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 rose in New York after an industry-funded report showed a drop in U.S. gasoline stockpiles, renewing optimism of increasing fuel demand in the world’s largest crude consumer. Oil pared part of yesterday’s 2.1 percent decline after the American Petroleum Institute said gasoline supplies fell 3.19 million barrels last week. Crude has dropped 20 percent since reaching $87.15 a barrel on May 3, the highest intraday price in more than a year. U.S. equities erased losses in the final minutes of trading, with the Dow Jones Industrial Average closing 0.2 percent lower after plunging 292 points.
“The drop in the gasoline inventories has brought optimism back to the market,” said Serene Lim, an energy and commodity strategist with Australia & New Zealand Banking Group Ltd. “Crude prices have been oversold the past two weeks so that is opening up some buying opportunities.” Crude oil for July delivery rose as much as $1.38, or 2 percent, to $70.13 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $69.27 at 2:03 p.m. Singapore time. Yesterday, the contract fell $1.46 to $68.75 after dropping as much as 4.4 percent.
“A drop in gasoline supplies almost always gives the energy markets reason to trade higher,” said Mike Sander, an investment adviser a Sander Capital Advisors in Seattle. “Oil is also up after the Dow Jones rallied in trading at the end of its session. With such a positive reversal, the price of oil received a boost”....Read the entire article.
Crude oil closed lower on Tuesday as it extended this month's decline. A short covering rally tempered early losses and the mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If July extends this month's decline, last July's low crossing at 66.11 is the next downside target. Closes above the 20 day moving average crossing at 78.58 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 73.30. Second resistance is the 20 day moving average crossing at 78.58. First support is today's low crossing at 67.15. Second support is last July's low crossing at 66.11.
Natural gas closed higher due to short covering on Tuesday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If July extends last week's decline, this month's low crossing at 3.971 is the next downside target. Closes above the 10 day moving average crossing at 4.291 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 4.229. Second resistance is the 10 day moving average crossing at 4.291. First support is today's low crossing at 4.036. Second support is this month's low crossing at 3.971.
The U.S. Dollar closed higher on Tuesday as it extended Monday's rally. However, profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 84.83 are needed to confirm that a short term top has been posted. If June renews 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. First resistance is last Wednesday's high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is last Friday's low crossing at 85.33. Second support is the 20 day moving average crossing at 84.83.
Gold closed higher due to short covering on Tuesday as it consolidated some of last week's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends last week's decline, the reaction low crossing at 1156.20 is the next downside target. Closes above the 10 day moving average crossing at 1209.10 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 1198.40. Second resistance is the 10 day moving average crossing at 1209.10. First support is last Friday's low crossing at 1166.00. Second support is the reaction low crossing at 1156.20.
The Role of Canadian Oil Sands in U.S. Oil Supply, a report from Cambridge, Mass.-based IHS CERA, says that in a fast-growth scenario, oil sands could represent 36% of oil imports by 2030, or 20% in a more moderate growth scenario, compared with 8% in 2009. Production of 1.35 million barrels per day (mbd) in 2009 could rise to between 3.1 mbd and 5.7 mbd by then. Although production of oil sands has run into environmental opposition, innovation in the technology of oil sand production has been constant and there will be continued progress in cutting greenhouse gas (GHG) emissions and reducing its environmental impact, the report says.
While the total “well to wheels” greenhouse gas emissions from oil sands are some 5 to 15% higher than the average crude oil produced in the U.S., a comparison to the average can be misleading because some domestic crude oil production can actually have higher GHG emissions, the IHS CERA report says. However, continued high growth in oil sands production will require further advances in managing water and land use and the reclamation of tailings the waste material byproduct, the report says.....Read the entire article.
With 4 hours MACD crossed below signal line, crude oil's recovery might be completed already. Intraday bias is flipped back to the downside for 64.24 low first. Break will confirm decline resumption for 60 psychological level next, which is close to 50% retracement of 33.2 to 87.15 at 60.18. On the upside, in case of another recovery, we'd expect strongly resistance at 38.2% retracement of 87.15 to 64.24 at 72.99 to limit upside and bring fall resumption finally.
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 from 87.15 is completed. Otherwise, we'll stay bearish.....Your keyword.
The” Carry Trade” just can’t carry the oil market away like it used to, especially with total petroleum inventories at a 20 year high for the month of May. So much for selling the dollar buying the Euro and every commodity you could get your hands on, the great carry trade unwind continues changing the way we may view all markets from this day forward.The global commodity markets are still trying to adjust to the economic problems in Europe and what may or may not happen in China in terms of economic policy. Not only will these issues adversely impact demand but also how the price of oil fits in terms as a hedge against global economic turmoil. As we have said many times before the increase in the price of oil and its fortunes has mainly been responding to the different phases of this global economic drama or as some have dubbed it “the Great Recession”.
With confidence in Europe being shaken and the dogma of ever increasing China demand is being questioned, the fragility of the oil price becomes so very apparent. The price of oil has got a lot of its bullishness not so much from oil demand but as a hedge against systemic risk. The euro has been the oil bull's best friend, not to mention the currency of “super models” but now it seems its fight for survival may have lost its appeal. The truth is that with the bailout of Greece and the purchases of debt by the ECB the Euro has changed forever anyway.Last week the markets went into crisis mode. The VIX volatility or fear index surged....Read the entire article.
Crude oil declined, falling below $70 a barrel in New York, after the seizure of a Spanish bank fueled concern Europe’s debt crisis may spread. Oil dropped for the first day in three as the euro weakened against the dollar, reducing the investment appeal of commodities. U.S. supplies of crude oil probably rose for the 16th time in 17 weeks amid ample imports, according to analysts surveyed by Bloomberg News before a government report tomorrow.
“Speculators are shifting money from risky to non-risky assets,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “From a fundamental point of view, inventories are high so that could push prices further down but crude oil is really going to be driven by the euro issue.” Crude oil fell as much as $1.08, or 1.5 percent, to $69.13 a barrel in electronic trading on the New York Mercantile Exchange. It was at $69.16 at 12:08 p.m. Singapore time. Yesterday, the contract rose 17 cents, or 0.2 percent, to settle at $70.21 a barrel.
Futures rose yesterday on speculation that China may delay economic tightening measures and on signs that U.S. economic growth will accelerate. Europe’s debt crisis has undermined that optimism, pushing the region’s common currency lower. The dollar rose to $1.2299 per euro from $1.2372 yesterday. The euro fell against all of its most traded counterparts after the Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property loan defaults.....Read the entire article.
The stock market topped in April which was expected from analyzing stocks and the indexes. Back in April I posted a few reports explaining how to read the charts to spot market tops. Today’s report is about identifying market bottoms. It does not get much more exciting than what we have seen in the past 2 months with the market topping in April and the May 6th mini market crash. This Thursday we saw panic selling which pushed the market below the May 6th low washing the market of weak positions.
For those of you who have been following me closely this year I am sure you have noticed trading has been a little slower than normal. This is due to the fact that the market corrected at the beginning of the year and we went long Feb 5th and again on Feb 25th. Since then the market rallied for 2 months and never provided another low risk entry point. In April the market became choppy and toppy and we eventually took a short position to ride the market down. Now were we are looking at another possible reversal to the upside.
Only a few trades this year which I know frustrates some individuals but if you step back and look at my trading strategy you will learn that we only need to trade a few trades a year to make some solid returns. I don’t know about you but I would rather trade a few times a month and live life between trades… not trade all day every day getting bug eyed in front of the computer.
Ok enough of the boring stuff let’s get into the charts....
SP500 – Stock Market Index Trading ETFs & Futures
The pullback in the broad market was expected but the mini crash on May 6th really through a wrench into things for us technical analysts. We don’t really know the truth about what happened that day… was it just a simple error or was it a planned error for the US government to take a massive short position to move something in their favor quickly to generate MASSIVE gains? It leaves us technicians hanging wondering if that was a shift in trend from up (accumulation) to down (distribution)?
My thoughts are if the crash was truly an error then we will see months if not another year of higher prices… But if it was a planned sell off with banks moving to the sidelines then we are most likely headed into another bear market. Personally it does not matter what happens as big money will be made in either direction. Problem is if we do go into another bear market then the majority of individuals will lose capital as investor’s portfolios get smaller and smaller. That will lead to a lot of depressed people…
In short, I am neutral on the stock market for the intermediate and long term. Once we have a few more months of price action only then will I have a plan for longer term investments. But on the short term time frame the market is screaming at me with extreme sentiment levels lining up on the stock market and gold.
The daily chart of the SPY – SP500 Index shows several important points which help me time market bottoms. We have prices trading at a support zone. Buyers step back into the game here and should provide a decent bounce which started Friday Morning.
Next we have the panic selling spikes from an indicator I created. Generally the day after we see panic in the market like we did on Thursday we will see a big bounce and many times a large rally.
Down at the bottom you can see my custom market cycles which are both starting to bottom. During times like this the market has a natural tendency to move higher.
VIX – Market Volatility Daily Chart
The VIX has an old saying “When the VIX is high its time to buy, When the VIX is low, its time to go”. Simple analysis clearly shows the VIX trading high and at a resistance zone.
Put/Call Ratio – Daily Trading Chart
This chart measures the amount of put and call options traded each day. When it is trading over 1.00 then we know for every 1 call option traded (wanting the market to go up) there is 1 put option traded (wanting the market to go down). Over 1.00 is extreme and when that many people are bearish and using leverage to profit from a drop in price then in my opinion it means everyone has already sold and the selling pressure is about to end.
Actually if you go back in time and review SP500 and this ratio you will notice 2-3 days after this ratio reaches 1.00 or higher the market bounces/bottoms.
NYSE Advance/Decline Line for Equities – Daily Chart
This chart shows us how many stocks are advancing or declining on any given day. When extremes are reached look for a short term bounce or bottom 1-3 days following.
How to Identify Stock Market Bottoms with Simple Analysis:
In short, I feel the market is forming a bottom here. How big of a rally will we get? I don’t know because of the mixed signals from the May 6th EXTREME heavy volume selling session. As usual I focus on trading with the trend, trading the low risk setups and I manage my money/positions scaling in and out of those positions as I see fit.
Crude oil closed slightly higher on Monday as it consolidated some of this month's decline. The mid range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If July extends this month's decline, last July's low crossing at 66.11 is the next downside target. Closes above the 20 day moving average crossing at 79.38 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 74.43. Second resistance is the 20 day moving average crossing at 79.38. First support is last Thursday's low crossing at 68.85. Second support is last July's low crossing at 66.11.
Natural gas closed lower on Monday as it extends last week's decline. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If June extends today's decline, this month's low crossing at 3.855 is the next downside target. Closes above the 10 day moving average crossing at 4.212 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 4.140. Second resistance is the 10 day moving average crossing at 4.212. First support is today's low crossing at 3.986. Second support is this month's low crossing at 3.855.
The U.S. Dollar closed higher on Monday ending a three-day correction off last week's high. The high range close sets the stage for a steady to higher opening on Tuesday. 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 84.60 are needed to confirm that a short term top has been posted. If June renews 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. First resistance is last Wednesday's high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is last Friday's low crossing at 85.33. Second support is the 20 day moving average crossing at 84.60.
Gold closed higher due to short covering on Monday as it consolidated some of last week's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If June extends last week's decline, the reaction low crossing at 1156.20 is the next downside target. Closes above the 10 day moving average crossing at 1211.60 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 1196.70. Second resistance is the 10 day moving average crossing at 1211.60. First support is last Friday's low crossing at 1166.00. Second support is the reaction low crossing at 1156.20.
