Precious Metals & Oil ETF Trend Trading

Last week was exciting with broad market and gold forming an intraday reversal pattern after a long overbought rally, then broke down though short term key support levels. While this move lower was tough on the pocket book for those who chased the market up the past few days and/or were not moving their protective stops up, this move is good for the health of the market.

This pullback is actually a good thing for us active traders who wait for low risk setups and don’t chase prices higher, but rather buy on the dips in a bull market when most of the risk has been flushed out already. Trading with low risk setups is not the most exciting type of trading because there are not a ton of setups but if one can be patient and wait for these plays it is a very profitable strategy in the long run.

Those traders who live and breathe the market focusing on trading intraday price action most likely made a small fortune last week with Fridays sell off in stocks and precious metals. You can see how some of us took advantage of this sharp pullback last week with my before and after videos.

Below are the charts showing what I am currently thinking is going to happen for gold, silver, gold stocks and oil. I will be tracking the market with intraday charts to help pin point a low risk entry point for a possible short or long position as the market unfolds this week.

GLD – Gold Trading ETF

The chart below is an updated chart which I have showed several times. It shows how gold corrected, bottomed and is now trending back up. This week I will be watched closely to be sure we take a position which has the highest probability of working in our favor if and when a low risk setup occurs.



SLV – Silver Trading ETF

Silver really took a hit on Friday. It is now trading near support but there is not much we can do until we see what happens on Monday. There could be a bounce or more down side, tough to call right now…. And it’s not something you want to be on the wrong side of.



Gold Stocks – Gold Stock Trading

Gold stocks did not drop as much as I thought they would which indicates the market is still very bullish on gold. There is still potential for more downside… so I am letting the market unfold before doing anything.



USO – Oil Trading Fund

You can see oil moved down sharply on Friday and is now testing both a price support level and trendline support. Although this looks like a perfect setup, the market is designed to shake people out of positions before continuing the move. So it is likely for oil to dip which would break both these support levels triggering stop orders. Then the price should drop to the key support level where support should be found for at least a bounce or a new bottom.



Precious Metal & Oil ETF Trading Conclusion:

In short, the market had a nice correction on Friday and the heavy selling volume indicates that we are getting close to a larger correction which should provide two swing trades, a shorting opportunity and a new buying opportunity in the coming days, weeks or months depending how long the market takes with this pullback/correction.

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Where is Crude Oil Headed Next Week?

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





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Crude Oil Weekly Technical Outlook

Crude oil had a rebound attempt last week but failed at 86.39, below near term high of 87.09, and reversed sharply. The close below near term rising trend line argues that rise from 69.50 is over after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. But we'll need more evidence to confirm. Hence, we'll stay neutral first. On the upside, above resistance will suggest that recent rally is still in progress for 90 psychological level before making a top. On the downside, however, firm break of 38.2% retracement of 69.50 to 87.09 at 80.37 will confirm that rise from 69.50 is over and will bring deeper fall to 61.8% retracement at 76.22 and below.

In the bigger picture, note again that medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

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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Bulls Lose Their Momentum.....Crude Oil Closes Below 20 Day Moving Average

Crude oil closed lower on Friday and below the 20 day moving average crossing at 83.56 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If May extends today's decline, the 38% retracement level of the February-April rally crossing at 80.66 is the next downside target. Closes above Wednesday's high crossing at 86.39 would temper the near term bearish outlook. First resistance is today's high crossing at 85.44. Second resistance is this month's high crossing at 87.09. First support is today's low crossing at 82.52. Second support is the 38% retracement level of the February-April rally crossing at 80.66.

Natural gas closed higher due to short covering on Friday and the high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.334 are needed to confirm that a low has been posted. If May renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.334. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is the reaction low crossing at 3.857. Second support is the early April low crossing at 3.810.

The U.S. Dollar closed higher due to short covering on Friday as it consolidates some of the decline off March's high. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, March's low crossing at 79.73 is the next downside target. Closes above the 20 day moving average crossing at 81.30 are needed to confirm that a short term low has been posted. First resistance is today's high crossing at 81.04. Second resistance is the 20 day moving average crossing at 81.30. First support is Wednesday's low crossing at 80.14. Second support is March's low crossing at 79.73.

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Phil Flynn: Crude Oil is Having a Hard Time Following Through

Oil is having a hard time following through on its bullish momentum especially which is particularly disappointing to the bulls especially after China’s red hot GDP numbers. Strong growth numbers out of China seemed to not inspire the type of buying frenzy that one might imagine. Mixed data out of the US and the fact that oil should be getting close to a seasonal peak perhaps is weighing down the marketplace. China did take some steps t o try to slow their economy down from overheating by attacking surging real estate prices and that may be another reason why China’s surging prosperity didn’t trickle down to the oil market. The Financial Times reported that the Chinese State Council said that anyone buying a second home in China would need to put up a 50 per cent deposit up front. That is up from 40 per cent previously. First time homebuyers in China buying homes s bigger than 90 square meters have to put up 30 per cent. The Financial Times says that China instead of raising rates like Australia and India, China has targeted a 22 per cent reduction in new loans from a record $1,400bn last year and twice asked lenders to set aside more cash as reserves.

The last time China's growth accelerated to more than 11 per cent, in the first quarter of 2006, the central bank raised rates within a month. Still the Times said that China's cabinet signaled caution in ending crisis policies, saying first-quarter economic growth was largely driven by stimulus policies and a comparison with low levels in 2009. I think the bulls would like to end the week with the front month closing over $85 to confirm their bullish aspirations which is getting harder to do as we are seeing a lot of rolls continuing from the May into the June and other contract. June has more open interest now yet with record volume and a lot of rocking and rolling to do we could see the contango continue to widen.

The other factor holding oil back is the dollar. The dollar seems to be gaining strength on the ongoing on again off again Greek worries. Oh no. It’s not resolved yet? The Financial Times reported that “Greece capitulated to market pressure yesterday and took an important step towards a bailout from its Eurozone partners and the International Monetary Fund as it formally sought "consultations" over a €30bn-plus loan package to stave off default.” With uncertainty surrounding the latest bailout once again going into the weekend traders may seek the safe haven of the dollar so they can sit back and enjoy their recent stock market profits. Yes that soaring stock market has also provided support. Yet the run while impressive may face some profit taking especially after Google missed the whisper number

Natural Gas’s little foray above $400 ended in an ignominious fashion. The EIA reported that wworking gas in storage was 1,756 Bcf according to EIA estimates. This represents a net increase of 87 Bcf from the previous week and a whopping 16.3 per cent above the five year average. So much for that preseason hurricane premium. Of course ample supplies o cheap natural gas is the unsung hero and a part of the incredible manufacturing come back. Think of the natural gas price as an economic stimulus package that the taxpayer does not have to pay for. We still feel the best way to trade energies and other commodities at this point is to trade the ranges.

Phil can be reached at pflynn@pfgbest.com And make sure to watch him on the Fox Business Network broadcasting all weekend long!

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Crude Oil Daily Technical Outlook For Friday

Crude oil's recovery was limited below 87.09 resistance and drops sharply since then. With 4 hours MACD crossed below signal line, intraday bias is turned neutral again. Note that consolidation from 87.09 is still in progress and deeper fall to 82.51 or below could be seen. Nevertheless, strong support is expected at 61.8% retracement of 78.56 to 87.09 at 81.82 to conclude the correction and bring rally resumption. Break of 87.09 will target 90 psychological level next.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, 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, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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

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Dow and S&P Update Video....Can We Keep Going Higher Forever?

We owe trillions of dollars, but Crude oil is at $86 a barrel, the DOW, S&P, and NASDAQ are making new highs almost everyday and unemployment is officially at 9.7%.

Everything is great! Happy days are here again... Right?

So is the DOW, S&P, and NASDAQ all going to keep going higher forever? Or are the teachings of a dead mathematician going to reverse this juggernaut of a market?

In our new video we show you exactly what we mean and how the these indices could be very close to a very important tipping point.

This is without a doubt, one of the most important videos we have ever made and if you are concerned about your financial future, you don't want to miss it.

As always, our videos are free to watch and there are no registration requirements.


Just click here to watch Dow and S&P Update Video....Can We Keep Going Higher Forever?






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Where is Crude Oil Headed on Friday?

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 Closes Lower, Bulls Still Maintain The Advantage

Crude oil closed down $0.34 at $85.50 a barrel today. Prices closed nearer the session low today and saw mild profit taking. Crude oil bulls still have the solid overall near term technical advantage. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.09 a barrel.

Natural gas closed down 19.2 cents at $4.007 today. Prices closed near the session low today and were pressured by a bearish weekly natural gas storage report. Bears have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.334.

Gold futures closed up $0.50 at $1,160.10 today. Prices closed near the session high today and were supported by speculative bargain hunting buying after prices were under selling pressure early on. A stronger U.S. dollar index did limit gains in gold, however. Bulls still have the solid near term technical advantage. A nine week old uptrend line is in place on the daily bar chart.

The U.S. dollar index closed up 28 points at 80.58 today. Prices closed near mid-range today. While no serious chart damage has occurred recently the bulls have faded and need to show more power soon. The bulls still have the overall near term technical advantage.


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Phil Flynn: Forget those Fed Fund Futures, Oil is the key!

Ben Bernanke spoke yesterday and the oil market listened. Of course listening to Ben Bernanke and his comment about the price of oil made one wonder whether or not Big Ben gave traders the green light to buy oil. Among other things that the Fed Chairman said about the economy was that the current price of oil was not a threat to the economy. "At this point oil prices are not a serious threat to the recovery," Bernanke told a Congressional Committee. "Clearly if it moves a lot it would be a negative, so we have to watch it."

Of course they have to watch it. If oil prices spin out of control it could endanger an economic recovery which begs the question, at what point does Bernanke see oil prices as a threat? Obviously that is a difficult question as the price of oil can move higher comfortably as long as it accompanies strong economic growth. With Mr. Bernanke basking in the light of some strong data and earnings, it seems the oil price right now is a concern but not a major one. My guess is that Mr. Bernanke’s point of pain on oil is $90 for the rest of the year. That means that instead of watching Fed fund futures for an estimate of when interest rates will raise, perhaps we'd do better to watch the crude oil curve.

If we see oil go solidly above $90 a barrel then perhaps that would be the month we would expect a rate increase. Which means according to the oil market price with the December contract trading currently at 8990, there is an approximate 98 percent chance the Fed will raise rates in December and with January at 9006 over a 100% chance they will increase early next year? If the front month oil contract goes solidly over $90, the pressure on the Fed would be enormous to try to do something despite the subdued core inflation rate.

China is hot, hot, hot. So hot that it's getting too hot for the Chinese government to handle? China's GDP came in at a three year high blistering rate of 11.9% raising fear this morning that China is going to have to do something dramatic to try to slow things down. At the same time Chinese consumer prices climbed 2.4 percent in March which was less than expected. Yet at the same time this is a number that is fraught with danger for the future of the Chinese government. Those fears about China may be one reason the oil market seems less than impressed with China’s strong GDP or perhaps the market feels that yesterday move up in oil basically priced strong China growth in.

How much of the Iranian threat is priced in. Some traders took note of the story about Iran’s capability to shutdown the critical oil export choke point the Straits of Hormuz. Bloomberg News reported, “Iran’s build-up of its defenses gives it the capability to block a major Persian Gulf oil- transit route and project military strength on its territory, the U.S. Defense Department’s intelligence director said. “It does have the ability to restrict access to the Straits of Hormuz with its naval forces temporarily and threaten U.S. forces with missiles,” U.S. Army Lieutenant General Ronald Burgess, director of the Defense Intelligence Agency, told the Senate Armed Services Committee. Iran has taken steps to strengthen its military defenses and cultivate allied terrorist groups targeting the U.S. and Israel, Burgess told the committee. “Iran can conduct limited offensive operations with its strategic ballistic missile program and naval forces,” Burgess said.

Iran has threatened to block the Straits of Hormuz before. The EIA says that narrow Straits of Hormuz between Iran and Oman (21 miles width at its widest point) is the most important choke point for oil shipments from the Persian Gulf. Roughly 17 million barrels per day, more than 20% of the world’s total oil supply, transit this route. If the Straits of Hormuz were blocked, only a small share of the oil could be transported along alternative routes. The most viable is a 745-mile long east-west pipeline through Saudi Arabia to the Red Sea. The possibility that Iran might try to close these straits would cause the mother of all oil spikes but at the same time it would also be the end of the Iranian regime as we know it. The global outrage from such a move would be met with swift and lethal resistance.

Oil also got a boost yesterday on the EIA which showed a surprisingly large crude draw on the East Coast. I suspect that that number will be adjusted somewhat next week to the upside but that does not help us this week. The EIA said that crude oil inventories decreased by 2.2 million barrels from the previous week. At 354.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.1 million barrels last week, and are above the upper limit of the average range.

Phil Flynn can be reached at pflynn@pfgbest.com. And make sure to watch him every day on the Fox Business Network!

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