Going Higher" and as always, our videos are free to watch and there are no registration requirements. Do you agree with our analysis of the dollar index? Please feel free to leave a comment and let us know what you think.
Crude oil is still bounded in choppy sideway trading below 83.16 and intraday bias remains neutral. Nevertheless, even in case of another fall, we'd still expect strong support from 38.2% retracement of 69.50 to 83.16 at 77.94 and bring rally resumption. Break of 83.16 will target a retest of 83.95 high. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.
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 .
Crude oil closed lower on Thursday as it extends this week's decline below the 20 day moving average crossing at 81.34. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.
Natural gas closed lower on Thursday renewing the decline off January's high. 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 3.502 is the next downside target. Closes above the 20 day moving average crossing at 4.472 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.262. Second resistance is the 20 day moving average crossing at 4.472. First support is today's low crossing at 3.989. Second support is weekly support crossing at 3.502.
The U.S. Dollar closed higher on Thursday as it extended Wednesday's breakout above February's high crossing at 81.70. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends last week's rally, the May 2009 high on the weekly continuation chart crossing at 83.34 is the next upside target. Closes below the 20 day moving average crossing at 80.80 would confirm that a short term top has been posted. First resistance is today's high crossing at 82.48. Second resistance is the May 2009 high on the weekly continuation chart crossing at 83.34. First support is the 10 day moving average crossing at 80.83. Second support is the 20 day moving average crossing at 80.80.
Maybe the oil bulls can take some comfort in the fact that oil was unable to close below $80 despite the fact that the euro hit a ten month low and the stock market actually closed lower. (It can do that you know.) Oil prices shook off a mighty crude oil inventory build according to the Department of Energy’s Energy Information Agency. The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by gigantic 7.3 million barrels from the previous week.
The build was on the back of strong imports which averaged 9.4 million barrels per day which was up a cool 969,000 barrels from last week. Yet draw downs in products kept the oil somewhat supported. The EIA reported a fall of 2.7 million barrels in gasoline supply and a 2.4 million barrel drop in distillates. The drop was inspired in part by strong gasoline demand. The EIA says that gasoline demand rose 2.7%, or 238,000 b/d, to 9.087 million barrels a day which according to David Bird at Dow Jones was the highest weekly level since November 20.
Still year over year demand was down 13,000 barrels per day for the corresponding week a year ago. Bird says that the gain in gasoline led a 504,000 barrel per day, or 2.7%, rise in total oil demand for the week, to 19.336 million barrels per duty which was a two week high.Increasing gas demand usually is a sign that things for consumers are getting a little better and we may see that optimism grow in gas demand numbers first.
Over the last few weeks I have scoffed at strong gas demand numbers but the trend may have to be now taken more seriously. Perhaps the rally in the stock market has been more reflective of an improving backdrop for the economy than we have expected. Assuming we avoid a double dip maybe we can see a better than expected summer driving season. Still that does not mean that retail gas prices will go straight up. With gas production rising we should be close to the seasonal top.
Still for oil the dollar remains the key. Yesterday the flight to the dollar helped sink commodities as Portugal’s debt rating was downgraded. The EU members meet today and tomorrow and the outcome of this meeting may be the catalyst for the next big move in commodities. We are still buying breaks and selling rallies at what we project will be the high or low for that particular day. Long term position traders, both bulls and bears, will have their days but until we break out of the larger range there will be mounting frustration. Iron condors may be another way to play a market that is locked in a range. Long term players are just in a rut.
Catch Phil daily on the Fox Business Network. And for buy and sell points across the commodity spectrum, just pick up the phone and call Phil at 800-935-6487.
Intraday bias in crude oil remains neutral as consolidations from 83.16 continues. In case of another fall, we'd still expect strong support from 38.2% retracement of 69.50 to 83.16 at 77.94 and bring rally resumption. Break of 83.16 will target a retest of 83.95 high. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.
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 .
I think many of you will find this article interesting as I show several different indicators which point to an imminent correction for stocks and precious metals.
Last Wednesday’s report I showed how the current price of the index was almost identical to the January peak from where prices dropped nearly 10%. The report was called “28 Day Sector Rotation, Commodity & Index”. We did get the first sign of toppy market last Friday with the sharp one day sell off as I expected.
Today, one week later we are now that much closer to a 3-8% drop which is shown in the charts below. It’s important to remember that bottoms tend to happen quickly while a market topping is more of a process which is why so many people take big losses trying tip a top.
The market will continue to move up even when it is way overbought. It’s only when extreme levels are reached that tops can try to be played.
The Volatility Index – Measures Fear & Complacency in the Market
While the VIX is not something I follow on a daily basis it is important to keep an eye on it. When extreme low levels are reached we know the market (John Dow traders) are feeling confident and buying up everything they can get their hands on.
I like to trade with the trend but when extreme levels are reached I start looking for a low risk setup to the short side (profit in a falling market) using leveraged ETFs.
As you can see from the chart of the VIX and SP500 below, each time the VIX tested the support level the market made a top. Again the VIX is not a great timing tool but it helps me decide which trading strategy I should focus on (swing or day trading) and if I should be looking to buy or selling the market.
NYSE New Highs-Lows Index
If a chart is worth a thousand words then this chart is worth 2000. It cannot get any simpler that the NYSE new high-low index.
The green line is the SP500 index which is straight forward. The Red line is the number of stocks on the NYSE which have reached a new high.
How strong is the market if is keeps going up while the underlying stocks are getting weaker? Something has got to give and it will most likely be to the down side.
Dow Jones Industrial Average – Daily Trend Chart
This chart adds another layer of clarity. You can see what happened last January when everyone was buying stocks thinking life is good, trading is easy. As my trading buddy David Banister from ActiveTradingPartners.com always says “Buy when the Cry, Sell when they Yell”and that’s what I am looking to do.
Today the Russell 2000 index (small cap stocks) sold down very hard. These stocks tend to lead the market both up and down. So the red flag is up and I am just waiting for the market to show me its hand so we can catch the next big move.
Coles Notes on Chart: • Market is over bought and in dire need of a pullback • The length of this steady rally is much longer than a normal rally • The rate as which prices are rising is much to steep to be maintained • The market is trading at the parallel trend line • VIX is tell us people are buying and not worrying about any possible drop • NYSE divergence is screaming Overbought....
GLD Gold Fund Trading
Gold is still in a major bull market but the recent price action from Dec up until now has been down as gold consolidates the large rally from 2009.
Looking at the chart below you can see the mini Head & Shoulders pattern. The neckline has now been broken and prices are falling. I almost had a buy signal for gold two days ago with the small move up and the candle closing above the previous days high. But because the price was still under the neckline (resistance) I decided to stand aside and live another day.
Mid-Week Gold Newsletter Conclusion:
In short, the market looks very strong but from a technical point of view it’s about to die of exhaustion in my opinion.
Gold, silver and oil I figure will move together which is sideways or down.
I am keeping a very close eye on things hoping prices unfold in a manor which will allow us to spot a low risk setup in the coming days as I would like to catch this drop if it happen. With any luck we could make 10-15% within a couple days using a leveraged ETF.
