Trade ideas, analysis and low risk set ups for commodities, Bitcoin, gold, silver, coffee, the indexes, options and your retirement. We'll help you keep your emotions out of your trading.
Crude oil closed up $2.26 at $82.26 a barrel today. Prices closed nearer the session high today amid a weaker U.S. dollar index and higher stock index prices. Crude oil bulls have the overall near term technical advantage and regained some upside momentum today. The next upside price objective for the bulls is producing a close above solid technical resistance at the March high of $83.47 a barrel.
Natural gas closed down 0.2 cents at $3.928 today. Prices closed nearer the session low today and set another fresh contract low. Bears have the solid overall near term technical advantage. There are still no early technical clues that a market bottom is close at hand. Prices are in a three month old downtrend on the daily bar chart.
The U.S. dollar index closed down 40 points at 81.57 today. Prices closed nearer the session low today on profit taking pressure from recent gains. The bulls still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.00.
We can talk about upcoming data from China or relief that the Greece crisis seems resolved for the moment but the truth is oil is still locked in a range. This is a market where the bullish and bearish forces have been in a stale mate and a quagmire of epic proportions. For every bullish argument there is a bearish argument to counter it as crude oil waits to find a definitive direction.
Overnight oil seemed to be getting some support from geopolitical events as well as what some say is the expectations of strong economic data coming out of the US and China. A terror attack on a Moscow subway and a story about a Saudi ship firing on a ship from the United Arab Emirates are just as astonishing as the report on Friday that a North Korean Snipe supposedly sunk a South Korean ship that was later denied. Strong demand hopes have been tempered by rising yield in the long end of the treasury markets raising fears that interest rates will have to go higher. Oil has a lot on its plate and is keeping the market in lockdown.
OPEC put off its next meeting until October but at least one OPEC member seems to be optimistic about the future. Dow Jones reported that Shokri Ghanem, chairman of Libya's National Oil Co said that OPEC would raise production in October if the world economy picks up. Ghanem says that, "If the economy improves, demand picks up and prices go up; that will add pressure on the economy and OPEC will take action. In October the situation will be examined and action will be taken accordingly. Ghanem told Dow Jones that, “Change of OPEC production level is a more complex process--it follows the market but it looks at supply and demand, and whether the market is being driven by fundamentals, geopolitics or psychological factors as well as the plans for production from other member countries," he said.
Bloomberg News Margot Habiby reports that oil producers and consumers, trying to avoid a repeat of the $115 a barrel price swing in 2008, will seek a “broad agreement” on improving market transparency and curbing volatility, according to the International Energy Forum. Habiby says that, “The IEF wants greater sharing of information on supply, demand, production and futures market trading, and greater cooperation on forecasting by groups such as OPEC, the IEF and the International Energy Agency," he said ahead of the IEF meeting in Cancun. A must read on Bloomberg.
You can reach Phil at pflynn@pfgbest.com and be sure to watch him every day on The Fox Business Network.
Last week the general market continued to grind its way higher for yet another week. Overall I feel the market is very much over bought. We all know the market can stay in extreme overbought levels for extended periods of time making it very difficult to pick tops.
This is the reason I do not try to pick tops, but rather wait for a top to form before putting my money to work. While a bottom can be made in 1 day, tops tend to take days and some times months to complete.
A few things really stood out to me when looking back on last week’s price action.
1. Gold (GLD Fund) was only up 0.29% for the week while the gold mining stocks (GDX Fund) was down over 3.5%. This strong divergence really has me concerned about the price of gold in the near term. Gold stocks generally lead gold and if they are down 10x more than gold last week, we better watch out....
2. The US Dollar broke out and started to rally posting a gain of 1% for the week. It is definitely weird to see gold move higher when the US dollar is rising…
Gold GLD Daily Chart
Gold has been trading sideways/down since December. I see this large 5 month pullback as a bull flag and expect to see much higher prices for gold long term. But I don’t count my eggs before they hatch, so I continue to focus on the daily and intraday chart patterns for low risk trading opportunities.
Friday we saw gold close very strong for the day. It looks very much like a reversal candle but with the price trading under the mini head & shoulders neck line and with the US Dollar in rally mode again, I don’t think the stars are aligned enough for me to put money to work just yet.
Gold is currently trading in a major congestion zone. Until there is a breakout of this zone, I think setups will not be very accurate.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – JANUARY
This chart shows the January 2010 peak in the stock market. As you can see prices became choppy with strong up and down movements before we saw the sharp drop.
Also note the NYSE new highs line. As the market became choppy new highs began to drop quickly. This indicated the market internals were weakening and led to an 8% drop over the next couple weeks.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – MARCH
This chart in my opinion looks much the same as January. You can see the Reversal candle from the February lows and the strong rally to the current price, as of Friday.
Notice how the market is getting choppy. Also last Thursday the Dow gave us a reversal candle. But this time the reversal candle is to the down side.
Also note the NYSE New Highs line. It has dropped sharply indicating the market internals are weakening once again.
This is what trading is all about… finding things that are out of whack and waiting for a low risk setup in order to make a profit.
Weekend Trading Conclusion:
In short, the stock market is over bought and about to roll over. I do understand that this grind higher could last another week or so, which is why I am focusing on short/quick intraday movements like Friday’s SP500 Intraday Low Risk Setup, and not buying etf funds to hold for a few weeks. Most of you know I do not chase prices higher simply because down side risk increased when buying into an over extended rally.
I feel gold, silver and oil will move together and at this time, I don’t like their charts for trading. With any luck we could get some setups this week, but not counting anything just yet.
Crude oil rose the most in more than five weeks as the dollar fell on European Union plans to help Greece and on signals that economic growth will accelerate. Oil topped $82 a barrel as the greenback dropped following an International Monetary Fund and European Union pledge to help finance Greece’s debt. A weaker U.S. currency bolsters the appeal for raw materials as an alternative investment. Consumer spending in the U.S., the world’s biggest energy consuming country, climbed in February for a fifth consecutive month.
“The resolution of the Greek crisis is giving oil a boost,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is weaker, which is helping all of the commodity markets today.” Crude oil for May delivery rose $2.13, or 2.7 percent, to $82.13 a barrel at 9:49 a.m. on the New York Mercantile Exchange. Futures are heading for the biggest gain since February 16. Futures touched $82.25, the highest since March 18.
Prices are up 3.5 percent in the first quarter, peaking at a 15 month high of $83.95 a barrel on Jan. 11. Leaders of the 16 nation euro region endorsed a Franco-German proposal for a mix of IMF and bilateral loans at market interest rates on March 26, while voicing confidence that Greece won’t need outside help to cut its deficit, the biggest in the 16 nation euro region. The dollar fell to $1.3457 to the euro, down 0.4 percent from $1.341 on March 26. The dollar index, measured against six major currencies, dropped 0.4 percent today to 81.364.....Read the entire article.
Crude oil rose for the first time in four days on expectations fuel demand will increase as the global economic recovery gained momentum and receding concerns over Greece’s debt crisis bolstered the euro. Oil climbed in New York the dollar fell against the euro following the International Monetary Fund and European Union pledge to help Greece finance the 16 nation region’s largest debt. Investors buy commodities as the greenback declines to offset inflation concerns and as an alternative investment.
“This rescue plan settles down the fears about the Eurozone going into a double dip recession so that’s bullish for crude,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “People feel the dollar will continue to be weak because of the long term policy to keep interest rates low and the money supply high.” Crude oil for May delivery rose as much as 49 cents, or 0.6 percent, to $80.49 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $80.46 at 11:42 a.m. in Singapore.
The contract dropped 0.7 percent to $80 on March 26, the lowest close in almost two weeks, after a report showed the U.S. economy expanded less in the fourth quarter than analysts had estimated. Prices fell 1.2 percent for the week as U.S. crude stockpiles surged to a seven month high and the dollar rose against the euro on uncertainty over Greece’s debt problems.....Read the entire article.
Crude oil continued to engage in sideway trading below 83.16 last week. More consolidations would still be seen this week but after all, downside should be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise. Break of 83.16 will target 83.95 high. However, note that sustained trading below 77.94 fibo level will indicate that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support instead.
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 .
Crude oil closed lower on Friday 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 Monday. 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 20 day moving average crossing at 81.34. Second resistance is the reaction high crossing at 83.47. First support is last Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.
Natural gas closed lower on Friday as it extends the decline off January's high. 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 3.502 is the next downside target. Closes above the 20 day moving average crossing at 4.424 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.209. Second resistance is the 20 day moving average crossing at 4.424. First support is today's low crossing at 3.923. Second support is weekly support crossing at 3.502.
The U.S. Dollar closed lower due to profit taking on Friday as it consolidated some of this week's rally but remains above February's high crossing at 81.70. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this 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 80.86 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 82.52. 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 81.03. Second support is the 20 day moving average crossing at 80.86.
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.
