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 fell for a fourth day on speculation that the U.S. economic recovery is slowing, reducing fuel demand in the world’s biggest oil consuming country. Oil slipped as much as 1.2 percent after the Thomson Reuters/University of Michigan preliminary September index of consumer sentiment fell to 66.6 from 68.9 a month earlier. Enbridge Energy Partners LP obtained government approval to resume sending Canadian oil to refineries in the Midwest on Line 6A. The system will begin operating today, the company said.
“The market really started to tank once the consumer confidence numbers came out,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. “The economy is the driver of this market right now.” Crude oil for October delivery declined 67 cents, or 0.9 percent, to $73.90 a barrel at 10:15 a.m. on the New York Mercantile Exchange. Brent crude oil for November settlement fell 36 cents, or 0.5 percent, to $78.12 a barrel on the London based ICE Futures Europe exchange.
Oil futures topped $78 a barrel this week following the closure on Sept. 9 of Enbridge’s 466-mile Line 6A. The pipe spilled about 6,100 barrels of oil from a section in Romeoville, Illinois, about 30 miles southwest of Chicago. The 34-inch line runs from Superior, Wisconsin, to Griffith, Indiana, and can carry 670,000 barrels a day of crude, equal to more than one- third of Midwest imports. Goldman Sachs Group Inc. said in a report today that the pipeline’s closure will keep U.S. crude oil imports at reduced levels in coming weeks.
Lower Inventories
“As the tide turns, we will see lower inventories and shifting sentiment send WTI crude oil prices into a $85-$95 per barrel trading range in coming months,” Goldman said in the report.
“The oil price will remain stuck in a $70 to $80 range,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “At first it looked like the Enbridge repairs would take a long time. Now it seems it will go fairly fast. Markets are very well-supplied and U.S. demand is lackluster.”
Bloomberg reporter Mark Shenk can be reached at mshenk1@bloomberg.net
Crude oil was higher overnight as it consolidates some of this week's decline. 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 74.43 would confirm that a short term top has been posted. If October renews the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target.
First resistance is Monday's high crossing at 77.50
Second resistance is the 62% retracement level off August's high crossing at 78.58
Crude oil pivot point for Friday morning is 74.89
First support is the 20 day moving average crossing at 74.43
Second support is the reaction low crossing at 72.63
We are at the tail of another light volume choppy options expiry week and a big move is brewing… So I thought I would do a mid-week update on what I think is about to unfold in the coming days.
First off I will touch on gold. Everyone is in love with this shiny metal. But as I mentioned last week I think we are nearing a sharp correction. Previously I pointed out that we needed gold to make a new high to the $1275- 1285 area before everyone piles in and gets married to it, only then will the market reverse… Remember the market is out to take money from the masses and the gold trade is getting a little crowded in my opinion.
There are fundamentals which can be taken into account… but when has any investment moved perfectly inline with the underlying fundamentals? I’ve seen investments lead fundamentals by years, and other times lag the fundamentals by years, not to mention manipulation… but that’s a whole different subject. That being said I don’t hold gold long term for the simple reason I don’t believe much in the buy and hold strategy, nor do I like to watch investments go much more than a few percent against me… I would rather sit in cash jumping in and out when things look ripe for the picking. OK let’s jump into the analysis....
Gold Futures Price – Daily Chart
As you can see gold is forming another rising bearish wedge. The last one lead to a $100 drop in gold earlier this year. The part that I find exciting is that this recent run up has been on relatively light volume and without any decent pullbacks along the way. What does that mean? It means fewer people are willing to pay top dollar for it and the big money is riding this train up until they feel its getting exhausted then they will start unloading large amounts at a premium. We also just saw another new high on Thursday which happened on light volume tells me this rally just may have the herd all rounded up before the slaughter.
Silver Futures Price – 15 Minute Intraday Chart
While I don’t trade silver as much as gold due to the added volatility/whipsaw action, this intraday chart is starting to show signs of weakness with a rising bearish wedge today. This is just an intraday chart but these short term patterns tend to lead the longer term charts pointing out exhaustion is starting to creep into the market. Both gold and silver could still have a blow off top and shot up, which is why I have been saying to stay long metals (if you have a position) and to keep raising stop as it could continue higher for some time if a new wave of buyers step in.
Crude Oil – 4 Hour Chart
Oil has been choppy recently making it difficult to get a good read off the chart. Currently it is testing support and looks to be forming a possible right shoulder. It could have some good potential to the down side if we get a neckline break. I’m keeping my eye on it for another low risk entry point.
SP500 ETF – Daily Chart
This chart clearly shows some extreme bullish sentiment levels in the market. The bottom indicator is the total put/call ratio and when it is below 0.80 in an environment like this, it means there are too many people bullish on the market. So with today's spike low its easy to tell that the majority of traders/investors are bullish as they buy all the call options they can.
That being said, we generally get a serious shake out before the market reverses. What I mean by that, we should see the market gap substantially higher or spike up intraday as key resistance is broken. This forces all the shorts to cover their positions just before the market rolls over and sells back down. That’s what I am looking for to take action.
Mid-Week Trading Conclusion:
In short, gold and silver are looking and feeling toppy here. While I am bullish on them long term, we could see sharp pullback which could take months to regain these prices. I am not short metals yet but very close to taking a short counter trend trade.
Oil continues to looks bearish but is taking a long time to play out. This is a 4 hour chart and if we do get this neckline breakdown, it would still take 1-2 months to pay off. That being said, it looks like it will go lower.
SP500, I think the chart gets the point across. The important part to know is that it should go another 0.5% – 2% higher before it goes lower as that would make for a perfect pop & drop reversal pattern which I will alert members to when the time comes to short.
You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 2-4 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis per customer’s request, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward.
Some of Pennsylvania's natural gas pipelines are 120 years old. Portions of lines also date to the 1800s in Massachusetts. And hundreds of miles in New York state are made of leak prone cast iron. Tens of thousands of miles of pipelines that run beneath communities nationwide are old or decaying, and an Associated Press survey found that no states in the parts of the country with the greatest concentration of people and pipes have ordered a safety review in the week since a deadly explosion in California raised public awareness of potential problems.
Officials from Massachusetts to Texas say their inspections are adequate, and they are waiting for federal investigators to determine the cause of the Sept. 9 gas line explosion that killed four in San Bruno, Calif., before deciding what to do. Consumer advocates and plaintiffs' lawyers say the response fits a familiar pattern: Utilities and customers won't pay the millions of dollars needed to replace corroded pipes, the lines fail and regulators act only after a disaster.
Massachusetts is ahead of most states, in part because it reviewed its system after several natural gas explosions during the winter of 2008-09. About one third of the state's 21,000 miles of distribution lines are cast iron or bare steel. The cast iron pipes were laid from the late 1800s to the 1940s and the bare steel between the 1930s to the 1960s. Other states, however, are not acting as swiftly.....Read the entire article.
The U.S. stock indexes closed firmer again today and hit multi week highs. Bulls have gained upside near term technical momentum recently as the bulls have "climbed a wall of worry." While the months of September and October have been historically unkind to the stock market bulls, the indexes are getting through the month of September in good shape, so far.
Crude oil closed down $1.58 at $74.44 a barrel today. Prices closed near the session low today. Bulls are fading and bears again have the slight near term technical advantage. The next near-term upside price objective for the bulls is producing a close above solid technical resistance at this week's high of $78.04 a barrel.
Natural gas closed up 5.3 cents at $4.048 today. Prices closed nearer the session high today, hit another fresh three week high on more short covering in a bear market, and scored a bullish "outside day" up on the daily bar chart. The bears still have the overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.20.
Gold futures closed up $5.70 at $1,274.40 today. Prices closed near mid-range today and did hit another fresh contract and all time record high today. A weaker U.S. dollar index today helped to boost gold. Look for price volatility in the gold market to heat up in the near term, with bigger daily price movements likely, both on the upside and on the downside, with prices now in uncharted territory. Gold bulls still have the solid overall near term technical advantage.
The U.S. dollar index closed down 27 points at 81.47 today. Prices closed nearer the session low today. Bears still have the near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at last week's high of 83.31.
Natural gas spot prices increased this report week (Wednesday to Wednesday, September 8–15), likely supported by demand in the electric power sector from late season heat and associated air-conditioning demand in much of the country. During the report week, the Henry Hub spot price increased by $0.25 per million Btu (MMBtu) to $4.06 per MMBtu.
At the New York Mercantile Exchange (NYMEX), the price of the October futures contract increased in 4 out of 5 trading days for a total gain during the report week of about $0.18 per MMBtu. The price of the near term contract remained just below $4 per MMBtu, closing yesterday at $3.995 per MMBtu.
During the week ending Friday, September 10, estimated net injections of natural gas into underground storage totaled 103 billion cubic feet (Bcf). Working natural gas in underground storage was 3,267 Bcf, which is 6.2 percent above the 5 year (2005-2009) average.
The West Texas Intermediate (WTI) crude oil spot price increased $1.27 per barrel during the report week. The WTI crude oil spot price averaged $75.92 per barrel yesterday, or $13.09 per MMBtu.
Prices
Although the hottest temperatures of the year are clearly over, consumption in the electric power sector remained strong this week as much of the country continued to experience warm weather and air-conditioning demand likely increased. Consumption in the electric power sector increased an estimated 2.3 percent in comparison with the previous week, while overall U.S. consumption was an estimated 2.0 percent higher, according to BENTEK Energy, LLC. Consumption in the industrial sector also increased an estimated 2.8 percent, chiefly as a result of the typical drop in demand the previous week because of the Labor Day holiday (which also likely affected week-to-week comparisons in electric power consumption). At the same time, U.S. production dipped this week by an estimated 1.5 percent, averaging 61.4 Bcf per day. Although domestic production clearly remains strong, this factor along with increased demand provided enough support to at least temporarily reverse a fairly steady decline in natural gas prices since mid-summer. The Henry Hub natural gas spot price increased in 4 out of the 5 trading days this report week for a net gain of $0.25 per MMBtu. The Henry Hub price averaged $4.06 per MMBtu on Wednesday, September 15, which was the first time this price has exceeded $4 per MMBtu since August 24.
There are currency manipulators everywhere you look. Now we all know about the Chinese and Treasury Secretary Tim Geithner who is going to give Congress an earful about those well known currency manipulating scoundrels as our fine men and women in congress begins a second day of hearings on the China and their manipulative currency ways. But who could have thought that the Japanese were manipulators as well! Well Senator Carl Levin is deeply disturbed with the Japanese and exclaimed that, "China is not the only country with a predatory exchange rate policy”!
He said that the US needs to watch the Japanese and what they are doing! Now of course we all know that currency manipulation is a very wrong thing to do. And if Senator Levin is deeply disturbed with the Chinese he must be even more disturbed with the Federal Reserve that should be grouped in with the rest of the currency manipulators. Don’t tell the honorable senator this but when the Fed prints more money to save the economy they are manipulating there currency. Also when the party in power, and I am not mentioning any names, runs up deficits and borrows money from the Chinese and pays them back in newly printed bills it kind of encourages that naughty behavior.....Read the entire article.
Get your favorite symbols' Trend Analysis TODAY! Click Here
Crude oil prices may not rise above $84 a barrel because increases lose momentum around that level, according to technical charts used by traders. A resistance channel has formed between $82 and $84 a barrel for oil traded in New York based on patterns in a point and figure chart, said analysts at the Villanova, Pennsylvania based Schork Group Inc. Crude reached this range five times in the last 18 months and failed to go higher. When prices did breach this level earlier this year, peaking at an intraday high of $87.15 a barrel on May 3, a collapse followed to $64.24 on May 20.
“A channel of significant resistance forms between $82 and $84 -- prices failed at this point in October 2009, in January 2010, twice in March and again in August,” Schork Group President Stephen Schork wrote in a Sept. 14 report. “The lone breakout, taking place between April and May, led to the sharpest sell-off seen all year and annual lows. Thus we consider this level key.” A point and figure chart gauges trends in prices without showing time or volume. Rising patterns are indicated by an X while falling prices are shown by an O. Movements are measured by a pre-defined unit called a reversal. The default for this unit on the Bloomberg terminal is a $3 a barrel change.
Months of the year are indicated on the point and figure chart by numbers, with the exception of October to December, which are shown by the letters A to C. For example, trends from September are shown as a 9 and for October by an A. The point and figure chart shows that prices are in a rising trend since bottoming out in May. Crude climbed from there reaching an intraday peak of $82.97 a barrel on Aug. 4. The system first appeared in an 1898 book called “The Game in Wall Street and How to Play It Successfully,” according to the Schork Group.
Crude oil was lower overnight as it consolidates some of the rally off August's low. Stochastics and the RSI are overbought and are turning bearish warning bulls to use caution as a short term top might be in or is near.
Closes below the 20 day moving average crossing at 74.46 would confirm that a short term top has been posted. If October renews the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target.
First resistance is Monday's high crossing at 77.50
Second resistance is the 62% retracement level off August's high crossing at 78.58
Crude oil pivot point for Thursday morning is 75.78
First support is the 20 day moving average crossing at 74.46
Second support is the reaction low crossing at 72.63
