Commodity Corner: A Banner Week for Crude Oil and Gasoline

Thanks to a weaker dollar and positive Chinese manufacturing news, the front month crude oil contract price surged to its highest point in nearly two months.

The price of a barrel of crude settled at $81.58, a $1.61 gain from the previous day. The greenback continued its slide against the euro, making oil a better value for traders. Also, an important indicator of China's manufacturing growth, supported oil. The China Federation of Logistics and Purchasing reported a 4.1% increase in its Purchasing Managers Index (PMI) from August to September. In the U.S., however, the Institute for Supply Management's own PMI experienced a 1.9 percentage point drop to 54.4 during the same period. According to ISM, the manufacturing sector and the overall economy continue to grow but at slower rates.

The intraday range for oil Friday was $79.70 to $81.47. Oil ended the week up 6.6%.

Natural gas prices, meanwhile declined as a result of a mild weather forecast and abundant inventories. November gas futures fell seven cents to settle at $3.80 per thousand cubic feet. Natural gas, which traded from $3.79 to $3.87 Friday, is unchanged for the week.

Gasoline for November delivery capped off an impressive week by settling at $2.09 a gallon, a five cent improvement from Thursday. The front month gasoline price traded from $2.03 to $2.09, and it ended the week up 7.2%.

Courtesy of the Rigzone Staff

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Is it Really Time to Get on The Gold Band Wagon? Try this ETF Instead

Retail investors are flooding into gold. And it's no surprise with Gold (GLD) reaching all time highs again this week more investors are putting cash into anything precious metal related but I am here to caution you on doing so. There are far better opportunities than gold right now and chasing this trend is not the formula for generating short term growth. We have traded GLD call options 8 times this year (7 profitable) in the ETF TRADR portfolio but now it’s time to step away. Of course, what type of ‘tradr’ would I be if I failed to offer a better alternative.

First off, it would be very difficult to find a long term chart more strong and persistent than the Gold chart, it’s nothing short of amazing (and at the same time scary for the future of the dollar). That said, even as Gold has made new highs in recent days there is a better place to focus your trading capital. The semiconductor industry has lifted off in recent days and I expect it to continue. Here’s the performance chart between the headline making Gold (GLD) rally and the Semiconductor ETF (SMH).

So what’s making the semis perform so well? It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead. It was just three weeks ago when Intel (INTC) slashed their outlook sending the stock down nearly 4%. Others like Cisco have also expressed concern with speak of “unusual uncertainty” in the global economy that could impact sales.

If these headlines weren’t enough many analysts also believe Apple’s iPad is hurting sales of the Semiconductor Industry because the chip is Apple branded and made by Samsung who is not a major Semiconductor. The major players are not benefiting from this particular increase in chip demand. Bottom line, here’s what is making semiconductors (SMH) move.

If you want real time ETF and ETF Option recommendations start here by signing up for our Freemium TRADR .

In a classic contrarian move Semiconductors shifted in to high gear directly after the industry leader (INTC) lowered their outlook. SMH has one of the strongest ETFs trends in September and I believe it will continue. Let’s take a look at the SMH charts to see the how the ETF is trading. We’ll take a look at the following:
Current Trend Analysis (how strong is this trend and how much further can it go) Resistance and Support Levels. How to Enter with a Lower Risk Profile.

Just click here to watch the video.



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A Perfect Weekend for “The 52-week New Highs on Friday Rule”

From guest blogger Adam Hewison .....

We published this trading rule on our blog almost 8 months ago, February 10 to be exact. You can look it up if you wish. With gold making all time highs on Friday, it seems like the perfect candidate for this rule. Just remember, there are no guarantees in trading and you want gold to close at or near its highs for the day.

I learned this rule over 3 decades ago in the markets from a low key trader named Bill. Using his special trading technique, Bill made millions and millions of dollars from his office. The best part is that this technique is still working more than 30 years after it was taught to me and why I insist on sharing it with as many traders as possible.

Bill didn’t even have a name for this killer trading technique and so I named it, “The 52-week new highs on Friday rule”.

This technique has been working with amazing regularity. In the video, I show you that when a market is closing at a 52 week high on a Friday, you should go long. In case you missed it, and all of the rules, you can watch here.

When I hear people say that things have changed in the market and that they are completely different from what they used to be, I have to disagree. I think this is a good example why.
As always, our videos are free to watch and there are no registration requirements. Have you traded using the “52 week Friday rule”? If so, let us know how it went, but regardless of whether you have or not, leave your comments below.

Just click here to learn this trading secret and please take a minute to leave a comment and let us know what you think.

P.S. Here are the 52 WEEK RULES
Here are the three rules you need to trade “The 52-week new highs on Friday rule”
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with “The 52-week new highs on a Friday rule” successfully.
“The 52 week new highs on a Friday rule” works extremely well in futures and in the Forex markets. This rule can be reversed for “The 52 week new lows on a Friday rule” if you are so inclined to trade the short side of the market. The same rules apply.



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The Chinese are Rockin....Repsol to Sell Brazil Assets to Sinopec for $7.1 Billion

In one of the largest Chinese oil acquisitions to date, Spain's Repsol Friday announced the sale of 40% of its Brazilian assets to China Petrochemical Corp., or Sinopec Group, for $7.1 billion. The joint venture, valued at $17.8 billion overall, guarantees Repsol key funding to explore vast and coveted offshore oil fields in South America's biggest economy.

The transaction is also another sign of China's growing prominence on the international energy scene, as it expands its access and ownership of raw materials needed to back the country's economic expansion. The biggest oil takeover by a Chinese firm to date has been Sinopec Group's $7.2 billion acquisition in 2009 of Addax Petroleum Corp., based in Switzerland, only slightly more than the venture announced Friday.

The joint Brazilian operation stands as one of Latin America's largest foreign controlled energy ventures, as it will develop some of the world's most important exploratory discoveries in recent years, Repsol said in a filing with the stock market regulator. Repsol will have controlling interest in the joint venture with a 60% share. At the center of the deal is Repsol's holdings in the coveted subsalt area offshore Brazil, which had been anticipated to constitute a long term cashcow for the Spanish oil giant.

The subsalt play is exceptionally expensive because the oil is found in water depths of more than 2,000 meters and several thousand meters further under the sea bed below layers of sand, rocks and salt. Repsol has said previously that bringing its Brazilian subsalt oil finds into production could cost between $10 billion and $18 billion. Friday's deal eliminates the need for an initial public offering of its Brazilian stake they company had contemplated, Repsol said. "With this new investment, Repsol Brasil is fully.....Read the entire article.


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Crude Oil Technical Outlook For Friday Morning Oct. 1st

Crude oil was higher overnight as it extends this week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off last week's low, the 87% retracement level of August's decline crossing at 82.41 is the next upside target. Closes below the 20 day moving average crossing at 76.69 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 81.08
Second resistance is the 87% retracement level of August's decline crossing at 82.41

Crude oil pivot for Friday morning is 79.23

First support is the 20 day moving average crossing at 76.69
Second support is last Thursday's low crossing at 73.58



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If It Wasn`t Oil, The Session Would Have Been Perfect...

From guest blogger Henrique M. Simoes.....

I was scared earlier on when the economic data points came out, all higher then expectations (remember, I was short ES). I thought to myself, "if the indexes do not reverse I am going to have the worst trading session of the year...". But I was calm and detached, and when I saw the hesitations in the morning rally, plus some timid dollar rallies, I stepped in and sold a few more eMini`s. It was the only play possible.

Unfortunately, the oil rally did not abate and I left a few gold bars in the oil pits today. Someone is buying Moet&Chandon on me tonight. We can`t always win, can we? It was a rough day. I will need 5 or more trading sessions to get back...

I closed almost all my positions as I want to start trading tomorrow with a clean sheet. No bias, no prepositions.

Henrique M. Simoes can be reached at traderhms@gmail.com


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Phil Flynn: Exporting America!

A surprise drawdown in gasoline supply as the US becomes an exporter of more products as refiners sink deep into seasonal maintenance. Strong data out of China helped offset concerns about European sovereign debt. Add to it a weak dollar and you have created the right condition for an energy rally. Also of note China has now surpassed the United States as the biggest consumer of Saudi oil yet we may see some slowing as China takes steps to bring down exploding property prices.

Inventories seemed to be the major driving force for yesterday steady methodical rally. The EIA reported that motor gasoline inventories fell by a shocking 3.5 million barrels last week even as gasoline production increased to 9.2 million barrels a day and refinery runs scrapped the bottom at 85.8 %.It is clear that the US is exporting more gas and diesel as demand stagnates here and is robust in other places. The EIA shows that four moving average for gas demand is averaging 9.1 million barrels per day which is up just 0.9% from last year percent from the same period last year.

Yet gasoline supply fell as refiners look overseas. The US is now a net gasoline exporter for the first time since 1961. Reuters News reported today, “US oil refiners are shipping fuels to foreign markets to restore profits battered by sputtering domestic demand, signaling a historic shift in the global oil trade. Gasoline guzzling Americans have cut consumption while emerging markets including nearby Latin America have seen demand grow beyond the capacity of local refineries.....Read the entire article.



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Mid-Week Market Report on SP500, Crude Oil, Gold & Dollar

Wednesday the market didn’t tell us anything new. The equities market is still over extended on the daily chart but the market is refusing to break down. Each time there has been seen selling in the market over the past two weeks, the market recovers. Equities and the dollar have been trading with an inverse relationship and it seems to drop every in value each selling pressure enters the market, which naturally lifts stocks.

That being said, sellers are starting to come into the market at these elevated levels and it’s just a matter of time before we see a healthy pullback/correction. The past 10 session volatility has been creeping up as equities try to sell off. There will be a point when a falling dollar is not bullish for stocks but until then it looks like printing of money will continue devaluing of the dollar to help lift the stock market. Some type of pullback is needed if this trend is to continue and the markets can only be held up for so long.

Below is a chart of the USO oil fund and the SPY index fund. Crude has a tendency to provide an early warning sign for the strength of the economy. As you can see from the April top, oil started to decline well before the equities market did. This indicated a slow down was coming.

The recent equities rally which started in late August has been strong. But take a look at the price of oil. It has traded very flat during that time indicating the economy has not really picked up, nor does it indicate any growth in the coming months. This rally just may be coming to an end shortly.

This daily chart of the SP500 fund shows similar topping patterns. This looks to be the last straw for the SP500. Most tops occur with a gap higher or early morning rally reaching new highs, only to see a sharp sell off by the end of the session which generates a reversal day. From the looks of this chart that could happen any day.

In short, volume overall in the market remains light which is why we continue to see higher prices. Light volume typically gives the stock market a positive bias while Sell offs require strong volume to move lower. That being said every dip in the equities market which has been close to a breakdown seems to get lifted back up by a falling dollar, but that can only happen for so long because one the volume steps back into the market the masses will be in control again.

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 3-5 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 as it allows me to get more info across to you quicker and is more educational, 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. Due to more analysis and that I want to keep the service personal the price of the service will be going up Oct 1st, so join today.

Let the volatility and volume return!

Chris Vermeulen
The Gold And Oil Guy.Com
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Where is Crude Oil and Gold Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, including gold's new high, and looks at where oil and gold may be headed tomorrow.



Do You Understand How Divergences Work in the Market?

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Stock Market and Commodities Commentary For Wednesday Evening Sept. 29th

The U.S. stock indexes closed mixed today. The indexes earlier this week hit fresh multi month highs. Bulls still have upside near term technical momentum. We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September. I would not be surprised to see the stock indexes rally during October and then trade sideways and choppy into the end of the year.

Crude oil closed up $1.53 at $77.71 a barrel today. Prices closed nearer the session high today following a bullish weekly U.S. stocks report. Bulls have gained the near term technical advantage in crude. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.

Natural gas closed up 1.4 cents at $3.965 today. Prices closed near the session high today in quiet trading and saw more tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the September high of $4.298.

Gold futures closed up $3.20 at $1,311.60 today. Prices today closed near mid range today and scored another fresh record high. A weaker U.S. dollar and more safe haven buying interest boosted gold again today. Gold bulls have the solid overall near term technical advantage. There are still no early technical clues to suggest a market top is close at hand in the gold market. Prices are in a two month old uptrend on the daily bar chart.

The U.S. dollar index closed down 23 points at 78.97 today. Prices closed near mid range today and hit another fresh eight month low. Bears have the solid overall near term technical advantage. There are no early clues to suggest a market bottom is close at hand. Bulls' next upside price objective is to close prices above solid technical resistance at 81.00.

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