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Where is USO headed? Smart Scan Chart Analysis is showing an uptrend with some near term weakness. However, this market remains in the confines of a longer term uptrend. Trade the uptrend with tight money management stops. Based on a pre-defined weighted trend formula for chart analysis, USO scored +70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10......Last Hour Close Above 5 Hour Moving Average
+15......New 3 Day High on Thursday
+20......Last Price Above 20 Day Moving Average
+25......New 3 Week High, Week Ending June 12th
-30......New 3 Month Low in May
Crude oil closed lower due to profit taking on Friday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 50% retracement level of last month's decline crossing at 78.46 is the next upside target. Closes below Monday's low crossing at 69.51 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 76.30. Second resistance is the 50% retracement level of last month's decline crossing at 78.46. First support is Monday's low crossing at 69.51. Second support is the reaction low crossing at 67.15.
Natural gas closed higher on Friday as it consolidated some of this week's decline. The high range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.444 would confirm that a short term top has been posted. If July renews the rally off May's low, the 50% retracement level of the November-May decline crossing at 5.151 is the next upside target. First resistance is Tuesday's high crossing at 4.995. Second resistance is the 50% retracement level of the November-May decline crossing at 5.151. First support is the 10 day moving average crossing at 4.635. Second support is the 20 day moving average crossing at 4.444.
The U.S. Dollar closed higher on Friday due to short covering but remains below the 10 day moving average. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 87.01 are needed to confirm that a short term top has been posted. If June renews this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is Monday's high crossing at 88.80. Second resistance is weekly resistance crossing at 89.71. First support is the 20 day moving average crossing at 87.01. Second support is today's low crossing at 86.77.
Gold closed higher due to short covering on Friday and closed above the 10 day moving average crossing at 1225.80. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below last Friday's low crossing at 1198.10 are needed to confirm that a short term top has been posted. If August extends this spring's rally into uncharted territory, upside targets will now be hard to project. First resistance is Tuesday's high crossing at 1254.50. First support is the 20 day moving average crossing at 1216.10. Second support is last Friday's low crossing at 1198.10.
The battle between the Bulls and Bears continues with very choppy trading action. The rally from a potential double bottom is cause for concern for the Bears, however the Bulls are in a similar situation as they have to prove their case with sustained market action.
In our new video, we outline some of the key levels that we think are important in the S&P 500 market. Volume continues to to be light and that is why the markets are moving around and are so volatile at the moment.
This is our first video this week, but expect many more as the market rotates. Don't miss our special risk free trial offer to MarketClub, my premium charting service, offered at the end of this video.
Crude oil was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI remain bullish signaling that additional short term gains are possible. Closes above the reaction high crossing at 75.72 are needed to confirm that a short term low has been posted and renew the rally off May's low.
If July renews the decline off April's high, weekly support crossing at 65.66 is the next downside target.
First resistance is last Friday's high crossing at 75.42.
Second resistance is Thursday's high crossing at 76.30.
Friday's pivot point is 75.17
First support is Monday's low crossing at 69.51.
Second support is May's low crossing at 67.15.
As noted before, Crude oil's rebound from 64.24 is possibly still in progress and further rise might be seen. But after all, we're still expecting strong resistance at 61.8% retracement of 87.15 to 64.23 at 78.39 to limit upside to conclude the correction. On the downside, below 69.51 minor support will argue that such recovery is finished and will flip intraday bias back to the downside for retesting 64.24 low first.
In the bigger picture, prior 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.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
Crude oil closed higher on Thursday and above renewed the rally off May's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 50% retracement level of last month's decline crossing at 78.46 is the next upside target. Closes below Monday's low crossing at 69.51 would confirm that a short term top has been posted. First resistance is today's high crossing at 76.30. Second resistance is the 50% retracement level of last month's decline crossing at 78.46. First support is Monday's low crossing at 69.51. Second support is the reaction low crossing at 67.15.
Natural gas closed higher on Thursday ending a two day correction off Tuesday's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.428 would confirm that a short term top has been posted. If July extends this week's rally, the 50% retracement level of the November-May decline crossing at 5.151 is the next upside target. First resistance is Tuesday's high crossing at 4.995. Second resistance is the 50% retracement level of the November-May decline crossing at 5.151. First support is the 10 day moving average crossing at 4.588. Second support is the 20 day moving average crossing at 4.428.
The U.S. Dollar closed lower on Thursday due to profit taking and below the 10 day moving average crossing at 87.44 signaling that a short term top has likely been posted. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought and turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 86.94 are needed to confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is Monday's high crossing at 88.80. Second resistance is weekly resistance crossing at 89.71. First support is today's low crossing at 87.02. Second support is the 20 day moving average crossing at 86.94.
Gold closed lower on Thursday and below the 10 day moving average crossing at 1224.30 signaling that a short term top has likely been posted. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below last Friday's low crossing at 1198.10 would confirm that a short term top has been posted. If August extends this spring's rally into uncharted territory, upside targets will now be hard to project. First resistance is Tuesday's high crossing at 1254.50. First support is the 20 day moving average crossing at 1216.20. Second support is last Friday's low crossing at 1198.10.
Bashing BP is in. While Obama is trying to figure out whose "ass to kick", politicians are acting like jilted lovers falling all over themselves to try to lash out and hurt BP while our global reputation as the world’s best and most fair place to do business is at risk. This goes far beyond BP and what they could have or should have to avoid this disaster or how they are handling the aftermath but really comes down to the credibility of this country in the global market place.
BP stock got hammered again in part because the Obama administration wants to make BP cover all the damages from the Gulf oil spill even the millions of dollars in salaries of the laid off oil industry workers let go because of their Federal moratorium on deepwater drilling. This is a concept that has no basis in our rule of law and is trying to change the law after the fact. In other words, they want BP to pay for their own bad policy. At the same time members of Congress are trying to retroactively lift the 75 million dollar liability cap on punitive damages and possibly have no cap at all.
Yet revenge and emotion always makes bad policy. The truth is that eliminating or raising the liability cap for oil companies will cost us thousands of jobs in the oil industry. Small oil companies and drillers will go out of business and insurance rates for companies will skyrocket faster than health care costs. US domestic oil and gas production would fall, maybe dramatically. It would add dollars to the cost of a gallon of gasoline and higher costs would prolong the recession. Higher energy costs would hurt small businesses across the country and would.....Read the entire article.
Market volatility continues to shake things up making it profitable for traders who are quick to spotting key reversal points, manage risk and taking profits before it evaporates. On Tuesday we saw the market go up and down more than I have seen in a long time… It moved over 5% as it trended up then down in 1% increments as shown in the chart below. Members of FuturesTradingSignals were able to capture a 1-2% gain which may not sound like much but when trading the leveraged ETFs, Futures or CFD’s we are making 4-200% profit within a few hours. That being said this type of price action is proof that the market just does not know which way to go and why trades must be very quick to enter and exit positions.
The SP500 daily etf chart shows my simple volume analysis during market corrections. During the early stages of a trend, pullbacks are quick and simple. But as a trend matures we start to see corrections become much more complex. We first saw the simple 1 wave corrections in 2009, then we saw a much deeper 3 wave correction which was enough to shake most retail (average Joe’s) out of the market before heading higher, and now it looks as though we are headed into a complex 5 wave correction which should be enough to shake out the majority again.
It’s important to note that the longer a trend lasts the larger the corrections/shake outs must be in order to get everyone out. From what I am reading and seeing everywhere online are doom and gloom scenarios. In my opinion this is good. One more leg down should be enough to shake everyone before we see a nice 10-20% rally. Once we see that bounce/rally then we can reanalyze the market to see if we are headed back up to test the 2010 highs or if its just a bear market rally. In the end it does not matter as we play both the long and short side of the market.
Gold ETF continues to unfold as planned. We caught a good chunk of the recent rally and are now in cash waiting for another low risk entry point in the coming days or weeks.
Crude oil Fund (USO) has been struggling to stay up the past 2 months. As you can see the chart below it’s trading at a key resistance level and at this point it could go either way… I don’t like to get involved in trades when they look to be a 50/50 probability of going each direction. If anything I would think oil will head back down as the US dollar continues its strong rally.
Mid-Week ETF Trading Conclusion
In short, the broad market is in a down trend and selling volume continues to rise. Investors around the world continue to accumulate gold and the US dollar as they seem to be the safe havens for the time being. Oil is also in a down trend and trading at resistance which means we should see lower prices for oil and oil companies and this will weigh heavily on the equities market.
Cash is king and during times of uncertainty that’s for sure… It is very comforting to know we are in cash most of the time and only get involved with the market when there is a low risk, high probability setup on the charts.
If you would like to get Chris Vermeulen's trading analysis and trading alerts check out The Gold And Oil Guy .Com
Current development suggests that whole rebound from 64.24 is still in progress and might extend beyond 75.72. But after all, we'd expect upside to be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption. Below 69.51 minor support will argue that such recovery is finished and will flip intraday bias back to the downside for retesting 64.24 low first.
In the bigger picture, prior 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.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
