The Crude Oil Trader

Wednesday, May 19, 2010

Mid-Week Gold, Crude Oil, U.S. Dollar and SP500 Report

It has been an interesting week in the market as stocks and commodities push to extreme support levels. Below I have posted some charts showing where the market is currently trading at and what I think is likely to unfold.

Gold Futures – 4 Hour Candle Stick Chart
The price of Gold is testing a key support level. I figure we will see gold try to stabilize over the next week or so as it digests the recent drop in value then start to head back up.

US Dollar Index – 60 Minute Candle Stick Chart
The US Dollar and gold have been moving together the past few weeks as more countries pop up on the radar for serious financial issues. This is helping to boost both the US Dollar and gold as investors around the world starting buying what seems to be safety. The dollar has had a sizable pullback and is now testing a key support level.

This could be the start of a possible Head & Shoulders pattern forming which means the dollar rally could be nearing maturity in the next couple weeks.

Crude Oil Futures – Daily Trading Chart
Oil has been under serious selling pressure because of the rising USD. It has now dropped to a key support level and is starting to look very interesting. If the US Dollar bounces in the next week or two it will keep downward pressure on oil. I think this bottom is going to be a process not a one day event.

SP500 – Daily Trading Chart
Stocks have been under dropping like flies the past few weeks and shorting the SP500 last week at 1170 has played out very nicely for members. The broad market is giving me mixed signals and when I am unsure of a trade I stand on the sidelines. It’s always better to sit in cash and watch things stabilize than it is to watch your hard earned money evaporate. We could see a wave of panic selling in the stock indexes testing the previous lows so be cautious.

Mid-Week Stock & Commodity Trading Report Conclusion:
In short, I feel gold and the dollar will bounce in the coming days from their support levels. This will keep pressure on oil & the SP500 holding them down near support. Once the US Dollar forms a possible right shoulder we will most likely see them pop and rally.

We are still 7 trading days away from a cycle low on the broad market making this scenario very likely to play out. At the moment I am getting a lot of mixed signals and during times like this I prefer to stay in cash because volatility will rise and it is easy to get shaken out of trades.

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Where is Crude Oil and Gold Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the oil and gold markets, and offers perspective on where the two commodities may be headed tomorrow.

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Crude Oil, Natural Gas, Gold and Dollar Commentary For Wednesday Evening

Crude oil posted an upside reversal due to short covering on Wednesday as it consolidated some of this month's decline. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 78.80 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 73.71. Second resistance is the 20 day moving average crossing at 78.80. First support is today's low crossing at 67.90. Second support is last July's low crossing at 65.66.

Natural gas closed lower on Wednesday and below the 20 day moving average crossing at 4.177 tempering the near term friendly outlook. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that sideways to lower prices are possible near term. If June renews this month's rally, the 38% retracement level of the October-April decline crossing at 4.715 is the next upside target. First resistance is Tuesday's high crossing at 4.494. Second resistance is the 38% retracement level of the October-April decline crossing at 4.715. First support is today's low crossing at 4.131. Second support is this month's low crossing at 3.855.

The U.S. Dollar posted a downside reversal due to profit taking on Wednesday as it consolidated some of this year's rally. The low range close sets the stage for a steady to lower opening on Thursday. 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 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.96 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 85.53. Second support is the 20 day moving average crossing at 83.96.

Gold closed sharply lower due to profit taking on Wednesday as it extended the decline off last week's high. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1191.30 would confirm that a short term top has been posted. If June renews this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 20 day moving average crossing at 1191.30. Second support is today's low crossing at 1186.60.

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Crude Oil Increases as the Euro Climbs From a Four Year Low

Crude oil rose in New York after the euro rebounded from a four year low against the dollar on speculation the European Central Bank will announce further steps to halt the region’s debt crisis. Oil rebounded as the common currency gained after Axel Weber, an ECB Governing Council member, said the euro region must “urgently” tighten its fiscal rules. Prices dropped earlier today after Germany’s prohibition on short selling sparked concern that regulation will increase. A government report showed that U.S. oil supplies climbed for a 16th week.

“Oil is reacting to the strong rally in the euro,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There’s a fear that there will be further government intervention in the markets.” Crude oil for June delivery rose 49 cents, or 0.7 percent, to $69.90 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $67.90, the lowest intraday price since Sept. 30.

Brent crude oil for July settlement declined 88 cents, or 1.2 percent, to $73.55 a barrel on the London based ICE Futures Europe exchange. The contract reached $72.72, the lowest level since Feb. 16. German Chancellor Angela Merkel laid out proposals to gain control over “destructive” financial markets after she imposed a unilateral ban on naked short selling that sent stocks and the euro sliding.

Short sellers borrow assets and sell them, betting the price will fall and they’ll be able to buy them later, return them to the lender and pocket the difference. In naked short selling, traders never borrow the assets so betting is unlimited.....Read the entire article.

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Phil Flynn: Here We Go Again

Ok, now let's get this straight. They write a big check to Greece to try to restore confidence in the EU and then Germany decides to shake that confidence a bit by banning “naked short selling” in stocks. Once again just when the market tried to put this EU crisis behind us, here we go again. Producer prices came in at a negative as deflation pressures are mounting and the last shred of confidence the market held on to was dashed by the terrible timing of Germany’s BaFin financial services regulator saying that it will introduce a temporary ban on naked short-selling and naked credit default swaps of euro area government bonds starting at the midnight hour.

As in last night! It had appeared that the market was starting to stabilize but now what! Way to go guys. Way to go to not instilling confidence. The BaFin Financial service head Jochen Sanio is the same one that said that speculators were, "waging a war of aggression against the euro zone." He is now taking steps to make sure speculators stay away and make them less likely to buy euro zone toxic debt from countries like Greece who fraudulently hid the magnitude of their real debt in the first place. No wonder the euro is in trouble as.....Read the entire article.

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New Video: Crude Oil Breaks $70 a Barrel, is it Time to be Short?

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Crude Oil Daily Technical Outlook Wednesday Morning

Yesterday's consolidation was brief and was limited at 72.52. Recent decline resumed and drops to as low as 67.90 so far today. Intraday bias is back to the downside and further fall should be seen to 38.2% retracement of 33.2 to 87.15 at 66.54 next. on the upside, though, note that break of 72.52 resistance will indicate that a short term bottom is formed, possibly with convergence condition in 4 hours MACD, and bring stronger rebound.

In the bigger picture, the break of 68.59/69.50 support zone affirms our view that whole medium term rebound from 33.2 has completed at 87.15 already, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. Further decline should be seen to 50% retracement of 33.2 to 87.15 at 60.18 at least. Also, as rebound from 33.2 is viewed as as a correction to the whole correction that started at 2008 at 147.27, we'd anticipate a break of 33.2 low in the longer term. on the upside, break of resistance at 78 level is needed to be indicate that fall fro 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil Futures Drop Below $68 on Tuesday Evenings Globex Session

Crude oil futures fell below $68 a barrel in electronic trading Wednesday afternoon in Asia, extending their losses after closing at a seven month low in New York, as broad weakness in Asia's stock markets helped rob investors of confidence in energy demand. "The European fiscal crisis and the generalization of budget adjustment programs seem to have acted as an eye-opener," Christophe Barret, global oil analyst at Credit Agricole, said in a report this week, pointing out that since the start of April, West Texas Intermediate crude had lost $15 a barrel.

New fears over spread of Gulf oil spill
There are new new fears that the massive Gulf of Mexico oil spill is spreading through ocean currents, after tarballs were found on Florida's Key West. "This evolution is more or less in line with what would have been dictated by still weak fundamentals, and appears as a healthy correction to inflated prices," he said. Crude oil for June delivery was down 80 cents, or 1.2%, at $68.61 per barrel on Globex in Asia's afternoon trading. It touched an intraday low of $67.90.

The contract lost 67 cents, or 1%, to $69.41 a barrel on the New York Mercantile Exchange Tuesday, ending in the red for the sixth consecutive session. That was the lowest settlement for a most active contract since Sept. 29, when oil ended at $66.71 a barrel, according to FactSet Research. See Tuesday's Futures Movers column. "Germany's ban on 'naked short selling' caused a spike in the [U.S.] dollar, and WTI ultimately closed below $70," Stephen Schork, editor of The Schork Report, said in his latest report. Traders are also looking ahead to weekly data on petroleum supplies due from the Energy Department's Energy Information Administration at 10:30 a.m. Wednesday in Washington.

Analysts polled by Platts expect a rise of 950,000 barrels in crude supplies. The market will be looking specifically at inventories at the Cushing hub, said Schork. Oil futures have been under pressure because of rising inventories at Cushing, Okla., the delivery point for futures traded on the New York Mercantile Exchange. Overall, analysts at Credit Suisse said they "remain cautious on the near term prospects of crude oil, but think that medium term fundamentals remain supportive."

Reporter Myra P. Saefong is MarketWatch's assistant global markets editor in Tokyo.

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

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Tuesday, May 18, 2010

Crude Oil Drops for a Seventh Day on Build in U.S. Gasoline Stocks and Europe Debt

Crude oil dropped for a seventh day in New York, its longest losing streak in five months, on concern that gasoline demand shows signs of slowing in the U.S. and as investors delayed buying commodities on speculation that the European debt crisis will worsen. Oil slumped to its weakest level in seven months after the euro touched a four year low earlier today as European nations struggle to meet austerity requirements. Crude prices also fell after an American Petroleum Institute report showed gasoline inventories in the world’s biggest energy consumer rose 981,000 barrels last week.

“Sometimes people are focusing a little too much on the good aspects of Asia, we need to remember that the north Atlantic economies are really important for oil,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in a Bloomberg Television interview from Melbourne. “And both the U.S. and Europe are very weak fundamentally.” Crude oil for June delivery dropped as much as $1.51, or 2.2 percent, to $67.90 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since Sept. 30. It was at $68.72 at 11:48 a.m. in Singapore. Yesterday, the contract fell 67 cents to $69.41 a barrel, the lowest settlement since Sept. 29.

The U.S. Dollar traded at $1.2211 per euro at 11:50 a.m. Singapore time, from $1.2202 in New York yesterday. The euro fell yesterday after Germany said it will ban naked short selling and naked credit default swaps of euro area sovereign debt and the Bank of Italy allowed lenders to exclude losses on government bonds.....Read the entire article.

New Video: Where to Place Your Stops in Gold?

New Video: Crude Oil Breaks $70 a Barrel, is it Time to be Short?

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