Bloomberg:Crude Oil Trades Near Two Year High, RSI Signals Reversal

Crude oil traded near its highest level in two years in New York as the dollar headed for a weekly decline against most major counterparts after the Federal Reserve’s decision to purchase more debt to boost the U.S. economy.

Crude’s 6.6 percent rally this week, driven by the dollar’s decline, may be about to end, according to a technical indicator used by traders. The U.S. currency has fallen versus all but one of its 16 most traded peers since the Fed said Nov. 3 it will buy about $75 billion of Treasuries every month through June.

“Underlying demand in the industrialized world is still not enough to justify these price levels,” said Eugen Weinberg, head of commodity research at Commerzbank AG. “But market sentiment is so strong that if the weakness of the dollar persists I couldn’t rule out higher prices.”

Oil for December delivery traded at $86.83 a barrel, up 34 cents, in electronic trading on the New York Mercantile Exchange at 12:51 p.m. London time. The contract earlier rose to $87.22, the highest price since Oct. 9, 2008. Brent crude for December settlement rose 16 cents to $88.16 after advancing to $88.80 a barrel on the ICE Futures Europe exchange in London.

Futures advanced after a U.S. government report showed payrolls rose more than forecast in October. Payrolls climbed 151,000, exceeding the median estimate of economists surveyed by Bloomberg News and following a revised 41,000 drop the prior month that was smaller than initially estimated, Labor Department figures showed today in Washington. The jobless rate held at 9.6 percent, in line with forecasts. Crude oil's relative strength index......Read the entire article.


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Crude Oil Technical Outlook For Friday Morning Nov. 5th

Crude oil was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If December extends this week's rally, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 82.91 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 87.22
Second resistance is the 75% retracement level of May's decline crossing at 88.07

Crude oil pivot point for Friday morning is 86.08

First support is the 10 day moving average crossing at 82.96
Second support is the 20 day moving average crossing at 82.72


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Commodity Corner: Crude Oil Soars as Dollar Tumbles

Crude oil climbed to a six month high Thursday as the dollar fell on news of the Fed's latest economic stimulus effort. Crude for December delivery added $1.80 Thursday, settling at $86.49 a barrel on the New York Mercantile Exchange (NYMEX). The Federal Reserve's decision to buy an additional $600 billion in bonds contributed to the dollar plummeting to a nine month low against the euro. The dollar has been weakening since late August in anticipation of additional quantitative easing. As more money is printed the value of the dollar weakens, leading to cheaper commodities for foreign currency holders. The greenback fell to $1.42 against the euro Thursday, the lowest since Jan. 20.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) bumped its global oil consumption estimates by 800,000 barrels a day for 2014. OPEC's 5.1 percent, or 89.9 million barrels a day, increase signifies a continuing recovery. Crude futures traded from $84.92 to $86.83 Thursday. Natural gas prices settled up 2 cents Thursday at $3.86 per thousand cubic feet on the NYMEX. Although the U.S. Energy Information Administration reported 67 billion cubic feet in gas inventories for the week ended Oct. 29, analysts predict traders buying gas futures ahead of cooler temperatures. Gas consumption increases in periods of extreme temperatures.

The intraday range for natural gas was $3.74 to $3.90. Gasoline prices also finished higher Thursday, settling 4.15 cents higher at $2.18 a gallon. December gasoline peaked at $2.18 after bottoming out at $2.14.

Courtesy of Rigzone.Com

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Sharon Epperson: Where is Crude Oil and Gold Headed on Friday?

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 Thursday Evening Nov. 4th

The S&P 500 index closed sharply higher on Thursday and above April's high crossing at 1203.00. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the 62% retracement level of the 2007-2009 decline crossing at 1234.75 is the next upside target. Closes below the 20 day moving average crossing at 1178.68 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1215.50. Second resistance is the 62% retracement level of the 2007-2009 decline crossing at 1234.75. First support is the 10 day moving average crossing at 1187.12. Second support is the 2 day moving average crossing at 1178.68.

Crude oil closed higher on Thursday as it extends the rally off August's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the aforementioned rally, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 82.76 would confirm that a short term top has been posted. First resistance is today's high crossing at 86.74. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support is the 10 day moving average crossing at 83.04. Second support is the 20 day moving average crossing at 82.76.

Natural gas closed higher on Thursday as it consolidates some of Monday's decline. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. If December extends last week's rally, the reaction high crossing at 4.207 is the next upside target. First resistance is Monday's high crossing at 4.187. Second resistance is the reaction high crossing at 4.207. First support is last Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold soared sharply higher on Thursday and the high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices is possible near term. If December extends the rally off last week's low, October's high crossing at 1388.10 is the next upside target. If December renews the decline off October's high, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. First resistance is today's high crossing at 1384.80. Second resistance is October's high crossing at 1388.10. First support is the reaction low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed lower on Thursday as it extends the decline off this year's high. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If December renews the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. First resistance is last Wednesday's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is Wednesday's low crossing at 75.24. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.


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Why 2011 May Be the Year of the Oil Comeback

From David Sterman at Street Authority.....

Like every investor, I try to read voraciously to get an edge. I'm always on the lookout for investment angles that haven't gotten much press but could eventually turn into a market moving event. So my ears perked up last week when I saw that hedge fund traders have recently been aggressively buying energy futures, betting that we'll soon see oil move up to $100 a barrel. In subsequent days, it's become easier to see the signs of $100 oil popping up on people's radars.

For example, on Monday, Saudi oil minister Ali Naimi suggested that oil prices could move up to $90 without hurting global economic growth, up from a previous perceived ceiling of $80. That's led some to speculate that OPEC will try to maintain production at current levels, even as signs are emerging that oil demand has begun to pick up.

Economic growth in emerging markets like Brazil and China remains robust, which led to a 1.4 million barrel jump in the third quarter, according to the International Energy Agency (IEA) and a 980,000 barrel uptick in Western Europe and the United States. Any further uptick in global demand could push oil demand back up to, or above, supply levels.

Analysts at Merrill Lynch see $100 oil by early 2011 for a more prosaic reason: They believe that the U.S. Federal Reserve's plan for quantitative easing (QE2) will weaken the dollar and raise the price of commodities, particularly gold, silver and oil. [Read: "How The Fed Will Affect Your Portfolio This Week"] The recent move in the dollar is a possible harbinger of things to come, according to Merrill: "We believe that oil is only starting to reflect a weak U.S. dollar against G10, leaving room for oil price rises as emerging market currencies strengthen against the U.S. dollar."

Read the entire article > "Why 2011 May Be the Year of the Oil Comeback"



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Phil Flynn: Inflation Is Good For You

As expected the Fed pumped more money into the economy and seemed to do just enough to exceed market expectations. The Fed said that they would maintain its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer term Treasury securities by the end of the second quarter of 2011. They will do this to the tune of about $75 billion per month. While the estimates of what the Fed would do were all over the board, the average was for the Fed to do $500 billion. The Federal Reserve was very aware of market expectations and aware that the market had priced that 500 billion with the massive move that we saw in commodities and to a lesser extent stocks.

It was clear that the Fed wanted to exceed the expectations so we would not sell the fact and take away some of the inflationary expectations they had built into this market. That's right. Inflation is not the worst thing in the world. At least that's what Ben Bernanke says and he is making it clear that worries about his policies creating inflation are over blown. He says that QE1 did not spark inflation and he does not expect that QE2 will either. In an op-ed with the Washington Post he tries to explain why he did what he did.

He says that, “The Federal Reserve's objectives, its dual mandate set by Congress, are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense......Read the entire article.


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The Market Continues The FOMC March Upward

With the election over and congress divided, it may be difficult for the president to get much done. None of this will take affect until the near year but traders are asking the big question… Will the government work together as a team or will it be a stalemate?

Today’s whipsaw action after the FOMC statement shook things up as it always does. We saw gold, silver, the dollar, SP500 and bond prices go haywire. It took about 30 minutes for the market to digest this news in that time a lot of people lost money because of the wide price swings. Trading around news, I find, is a net losing trade over the long run and I advise never to do it. Rather wait for a trend to form and trade any low risk setups that come your way.

I truly believe that the market has already priced in most news and events which unfold, and that news tends to agree with the overall trend of the market. Of course there will be short term blips on the charts from the news, but they tend to be minor setbacks in the underlying market trend. That being said, the trend is our friend, and while so many are trying to pick a top in the equities market it makes me cringe because they are fighting the trend and the Fed.

Successful trading is done by trading the trend, and during choppy times you may get roughed up a bit and need to alter your strategy for shorter term momentum play, but overall you gotta’ stick with the trend until proven wrong. Once the trend reverses and confirms, only then can you start shorting the market.

Last week we took another long position near the lows on the SP500 as it dipped down to key support with the market internals confirming our entry. This low risk setup gets us into a market at an extreme, meaning we are in the money usually within hours of entry and the market tends to keep well above our entry point until its ready for another surge higher or a break down.

I agree with those of you who think the market is WAY over bought and due for a strong pullback, and I find myself squirming in my chair when I take another long position way up here in the lofty SP500 prices. But over the years I have found that if it’s hard to pull the trigger, then it should be a good trade if all the trading rules have been met, and if it’s a clear chart setup (meaning an easy looking trade) you better watch out!

This chart shows two charts, one of the 10 minute intraday chart covering 6 trading sessions.




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Crude Oil Daily Technical Outlook For Thursday Morning Nov. 4th

Crude oil was higher overnight and trading above October's high thereby renewing the rally off August's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If December extends this week's rally, the reaction high crossing at 86.52 is the next upside target. Closes below the 20 day moving average crossing at 82.72 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 86.05
Second resistance is the reaction high crossing at 86.52

Crude oil pivot point for Thursday morning is 84.54

First support is the 10 day moving average crossing at 82.96
Second support is the 20 day moving average crossing at 82.72


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Crude Oil Rises a Fourth Day After Fed Move Weakens Dollar

Crude oil climbed for a fourth day in New York, the longest rising streak since September, as the dollar traded near a nine month low against the euro after the Federal Reserve said it will expand stimulus to spur the economy. Crude rose above $85 a barrel to trade near the highest in six months amid speculation of a recovery in the U.S., the world’s largest oil consuming nation. The Fed yesterday said it will buy an additional $600 billion of Treasuries through June. U.S. gasoline stockpiles fell last week to the lowest in almost a year, according to an Energy Department report.

“The Fed is pumping money into the economy and the money doesn’t have that many places to go, interest rates are almost zero,” said John Vautrain, senior vice president at U.S. energy consultants Purvin & Gertz Inc. in Singapore. “That’s pumping up the value of commodities.” Crude for December delivery rose as much as 60 cents, or 0.7 percent, to $85.29 a barrel in electronic trading on the New York Mercantile Exchange. It was at $85.28 at 10:46 a.m. Singapore time. Yesterday, the contract reached $85.36, the highest intraday price since May 4. Prices are in the longest rally since a four day run through Sept. 27. Futures have gained 7.5 percent this year.

The dollar yesterday touched $1.4179 against the 16 nation euro, the lowest since Jan. 26, and was at $1.4132 today. A decline in the U.S. currency bolsters the investment appeal of commodities as a hedge against inflation......Read the entire article.


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