Wednesday, March 31, 2010

Crude Oil Daily Technical Outlook Wednesday Morning


Crude oil climbs further to as high as 82.95 so far today and at this point, intraday bias is cautiously on the upside for 83.16 resistance. Break there will confirm that whole rally from 69.5 has resumed and should target a test on 83.95 high next. On the downside, below 81.77 minor support will turn intraday bias neutral again and argue that consolidations from 83.16 is still in progress. But after all, we'd still expect downside to be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise.

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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Tuesday, March 30, 2010

Where is Crude Oil Headed on Wednesday?

CNBC's Brian Shactman discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Tuesday Evening


Crude oil closed up $0.21 at $82.38 a barrel today. Prices closed nearer the session high today. Crude oil bulls have the overall near term technical advantage and have regained upside momentum this week. 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 up 6.7 cents at $3.983 today. Prices closed near the session high today on tepid short covering after hitting another fresh contract low early on. 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 up 12 points at 81.74 today. Prices closed near the session high today. 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.


Why Gold Will Not Make New Highs or Lows This Year


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Crude Oil Daily Technical Outlook For Tuesday


Crude oil rebound's strongly overnight but after all it's still bounded in established range below 83.16. Intraday bias remains neutral and more consolidations could still be seen but downside is expected to 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.....Nymex Crude Oil Continuous Contract 4 Hours Chart .


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Monday, March 29, 2010

New Video: Why Gold Will Not Make New Highs or Lows This Year


Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.

While we recognize that gold is one of the few commodity markets that people are really passionate about, the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, we want to discuss our interpretation of the markets cycle.

After spot gold made an all time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.

Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:

Gold first started trading in the 80's and when gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros, the guys who made their living trading. As a result, gold hit an all time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. We don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.

So what is really happening in this market?

Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.

Based on the declining value of world currency against gold you might ask "why isn't gold trading at $2,000 or even $3,000 an ounce"? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.

So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.

Here is what we've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.

Before gold can move higher it needs to create what we call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80's mentioned earlier.

The energy fields we have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.

With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.

To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.

On the on the upside we will also be looking for gold to make a natural cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy, however when we look at the cycles in gold this reads as a pretty good bet.

No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.

http://www.ino.com/info/542/CD3116/&dp=0&l=0&campaignid=3

As we always discuss, in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.

So just click here to watch today's new video and as always the video is free to watch. Please take a minute to leave a comment and let us know what you think about the direction of this gold market.



Also watch....The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010



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Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Monday Evening


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.

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Phil Flynn: Range Bound


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.

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How to Find Market Tops for Gold & the Dow

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.

Just click here if you would like to receive Chris Vermeulen's Real Time Low Risk ETF Trading Signals.






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Crude Oil Rises the Most in Five Weeks as Dollar Weakens Against Euro


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.

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