This Week's Commodity & Index ETF Trading Strategy

As we all know, last weeks stock market blip/mini crash was very emotional for those of you watching or trading it live. A lot of money changed hands last week and you either lost a bundle or made a bundle…

I did send out some charts and a video on Thursday night about the market crash/recovery if you have not seen it. It’s called “Stock Market Micro Intraday Crash Shows Us Where The Safe Havens Are”.

Below are my ETF charts for the commodities and index I actively follow and trade.

GLD – Gold Bullion ETF – Daily Chart
GLD is a great ETF to trade as it generates 10-20 quality low risk setups each year for subscribers. The chart clearly shows the large rally in late 2009 and the correction as it formed patterns moving from a down trend – base – and back to an uptrend.



$USD – US Dollar Index – Monthly Chart
This weekly chart I think shows some serious potential for gold and silver prices. The US Dollar is now trading at a key resistance level which I think it will have a tough time moving higher. The dollar has been moving up for several months and looks ready for a pullback or at least a pause. If the dollar starts to roll over in the next few months then we should see gold and silver move substantially higher.



SLV – Silver Bullion ETF – Daily Chart
Silver like gold bounced off a key support level last week as investors started to buy silver as a safe haven. Gold moved up sharply on the day of the intraday market crash while silver traded sideways for a day before joining the party. The following day investors starting buying up silver because it was lagging its big sister “yellow Gold”.



USO – Oil Fund – Daily Chart
Several weeks back I posted this chart showing how volume was drying up as oil tested resistance on declining volume. This indicated to us that once/if the price started to roll over it would trigger a sharp sell off as short term traders who bought in anticipation of a breakout to the up side sold out of their positions once support was broken. This is what caused the heavy volume and sharp price drop.



SPY – SP500 INDEX Trading ETF – Daily Chart
It’s tougher now to read the index charts as last weeks heavy volume market crash could be seen in two very different ways…

One – We are starting a correction and had a jump start with the human error of selling billions of dollars worth of investments instead of millions prematurely pushing pulling the market down to a level where I think it should/will test again before moving up.

OR
Two – This extremely heavy sell off is just the start of what is to come....

Since the government owns the largest banks and the banks are unloading/selling massive amounts of shares calling it an error how do we know it’s not a scam for them to completely short the market in anticipation for a collapse which would make them unheard of amounts of money as the market drops… It is tough to trust anyone sitting up there in those power positions after everything they have been caught for already…

I personally think we could see lower prices in the coming month then the market will bottom and we will see new highs for 2010.



Weekend Commodity & Index ETF Trading Strategy Conclusion:
Stepping back and looking at the above charts it looks as thought we could see stocks and commodities digest the recent moves. In short, gold and silver have rallied strong and now trading near resistance. Oil dropped last week and is now trading near a key support level. I feel it the market will trade sideways and stabilize before for a while as the SP500 had that crazy drop last week and now the market is in shock. I figured it would see 3-4 weeks to reach those prices yet it happened in 1 day so now the market could do very little for 3-4 weeks…

The US dollar is something we will be watching more closely because it’s trading at key resistance level. In the past it has taken a month or two for a rally to roll over and head back down. This could play out very nicely if the dollar tops and the rest of the market trends sideways to digest the recent moves. Once the dollar starts to fall it will provide fuel for the next rally in both stocks and commodities.

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The Charts Say we Aren't in a New Bear Market

From guest blogger Kevin Kiefer at Ticker House.Com

Everyone is bearish now... should you be selling after a nearly 10% correction now? I don't think so. Even if your a believer in a double dip recession and a market crash, the charts show that now is probably not the time for that. For predicting the future, we are using the S&P 500 monthly 10 year chart. Over the last 10 years, we have never entered a bear market while the MACD was positive. With this 10% correction, the RSI is now down back to 50 and the MACD is still positive.

That leads me to believe that the RSI will not break 50 and that we are exactly laying the foundation for a bottom here. Remember the 50 level on the RSI is pivot point because below 50 signals a bear market while above 50 signals a bull market. Not only are the charts saying this is not the start of a crash but the fundamentals in the US also do not support it. Last time we broke the 200 day moving average in late 2007, we were losing jobs, our banking system was reporting huge write downs and home prices were falling.

April's job report was very good with around 220,000 private sector jobs being created and March's numbers were revised upwards. Before we panic out of the market, let's wait to see what happens this week. We'll be watching the 200 day on the SPY daily chart and the RSI on the 10 year monthly SPY chart. The RSI needs to hold 50 on that chart for us to remain bullish. Below is the chart of the SPY 10 year monthly. I have circled the areas of importance.



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Natural Gas Weekly Technical Outlook

Despite edging lower to 3.855 last week, Natural gas managed to stay above 3.81 support and basically engaged in sideway trading only. The development argues that down trend might not be ready to resume yet and we'll turn neutral first. Some more consolidations could be seen above 3.81 and stronger recovery cannot be ruled out. But after all, we'd expect upside to be limited by 4.386 resistance conclude the consolidation and finally bring down trend resumption. Decisive break of 3.81 low will target 3.0 psychological level next.

In the bigger picture, medium term rebound from 2.409 has completed at 6.108 and the three wave corrective structure of the rebound argues that it's merely a correction, or part of the consolidation in the larger down trend. Current fall from 6.108 might extend further for a retest on 2.409 low next after sustaining below 61.8% retracement of 2.409 to 6.108 at 3.822. Sustained trading above 4.386 resistance is needed to be the first sign that the trend in natural gas has reversed. Otherwise, outlook will remain bearish.

In the longer term picture, while the bounce from 2.409 was strong, it's been limited below 55 months EMA (now at 6.035) and reversed. The failure to sustain above 55 weeks EMA (now at 4.730) also argue that 2.409 might not be the bottom yet. We'll stay bearish as long as this year's high of 6.108 holds and favor a new low below 2.409 going forward.




From the staff at Oil N'Gold

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Phil Flynn: Could A Big Trading Error Save The Stock Market?

Was it real or was it all just a dream? Someone might say we were living in a dream or maybe it was more of a nightmare. Fat fingers and Greece rioters set up one of the most jaw dropping and surreal days in market history.

With Europe embroiled in economic and political turmoil as riot police faced protesters assembling near the Greek Parliament after passing an austerity package, the market was already in panic mode. And then the bottom just fell out. In just in a short ten minute free fall the Dow dropped nearly 700 points bringing the Dow down close to 1000 points before rebounding very quickly. After the smoke settled there were rumors that a major trading error occurred that sparked the record drop leading many to question what was real and what was not. Those questions might have actually been a stabilizer for a market that obviously was not stable at all. In fact we may want to thank whoever made that error because that error may help restore some confidence and bring buyers back into the market!

What? Is he crazy? Well indeed I am but that has nothing to do with it. The reason why I say that is because prior to this alleged error the Dow was already having one of its worse days of the year. The fears surrounding Greece, while very real, were being exasperated by fear and emotion. The market started to react to live news reports of Greek protesters and started to sense that Europe was going to go up in flames. That caused the markets to go into flight to quality mode and because of someone probably hurrying to sell stocks as the market started to break while watching TV news at the same time probably made that monster error.

Yet later in the day news reports surfaced that told the world the drop was not that bad and that probably will bring back even more buyers back to the market. I guess you can call it artificial capitulation. The error sold off many stocks so far under their true value that the markets started to focus less on Greece and more on scouring the trading board for stocks that may had been undervalued. Proctor and Gamble was the stock that seems to have started the route and of course that company does a lot of business in Greece but not enough to justify anything near the value of the drop.

So the crash may have stock traders putting Greece on the back burner so that now all we have to worry about is the monthly jobs situation in the US. Oh Boy.
Of course for oil that now means the move down in was too much too soon and no one has to question whether yesterday's close in oil was real or an illusion. The close in oil was determined during the heat of the stock market battle which means technical traders may want to throw that close out and wait for today's close as a barometer of where we are going on the longer term charts! Do Over! Wait, there's no do overs in trading! Well unless they throw out trades.

Another risk to the upside in oil is the threat that the oil slick can slow oil imports. Bloomberg News reported yesterday that oil leaking from BP Plc’s damaged Gulf of Mexico well has drifted within 1.5 miles of the buoy marking the entrance to Southwest Pass, the main approach to the Port of New Orleans. Bloomberg says that Wayne Mumphrey, Secretary Treasurer of the Port of New Orleans said in an interview in New Orleans, “Once it passes the buoy, we have to start decontaminating every ship coming into the port.” Mumphrey said two floating decontamination stations have been set up near the buoy to scrub oil from the hulls of ships entering the Mississippi.

It will take 10 to 12 hours to decontaminate each ship, which will dramatically slow incoming port traffic and that may cause ships to begin backing up into the Gulf, he said. Mumphrey said a port study commissioned in the wake of a tanker spill that closed the Port of New Orleans for several days last year showed the economic impact of a total port closure on U.S. Midwestern communities from the mouth of the Mississippi to Minnesota is roughly $250 million a day. “All the grain from the Midwest ships out through the Port of New Orleans,” Mumphrey said. “It can’t get out any other way. Slowing oil imports may also give sellers some pause.


Phil can be reached at pflynn@pfgbest.com and don't forget to catch him daily on The Fox Business Network


Who does some of the major hedge funds turn to when they need advice?


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Crude Oil Weekly Technical Outlook

Crude oil's sharp fall last week indicates that rise from 69.50 is completed at 87.15 on a double top reversal pattern (87.05/87.15). Initial bias remains on the downside this week and further fall should be seen to test 69.50 key support next. On the upside, above 78.19 resistance will argue that a temporary bottom is formed and bring consolidations. But we'd expect strong resistance at double top neck line (80.53) and 4 hours 55 EMA (now at 81.55) to limit upside and bring fall resumption.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. 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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Stage is Set For Lower Crude Oil Numbers Next Week

Crude oil closed lower on Friday as it extends this week's decline. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, the 87% retracement level of the February-April rally crossing at 72.86 is the next downside target. Closes above the 20 day moving average crossing at 83.51 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.23. Second resistance is the 20 day moving average crossing at 83.52. First support is today's low crossing at 74.51. Second support is the 87% retracement level of the February-April rally crossing at 72.86.

Natural gas closed higher due to short covering on Friday as it consolidates above trading range support crossing at 3.914. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If June renews this winter's decline, weekly support crossing at 3.502 is the next downside target. Closes above the 20 day moving average crossing at 4.119 are needed to confirm that a low has been posted. First resistance is the 20 day moving average crossing at 4.119. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is Thursday's low crossing at 3.855. 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 month's rally. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, weekly resistance crossing at 85.85 is the next upside target. Closes below the 20 day moving average crossing at 82.01 are needed to confirm that a short term top has been posted. First resistance is Thursday's high crossing at 85.46. Second resistance is weekly resistance crossing at 85.85. First support is the 10 day moving average crossing at 83.04. Second support is the 20 day moving average crossing at 82.01.

Gold closed higher on Friday as it extends the rally off February's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, December's high crossing at 1230.00 is the next upside target. Closes below the 20 day moving average crossing at 1163.20 would confirm that a short term top has been posted. First resistance is today's high crossing at 1214.90. Second resistance is December's high crossing at 1230.00. First support is the 10 day moving average crossing at 1177.10. Second support is the 20 day moving average crossing at 1163.20.




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Stock Market Micro Intraday Crash Shows Us Where The Safe Havens Are

WOW....Now that was an exciting day in the market!!
This day will be talked about for years to come and the individual who hit the wrong button (“B” for billion instead of “M” for million) to sell billions instead of millions will have a tough time finding another job… Maybe this person can do commercials for Microsoft Windows showing how one simple key stroke can crash a system… lol

On a more serious note, a member in the chat room had a good point… Who would create a program that can not only bankrupt the company in one key stroke but also crash the entire broad market in 10 minutes losing millions of investor’s hard earned money??

I will keep this short with my Cole Notes Version on a few opinions of mine.

Banks – Good for taking your money and crashing the markets
All we have heard about in the past year is bank this, and bank that…. They take our money, bet on crazy investments, lose it, then get free money from the Feds to replace that lost money and they keep it for them selves….

Well today the market crashed because of a bank which should not be a surprise after everything else they have messed up. But to add more to the fire I had a lot of subscribers and followers today tell me they tried to trade with their brokers and they could not get orders to be executed. When I asked these individuals who they are using I got the same response… They were trading through a bank… This really makes my upset as I hate watching the bad guys (banks) keep winning/taking everyone’s money…..

Stock Market Circuit Breakers Failed
I find it amazing how the financial system has circuit breakers to protect investors from a market crash yet today they did not get triggered…

Rule is (and dumb one in my opinion) is that a circuit breaker (halts trading on the stock market for a set period of time) can only be triggered before 2:30pm ET. Funny thing is that the crash happened 7 minutes after 2:30. Manipulation???

2-3 Week Market Correction, Corrected in One Day
A pullback in the broad market which normally would have taken a few weeks at the most happened in one afternoon which is amazing really. Don’t get me wrong, I thought what happen today was very interesting, profitable and a lot of fun. But a move this drastic does throw a wrench into everyone technical analysis and it will be a few days before we get enough price action to start piecing this market back together for what looks most likely to unfold in the coming days and weeks.

Gold & US Dollar Rally Together
The past 2 weeks we have seen gold and the dollar move up together. This is very strong for gold. Even if we see the dollar roll over and head south that would help boost the price of gold… The short term charts for gold are looking tired be sure to watch the video below.

End of week Trading Conclusion:
This week was a crazy one with gold and the dollar moving higher together and the stock market crashing over 9% in one day…

It will take a few days for all this extreme price action to smooth out as we try and grasp if this is a bottom or the beginning of a major meltdown.

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Crude Falls on Concern European Debt Crisis Will Derail Economic Recovery

Crude oil tumbled, heading for its biggest weekly decline in 16 months, on concern Europe’s debt crisis will derail the global economic recovery. Futures dropped as much as 3.4 percent as equities fell amid speculation Greece’s debt crisis will spread to other countries. German Chancellor Angela Merkel said euro area countries must speed up efforts to tighten financial regulation and pursue budget consolidation. “The continued problems over in Europe seem to be infecting the rest of the world,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “If this thing continues it could really hurt the chances of a global recovery.”

Crude oil for June delivery fell $1.84, or 2.4 percent, to $75.27 a barrel at 12:32 p.m. on the New York Mercantile Exchange. Earlier, it touched $74.51 a barrel, the lowest level since Feb. 16. Futures are down 13 percent for the week, the biggest drop since the week ended Dec. 19, 2008. Oil settled at an 11 week closing low of $77.11 in New York yesterday after the euro fell against the dollar and the Dow Jones Industrial Average lost as much as 998.5 points, a 9.2 percent plunge that was the biggest intraday percentage loss since 1987. Futures touched $87.15 a barrel on May 3, the highest level since October 2008.

Shakeout ‘Overdue’
“The oil market was overdue for a shakeout like this,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut based procurement adviser. “Eighty seven dollars certainly wasn’t a justifiable level based on the fundamentals and if you start thinking about the potential ramifications for economic growth of what’s happening in Europe.”

A 110 billion euro ($140 billion) aid package to avoid a default by Greece has failed to prevent bond yields from rising, driving up borrowing costs for countries including Spain and Portugal. Moody’s Investors Service yesterday placed Portugal on review for a possible downgrade.

U.S. payrolls jumped 290,000 last month, more than the median estimate of economists surveyed by Bloomberg News, after a revised 230,000 increase in March that was larger than initially estimated, figures from the Labor Department in Washington showed today.

If commodities and equities “struggle to move higher in the wake of this positive report, the specter of bearish forces for growth may be larger than participants are currently pricing in and could push commodity and equity markets lower,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant, in a report today.

Equities Fall
The Standard & Poor’s 500 Index fell 0.7 percent to 1,119.9 at 11:38 a.m. after plunging as much as 3 percent. The Reuters/Jefferies CRB Index of 19 commodities fell 0.7 percent to 260.41, the weakest since Feb. 5. Ten of the commodities retreated, led by cocoa, crude and heating oil. “The market is not getting over the concerns of where we end up after the Greece situation gets resolved,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy. Brent oil for June settlement declined $1.60, or 2 percent, to $78.23 a barrel on the London based ICE Futures Europe exchange.


Reporters Margot Habiby and Aaron Clark can be reached at mhabiby@bloomberg.net and aclark27@bloomberg.net.



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MarketClub Crude Oil, Gold, Natural Gas and U.S. Dollar Numbers For Friday Morning

Crude oil was higher due to short covering overnight as it consolidates some of the decline off April's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If June extends the decline off April's high, the 87% retracement level of the February-April rally crossing at 72.86 is the next downside target. Closes above the 20 day moving average crossing at 83.66 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.52. Second resistance is the 20 day moving average crossing at 83.66. First support is Thursday's low crossing at 74.58. Second support is the 87% retracement level of the February-April rally crossing at 72.86.

Natural gas was slightly higher due to short covering overnight as it consolidates above trading range support crossing at 3.914. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. A downside breakout of trading range support crossing at 3.914 would open the door for a possible test of weekly support crossing at 3.339 later this spring. Closes above the 20 day moving average crossing at 4.117 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 4.117. Second resistance is last Wednesday's high crossing 4.424. First support is Thursday's low crossing at 3.855. Second support is weekly support crossing at 3.339.

The U.S. Dollar was lower due to profit taking overnight as it consolidates some of this year's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 75% retracement level of 2009's decline on the weekly continuation chart crossing at 85.85 is the next upside target. Closes below the 20 day moving average crossing at 82.00 are needed to confirm that a short term top has been posted. First resistance is Thursday's high crossing at 85.46. Second resistance is the 75% retracement level of 2009's decline on the weekly continuation chart crossing at 85.85. First support is the 10 day moving average crossing at 83.03. Second support is the 20 day moving average crossing at 82.00.

Gold was higher overnight and is poised to extend the rally off February's low. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that additional gains are possible near term. If June extends the rally off March's low, the 87% retracement level of the December-February decline crossing at 1206.90 is the next upside target. Closes below the 20 day moving average crossing at 1162.60 are needed to confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1211.90. Second resistance is the December high crossing at 1230.00. First support is the 10 day moving average crossing at 1175.90. Second support is the 20 day moving average crossing at 1162.60.




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Crude Oil Daily Technical Outlook For Friday

Crude oil dropped to as low as 74.59 and formed a temporary low there and recovered. Intraday bias is turned neutral for the moment and some consolidations might be seen. But upside should be limited below 61.8% retracement of 87.15 to 74.59 at 82.35 and bring fall resumption. On the downside, below 76.56 minor support will flip intraday bias back to the downside. Break of 74.59 will target a test on 69.05 key support.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. 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.....Nymex Crude Oil Continuous Contract 4 Hours Chart



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