Where is Gold and Crude Oil Headed on Tuesday

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Monday Evening

The U.S. stock indexes closed higher, near the session highs and hit multi week highs today. Bulls have gained good 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. My bias is that if there were to be serious market stock market turbulence during the months of September and October, it would have most likely occurred in early September.

Crude oil closed up $1.10 at $74.76 a barrel today. Prices closed nearer the session high today and saw short covering. Bulls and bears are back on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at last week's high of $78.04 a barrel.

Natural gas closed down 19.1 cents at $3.833 today. Prices closed near the session low today. The bears still have the overall near term technical advantage and regained some downside momentum today. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.144.

Gold futures closed up $3.60 at $1,281.10 today. Prices closed near mid range today and did poke to another fresh contract and all time record high today. A weaker U.S. dollar index today helped to boost gold. The fact that volatility in the gold market has not increased significantly with prices now in uncharted territory is a bullish clue and suggests the modest uptrend in prices can continue. Gold bulls still have the solid overall near term technical advantage. There are still no early technical clues to suggest a market top is close at hand.

The U.S. dollar index closed down 3 points at 81.60 today. Prices closed nearer the session high today. Bears still have the overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.31.

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Whiting Petroleum Launches $350M Note Offer

Whiting Petroleum Corp. said Monday it has launched a public offering of $350 million in senior subordinated notes to repay other outstanding debt. The notes will be due in 2018. Banc of America Securities, J.P. Morgan Securities and Wells Fargo Securities are the joint book-running managers.

Whiting explores for oil, and natural gas in several parts of the U.S. Its largest projects are in North Dakota, Oklahoma and Texas. The shares rose $3.50, or 3.8 percent, to $96.28 in regular trading before the announcement. In extended trading, they added 3.8 percent to $96.28.

Courtesy The Associated Press


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Phil Flynn: Ding Dong The Well Is Dead, Finally!

The BP Macondo Well has been officially declared dead over the weekend. The Financial Times says that US authorities pronounced BP’s blown out Macondo well in the Gulf of Mexico “effectively dead” on Sunday, 152 days after the explosion on the Deepwater Horizon drilling rig that caused the world’s largest accidental offshore. The announcement ends the 5m barrel leak, which sparked fury among the US public and politicians, but may eventually be seen to have had only a marginal effect on the global oil industry.” Marginal?

BP opponents of drilling will a rallying point. Yet at the same time the industry has learned a lot and will be better prepared to respond to this type of disaster in the future. So there will be some bad and good that will come from this disaster. Oil is rallying a bit on a weak dollar. Of course the main factor for oil and most other markets will be the impact from this week’s FOMC meeting. If I have said it once I think I have said it a thousand times that the Fed is one of the major driver of oil prices as well as other commodities.....Read the entire article.

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SP 500 Fakeout & Market Trend

From Chris Vermeulen, The Gold and Oil Guy....

I think it’s safe to say that everyone knows the markets are manipulated… but during options expiry week we tend to see prices move beyond key resistance and support levels during times of light volume which triggers/shakes traders out of their positions.

Trading during low volume sessions Pre/Post holidays for swing traders or between 11:30am – 3:00pm ET for day traders tends have increased volatility and false breakouts. This happens because the market markets for individual stocks can slowly walk the prices up and down beyond short term support and resistance levels simply because there is a lack of participation in the market.

SP500 4 Hour Candlestick Chart
That being said, the chart below of the SPY (SP500 ETF) shows that last Thursday, (the day before Friday options expiry) the put call ratio was showing extreme bullishness. I also mentioned that we should expect a pop of 0.5 -2% in the next 24 hours as big guys will try to shake everyone out of their short positions (put options).

The put/call ratio indicator at the bottom of this chart is a contrarian indicator. When it shows that everyone has jumped to the bullish side, the big money knows its about time to change the direction so they can cash in at premium price levels.

SP500 60 Minute OptionsX Chart of the Week
If you look at the volume at the bottom of the chart you will see there are times where this virtually zero volume trades. The yellow high lighted section shows the overnight price surge which is very easy for the big guys to push higher as everyone sleeps.

Here is what they are doing. The light volume makes it easy to manipulate so they push it higher until key resistance is broken, then everyone who was short and had a protective stop in place will have their order executed. As the price rises, more and more stops get triggered. Also, with the rising number of traders becoming bullish from the previous session have buy orders to go long if key resistance is broken. This causes a virtually automated rally to unfold, but once the orders/buying dries up, the big guys start selling their positions at premium prices, pushing the price all the way back down to where the market closed the previous day.

In short, the big guys shook the majority of traders out of their positions Thursday night and pocketed a ridiculous amount of money. Crazy part is 99% of the public don’t even know this type of thing is happening while they sleep.

SP500 OptionsX Intraday Price Action
I thought I would show this chart as it shows the selling pressure in the market. What I find interesting about this chart is the fact there was more selling volume during options expiry week, but the prices continued to move higher.

From watching the market internals I saw the majority of traders go from bearish to bullish by the end of the week, and this really gave the big guys a huge advantage in my opinion. Each session selling volume took control with the big guys unloading bu the low volume afternoons naturally brought prices up again as more and more traders became bullish each session. This happened all week and Thursday night it looks as though they let the price rise allowing the key resistance level to be broken which caused a surge of buying which they could selling into. So what’s next…

SP500 / Broad Market Trading Conclusion:
In short, the market looks toppy and if all goes well, last weeks overnight shakeout just may have been a top. This week will start off slow and most likely with light volume until Wednesday. During light volume times, keep trading positions smaller than normal and remember there is a neutral/upward bias associated with light volume.

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 only be covering only one. 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 newsletter traders and they will receive direct personal responses regarding trade ideas and analysis going forward. Let the volatility and volume return!

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Crude Oil Technical Outlook For Monday Morning Sept. 20th

Crude oil was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If October extends last week's decline, the reaction low crossing at 71.53 is the next downside target. Closes above the 10 day moving average crossing at 75.15 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 74.37
Second resistance is the 10 day moving average crossing at 75.15

First support is last Friday's decline crossing at 72.75
Second support is the reaction low crossing at 71.53

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Crude Oil Trades Near Lowest in Almost Three Weeks on Economic Recovery Concerns

Crude oil traded near its lowest in almost three weeks after falling amid speculation the U.S. economic recovery is slowing, reducing fuel use in the world’s biggest crude consumer. Futures dropped 1.2 percent on Sept. 17 after the Thomson Reuters/University of Michigan preliminary September index of consumer sentiment declined to 66.6 from 68.9 a month earlier. Prices also decreased after the American Petroleum Institute said U.S. gasoline consumption in August averaged 9.23 million barrels a day, down from 9.3 million in August 2009.

The October contract traded at $73.70 a barrel, up 2 cents, in electronic trading on the New York Mercantile Exchange at 8:30 a.m. Sydney time. It lost 91 cents to $73.66 on Sept. 17, the lowest settlement since Aug. 31. Prices are down 7 percent this year. Oil also dropped after the dollar gained against the euro, reducing the appeal of commodities as an alternative investment. The U.S. currency traded at $1.3044 a euro after rising 0.2 percent on Sept. 17.

Brent crude oil for November settlement traded at $78.22 a barrel, up 1 cent, on the London based ICE Futures Europe exchange. It fell 27 cents, or 0.3 percent, to settle at $78.21 on Sept. 17.

Reporter Ben Sharples can be reached at bsharples@bloomberg.net

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Crude Oil Weekly Technical Outlook From Oil n Gold

Crude oil edged high to 78.04 last week but was limited below mentioned 61.8% retracement of 82.97 to 70.76 at 78.31 and reversed. The break of 73.88 minor support indicates that whole recovery from 70.76 is likely completed. Initial bias is mildly on the downside this week for a retest on 70.76 support first. Sustained trading below 70.76/71.09 support zone will confirm our bearish view that whole rebound from 64.23 is finished at 82.97 already and target another low below 64.23. On the upside, above 75.25 minor resistance will turn intraday bias neutral and bring recovery. But we'll stay bearish as long as 78.31 fibo resistance holds.

In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Decisive break of 71.09 will confirm this bearish case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, break of 82.97 resistance is needed to invalidate this view. Otherwise, we'll stay bearish in crude oil.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.

Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

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Phil Flynn: Brown Shoes Oil

Comedian George Gobel once asked, "Did you ever get the feeling that the world was a tuxedo and you were a pair of brown shoes?" Energy traders right now probably know exactly what he means. Are you not feeling a little left out of all the commodity excitement and feel like you are on the outside looking in? While oil prices fail at another attempt to take out $80 a barrel this week and stumbled back down into the mid seventies, it seems the rest of the commodity world has gone parabolic. I mean look at all the markets that have gone dong gone wild! Gold overnight hit another all time nominal high! Silver hit the highest level since the Hunt boys diversified from tomatoes or is it tomatoes to silver.

Sugar seems to be targeting doubling its price from the low it made last May. Corn is back above $5.00 a bushel as it appears that the crop and some of the ears are more than a few kernels short of the cob. Coffee has been percolating and is surging as Arabica supplies are tight and there are worries about the current crop. Yet petroleum these days have been very rangy. For oil it is hard to get over the hump when the demand outlook is sketchy and the supply is mounting. Oh sure, you can speculate that supply will tighten dramatically in the future.....Read the entire article.

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