Crude oil was higher overnight as it extends the trading range of the past eight days. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is the reaction high crossing at 75.44
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Thursday morning is 74.48
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
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Thursday, September 9, 2010
Wednesday, September 8, 2010
Precious Metals Equity Index Forms a Triple Top, What’s Next?
From guest blogger Chris Vermeulen.....
I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold.
Below are my explanation and charts of what I think is unfolding.
HUI – Gold Bugs Index
This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down.
It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place.
UUP – US Dollar ETF
The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall.
GLD – Gold Bullion ETF
The chart of gold has identical patterns no matter if it’s this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move.
The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off.
With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit.
Mid-Week Precious Metals Trading Report:
In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down.
Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction.
I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at The Gold And Oil Guy.Com
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I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold.
Below are my explanation and charts of what I think is unfolding.
HUI – Gold Bugs Index
This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down.
It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place.
UUP – US Dollar ETF
The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall.
GLD – Gold Bullion ETF
The chart of gold has identical patterns no matter if it’s this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move.
The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off.
With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit.
Mid-Week Precious Metals Trading Report:
In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down.
Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction.
I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at The Gold And Oil Guy.Com
Learn To Trade Oil and Gold ETF's
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Bertha Coombs: Where is Crude Oil and Gold Headed on Thursday?
CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.
Markets Close Firmer, Are The Bulls and Bears on an Equal Playing Field Here?
Crude oil closed up $0.63 at $74.72 a barrel today. Prices closed nearer the session high today on short covering. A weaker U.S. dollar and firmer U.S. stock indexes today help support crude. Crude oil bears still have the slight overall near term technical advantage.
Natural gas closed down 4.8 cents at $3.804 today. Prices closed near the session low today. The bears have the solid overall near term technical advantage. A 2 1/2 month old downtrend is still in place on the daily bar chart.
Gold futures closed down $1.30 at $1,258.00 today. Prices closed nearer the session low on some profit taking pressure. Early prices did hit a fresh 10 week high. Bulls still have upside near term technical momentum and have the solid technical advantage. Prices are also in a six week old uptrend on the daily bar chart.
The U.S. dollar index closed down 24 points at 82.89 today. Prices closed near mid range today. Bulls and bears are now back on a level near term technical playing field. Bulls' next upside price objective is to close prices above solid technical resistance at 84.00.
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Phil Flynn: When Irish Bonds Are Crying
And worries surrounded countries with the acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain) were ready to go over the edge! The stock market was crashing and oil prices were plunging and it looked like we were getting ready for a major global market meltdown.
But then when all was nearly lost, the EU stepped up to the plate with a whopping 750 billion euro rescue package and instituted a series of European Bank stress tests to assure the world that gosh oh golly things were going to be ok and magically all of the problems seemed to go away.
The Euro came roaring back and the risk trade was back in vogue and oil was saved from a plunging deflationary bloodbath. I hope you remember that crisis because it may be back. We may be seeing that the European crisis is not over after all.....Read the entire article.
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Crude Oil Contango Doubles in 2011 Recovery Betting With Frontline Ship Demand
Crude, gasoline and heating oil inventories reached a 20 year high last month as the U.S. Commerce Department said the economy probably expanded at a 1.6 percent annual pace in the second quarter from an initially reported 2.4 percent. The gap, or curve, between the price of oil for immediate delivery and for March has increased to a three month high, making storage a profitable wager on an American rebound next year.
“Demand is going to look a lot better in 2011,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who predicted prices will rise to $80 next year. “By then the overall numbers on things like industrial production, housing, investment and probably even consumer sentiment will be better.” October futures rose 63 cents, or 0.9 percent, to $74.72 a barrel at 10:05 a.m. on the New York Mercantile Exchange. The March contract rose 6 cents to $80.35. The spread narrowed by 7.5 percent to $5.63.....Read the entire article.
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Crude Oil Daily Technical Outlook Wednesday Morning
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is the 20 day moving average crossing at 74.52
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Wednesday morning is 73.78
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
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Tuesday, September 7, 2010
What is Our Smart Scan Tool Telling Us About Natural Gas?
With retail traders anxious to find a bottom in natural gas prices, let's take a look at what our trading tols are telling us about natural gas ETF UNG.
"Smart Scan Chart Analysis" is showing some near term rallying power. However, this market remains in the confines of a longer term downtrend that should be traded with extremely tight money management stops.
Based on a pre defined weighted trend formula for chart analysis, UNG scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10....Last Hour Close Above 5 Hour Moving Avg
+15....New 3 Day High on Friday
-20....Last Price Below 20 Day Moving Avg
-25....New 3 Week Low,Week Ending Sept 4th
-30....New 3 Month Low in September
-75....Total Score
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"Smart Scan Chart Analysis" is showing some near term rallying power. However, this market remains in the confines of a longer term downtrend that should be traded with extremely tight money management stops.
Based on a pre defined weighted trend formula for chart analysis, UNG scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10....Last Hour Close Above 5 Hour Moving Avg
+15....New 3 Day High on Friday
-20....Last Price Below 20 Day Moving Avg
-25....New 3 Week Low,Week Ending Sept 4th
-30....New 3 Month Low in September
-75....Total Score
Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology
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Bertha Coombs: Where is Crude Oil and Gold Headed on Wednesday?
CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.
Markets Close Lower, Bulls Maintain The Advantage For Wednesday Morning
Crude oil closed lower on Tuesday due to profit taking but remains above the 10 day moving average crossing at 73.66. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target. First resistance is the 20 day moving average crossing at 74.85. Second resistance is the reaction high crossing at 75.58. First support is August's low crossing at 70.76. Second support is May's low crossing at 70.35.
Natural gas posted an inside day with a lower close on Tuesday but remains above the 10 day moving average crossing at 3.844. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are turning bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 4.048 are needed to confirm that a short term low has been posted. If October renews this year's decline, weekly support crossing at 3.225 is the next downside target. First resistance is last Friday's high crossing at 3.946. Second resistance is the 20 day moving average crossing at 4.048. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.
Gold closed higher on Tuesday and above the 87% retracement level of the June-July decline crossing at 1253.30 as it extends the rally off July's low. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near term. If August extends the rally off July's low, June's high crossing at 1267.10 is the next upside target. Closes below the 20 day moving average crossing at 1234.40 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1260.30. Second resistance is June's high crossing at 1267.10. First support is the 10 day moving average crossing at 1245.60. Second support is the 20 day moving average crossing at 1234.40.
The U.S. Dollar gapped up and closed higher on Tuesday as it consolidated some of the decline off August's high. 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 December extends last week's decline, August's low crossing at 80.75 is the next downside target. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. First resistance is today's high crossing at 83.29. Second resistance is August's high crossing at 83.96. First support is last Friday's low crossing at 82.23. Second support is August's low crossing at 80.75.
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