Bloomberg: Crude Oil Rises as Reports Show Improved U.S. Economic Outlook

Crude oil climbed in New York after reports showed improvement in the U.S. economy, raising investor expectation fuel demand will increase. Futures retraced some of yesterday’s 2.4 percent decline as Asian equity markets gained following data showing jobless claims fell in the world’s largest economy. The New York based Conference Board’s index of leading economic indicators climbed 0.3 percent, matching the forecast of economists surveyed by Bloomberg News.

“For the short term, the positive economic indicators should support the prices,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Fundamentals aren’t what people are looking at for the market but currencies and financial market conditions.” The December contract added as much as 60 cents, or 0.7 percent, to $81.16 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.05 at 11:55 a.m. Singapore time. Yesterday it lost $1.98 to $80.56. The contract has fallen 1 percent this week.

Oil also rose as Labor Department figures yesterday showed U.S. initial jobless claims dropped by 23,000 to 452,000 in the week ended Oct. 15. Chinese crude production gained 9 percent in September, the National Bureau of Statistics said Oct. 21. Oil refining reached 8.5 million barrels a day last month, China Mainland Marketing Research Co. said......Read the entire article.



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Commodity Corner: Crude Falls as Dollar Rebounds

Crude futures fell Thursday as economic worries resurfaced and the dollar rebounded against the euro. Oil prices for December delivery settled at $80.56 a barrel, down 2.4 percent from the previous day. Prices continued to feel the ripple from China's decision Tuesday to increase interest rates. As the Chinese government reported, projected third quarter gross domestic product growth fell to 9.6 percent from a 10.3 percent growth rate in the second quarter.

The second largest oil consumer after the U.S., China, is estimated to account for approximately 40 percent of an expected 2.1 million barrel per day increase in global oil demand this year and approximately one third of a 1.2 million-b/d increase next year, according to the International Energy Agency. The dollar rose 0.3 percent against the euro Thursday after falling earlier as much as 0.6 percent. Light, sweet crude futures traded between $80.09 and $82.70.

Likewise, natural gas futures plummeted to new 13-month lows Thursday. Henry Hub natural gas decreased 4.8 percent and settled at $3.37 per thousand cubic feet. The U.S. Energy Information Administration (EIA) reported that natural gas inventories grew by 93 billion cubic feet last week, marking the sixth consecutive above average weekly build. According to the inventory report, the U.S. had 3.68 trillion cubic feet of natural gas in underground storage last week.

The National Hurricane Center observed a tropical storm headed toward Mexico's Yucatan Peninsula Thursday. The system, Tropical Storm Richard, formed in the northwestern Caribbean Sea. Meteorologists predict that the storm may continue into the Gulf of Mexico, but major impact should be prevented by the high wind shear. The intraday range for natural gas was $3.35 to $3.54 Thursday. November delivery gasoline prices settled at the lowest point since Sept. 29 at $2.04 a gallon, after peaking at $2.08 and bottoming out at $2.03.

Courtesy of Rigzone.Com


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The Dollar-Crude Oil Trade

Dan Dicker, an independent oil trader, shares his dollar-oil trade with CNBC.



Why Diversification Doesn't Work

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Markets Close Mixed as Commodity Bulls Fight The Stronger Dollar

The U.S. stock indexes closed mixed today. The stock index bulls still have the overall near term technical advantage as price uptrends are still in place on the daily bar charts. Stock index bulls have been very pleased with price action so far this autumn, a time which is normally not favorable to market bulls. My bias is that prices will trade mostly sideways, but with a slight upside bias, into the end of the year.

Crude oil closed down $1.91 at $80.63 a barrel today. Prices closed nearer the session low today. A rebounding U.S. dollar pressed the crude market lower today. Trading has turned very choppy. Bulls and bears are on a level near term technical playing field.

Natural gas closed down 13.3 cents at $3.76 today. Prices closed nearer the session low today and prices hit another fresh contract low. The bears have the solid overall near term technical advantage.

Gold futures closed down $19.70 at $1,324.50 today. Prices closed near the session low today and hit a fresh two week low. Profit taking, a firming U.S. dollar index and lower crude oil prices combined to pressure gold today. Prices also scored a bearish "outside day" down on the daily bar chart, whereby the high was higher and low was lower than the previous session's trading range, with a lower close. Some near term technical damage was inflicted today as a 2 1/2 month old uptrend on the daily bar chart was at least temporarily negated today to begin to suggest that a near term market top is in place. Bulls do still have the overall near term and longer term technical advantage, but have faded this week and need to show fresh power soon.

The U.S. dollar index closed up 27 points at 77.69 today. Prices closed near the session high today and saw short covering in a bear market. Dollar index bears still have the overall near term technical advantage.


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Diamond Offshore: Market Sentiment Is Shifting, Rare Opportunity Is Ending

From Seeking Alpha contributor Hester.....

Earlier in the year, at the end of May, I wrote a bullish article on Diamond Offshore (DO). At the time, shares of Diamond were getting crushed, as the hysteria over the BP spill was in full swing, with many speculating that BP would go bankrupt. The offshore drilling industry was just starting to go under a microscope by regulators. The drilling moratorium was just a twinkle in Ken Salazar's eye. People refused to go near drilling stocks because of regulatory uncertainty, possible increased insurance costs, the risk of another spill, and most importantly, the general dislike of the sector.

It has been nearly five months since all of this, and most of the reasons to sell are nearly gone. The moratorium and regulatory scrutiny is basically over. Insurance costs will be passed on to customers. The BP spill has ended, it is out of the news, and cleanup is moving swiftly. The risk of another spill is the exact same as before the BP spill (which is low), but perception of the risk is lowered. The general dislike and hatred of anything in the sector is slowly ending. The opportunity to purchase great companies at ridiculous prices is may be ending.

Yet, DO is trading at basically the same price as when my article came out and when I started buying. The stock price took a big plunge, from high $60's per share to mid $50's, after the article when people were speculating that Diamond had a spill themselves. However, anybody who took the time to listen to management or actually read past the headlines knew it was a non issue, and the stock eventually recovered to where it is now. So even though these issues are ending, today's buyers are offered a rare opportunity to buy one of the highest quality oil drillers in the world, at just 10 times earnings......Read the entire article.


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Dan Dicker: A Refinery Buy - Frontier Oil

Dan Dicker has managed to find one refinery worthy of a trade.



Can you learn to trade crude oil in just 90 seconds?

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Pinpointing the Top China ETF Opportunities

We have been watching China and their ETF's pretty closely and this article is a good read as to why these are the top three ETF's.....

Think one ETF is as good as another as long as it’s in the same sector, country, or style as the alternatives? Perhaps that was the case ten years ago. In an effort to differentiate their exchange trade funds from others, however, ETF sponsors have really started to hyper focus their funds’ portfolios…. even within a particular grouping.

Take China based exchange traded funds for example. While the iShares FTSE/Xinhua Chain 25 Index Fund (FXI) may have the lead in hearts and minds of China-hungry investors, other funds of the same ilk may actually be the better choice, depending on your goal or strategy.

Just to put this idea into a stunning perspective, check out this performance chart of all the major China oriented funds for the year to date. While one could reasonably expect a mild amount of disparity when it comes to returns, you’d think they’d all basically offer the same result After all, they’re each investing in the same broad cross section of China’s stocks. Take a look though.

A 17% gain for the leader, and a 5% gain for the laggard, but the same underlying stocks? Wow. Even taking out the ‘Honk Kong’ leader, you’ve still got a 100% disparity from the next best performer and the weakest one. Of course, the different performances come as no real surprise once you look under the hood of these funds and really see what each is holding.

Just like many U.S. based ETFs, the idea of a “cross section of the country’s stocks” can have various meanings. For instance, the iShares FTSE/Xinhua China 25 Index’s (FXI) biggest two holdings are China Mobile Ltd., and then China Construction Bank Corporation. That sharply contrasts with the two biggest holdings of the iShares MSCI Hong Kong Fund (EWH), which are (in order) Sun Hung Kai Properties, Ltd., and Cheung Kong Holdings, Ltd.

To be clear, this isn’t a complaint. Quite the contrary actually, we should be celebrating these differences, so we can get the most out of a regional based opportunity rather than sit contently holding watered down carbon copies of ETFs. With that in mind, that’s where the real China opportunity comes to light.

They may still qualify as ‘new’, but several sector based China exchange traded funds are plenty liquid enough to trade now, and the performance separation within the group is easily wide enough to prompt a trader to pick and choose certain vehicles.

Take a look at the year to date performance chart of these sector-based ETFs, and take special notice a 20% gap between the leader and the laggard for the year so far.

Our favorites are the three leaders…. the Global X China Consumer ETF (CHIQ), the Claymore/AlphaShares China Small Cap ETF (HAO), and the Claymore/AlphaShares China Real Estate ETF (TAO). We either currently own those names in the ETF portfolio, or intend to own soon. Any of them offer a little more ‘umph’ than FXI does at this point.

The point here is simply to highlight the fact that there are obscure trends within the bigger China trend that are well worth tapping into. That’s one of the focal points of our ETF service, and the approach has been very rewarding.

Check out more of Andrew Hart post at  ETF TRADR.com



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Phil Flynn: French Fried

Alright, I admit it was kind of fun snickering about the French Strikes. You know like joking about the French work ethic (assuming they had one). You know the routine. The French have been striking and staging mass protests that have turned violent as the government moves to take away French entitlements they cannot pay for. The French are to vote on raising the retirement age from 60 to 62 (Sidérer!!!). With an aging French population and years of the government giving the country free goodies, the government is going to have to make much needed reforms or face an inevitable economic collapse.

The strikes have shut down 12 oil refineries in France leading to shortages of diesel and gasoline. The International Oil Daily Reported that, “lost French production is driving dramatic price gains in diesel and jet fuel in Europe, France’s 12 oil refineries, all but one of which has been shut down by national strikes, produce around 60,000 tons of diesel and 30,000 tons of jet a day. But even with refineries at full production, the country is a net importer of both products. Minimal domestic production means France is sucking in products from neighboring Germany, Italy and even Spain, as well as drawing from strategic......Read the entire article.


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Crude Oil Consolidates Some of Wednesday's Rally Overnight

Crude oil was lower overnight as it consolidates some of Wednesday's rally. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If December extends this week's decline, trendline support drawn off the August-September lows crossing near 77.85 is the next downside target. Closes above the 10 day moving average crossing at 82.67 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 82.67
Second resistance is this month's high crossing at 85.08

Crude oil pivot point for Thursday morning is 81.67

First support is Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 77.85


The "Super Cycle" in Gold and How It Will Effect Your Pocketbook in 2010

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What is Next for the Dollar, SP500 and Gold

The equities market reversed to the upside Wednesday posting a light volume broad based rally. Remember light volume tends to have a neutral to upward bias on stocks, But it was mainly the sharp drop in the dollar which spurred stocks and commodities higher.

Today’s bounce was not much of a surprise for several reasons…
• Overall trend is up, one day sell offs are generally profit taking
• Panic selling on the NYSE tipped us off that the market was oversold
• I don’t think they will let the market fall before the November election
• Intermediate cycle is turning up this week, 3 weeks of upward momentum…

US Dollar Index – 4 Hour Chart
The dollar put in a big bounce this week filling its gap window… Remember most gaps get filled with virtually every investment vehicle so when you see them remember this chart....

SPY ETF – Daily Chart
SP500 has been riding the key moving average up and Tuesday’s sell off tagged the 14MA along with extreme market internal readings telling intraday traders that a bounce is about to take place.

Gold Futures – Daily Chart
You can see gold has done much the same… A sharp profit/stop running sell off, which took the price back down to support. We took a long position to catch this bounce and hopefully a larger move going forward.

Market Sentiment Readings
Tuesday’s pullback was a great reminder of just how over extended the equities market was. These heavy volume sell offs are typical in a bull market. Without regular pauses in price, traders tend to place trailing stops moving them up each day. With traders chasing stocks higher bidding them up instead of waiting for a pullback we get a very large number to stop orders following the price up each day. Then, it’s only a matter of time before a key short term support level is broken at which point the flood gates open and everyone’s stops turn to market orders flooding the stock exchanges with sell orders causing a rapid decline and panic selling. This is exactly what happened on Tuesday which I show in the chart below.

Understanding how to read market internals provides great insight for short term traders looking to make quick high probability trades every week… Market internals are just part of the equation but very powerful on their own with proper money/position management. Both of these intraday extremes were bought on Tuesday in the advanced chatroom (FuturesTradingSignals.com).. We quickly booked profits and moved our stops up in order to protect our capital as the market surged higher.

Mid-Week Market Trend Analysis:
In short, the US Dollar is still in a down trend overall. The Fed’s I would think will continue to hold the market up into the election. It works well for them… they print money which devalues the dollar, and in return boosts stocks and commodities, plus they get trillions of dollars to spend… I’m sure its like kids in a candy store over there.

While everyone is trying to pick a top in this over extended market I think it is crucial to stick with the overall trend and to not fight the Fed. Using the key moving averages on the daily chart as shown in the charts above, continue to buy on dips until the market closes below the 20 day moving average at which point you should abandon ship.

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Chris Vermeulen


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