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 was sharply lower due to profit taking overnight as it consolidates some of the rally off August's low. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 83.98 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, the 87% retracement level of May's decline crossing at 90.82 is the next upside target.
First resistance is Thursday's high crossing at 88.63
Second resistance is the 87% retracement level of May's decline crossing at 90.82
Crude oil pivot point for Friday Morning is 87.99
First support is the 10 day moving average crossing at 86.03
Second support is the 20 day moving average crossing at 83.98
Crude futures remained flat Thursday, pulling back from a 25 month high as data showed record oil demand in China. Light, sweet crude settled unchanged at $87.81 a barrel on the New York Mercantile Exchange. The futures price peaked at $88.63, the highest intraday price since Oct. 9, 2008, and bottomed out at $87.54. Industrial production in China grew by 13.1 percent in Oct. compared to the same period in 2009, increasing oil usage to 8.92 million barrels per day (bpd). According to the National Statistical Bureau, China's refineries hit record throughput at 8.27 million bpd. The 12.2-percent increase from Oct. 2009 to Oct. 2010 is a key bellwether of crude demand growth.
The Organization of Petroleum Exporting Countries (OPEC) also provided support for oil prices by raising its oil consumption forecast for 2010 and 2011. It increased its expectations from global oil demand to 1.17 million bpd from 120,000 for 2011. Analysts said trading volume was light Thursday due to Veteran's Day, a holiday for many in the U.S. Henry Hub natural gas, meanwhile, fell 12 cents to $3.93 per thousand cubic feet.
The Energy Information Administration (EIA) Thursday reported an increase of 20 million cubic feet of natural gas in U.S. stockpiles for the week ended Nov. 5. Total gas in storage has reached a record of 3.84 trillion cubic feet, 31 barrel cubic feet higher than the previous year. Analysts claim that due to milder weather, the demand for heating is not as high. Natural gas fluctuated between $3.92 and $4.13 Thursday. Meanwhile, gasoline futures for December delivery slipped by less than a penny Thursday to settle at $2.24 a gallon. Gasoline peaked at $2.25 and bottomed out at $2.23.
The U.S. stock indexes closed lower today and saw more profit taking pressure after hitting fresh for the move highs early this week. The stock index bulls still have the overall near term technical advantage as price uptrends are still in place on the daily bar charts. The stock index bulls do not want to see a technically bearish weekly low close on Friday.
Crude oil closed down $0.07 at $87.74 a barrel today. Prices closed near the session low today after hitting another fresh six month high early on. The bulls still have upside momentum. The next near term upside price objective for the bulls is producing a close above solid technical resistance at $90.00 a barrel.
Natural gas closed down 11.6 cents at $3.93 today. Prices closed near the session low today. The bears have the overall near-term technical advantage and gained some fresh downside momentum today. The next upside price objective for the bulls is closing prices above solid technical resistance at this week's high of $4.249.
Gold futures closed up $6.10 at $1,405.30 today. Prices closed near mid range today. Gold made gains today despite a firmer U.S. dollar index, which is encouraging for the gold market bulls. Gold bulls have the overall near term and longer term technical advantage and have made a good recovery from Tuesday's selling pressure. A 3 1/2 month old uptrend on the daily bar chart is in place.
The U.S. dollar index closed up 56 points at 78.33 today. Prices closed near the session high today and hit a fresh two week high. Dollar index bears still have the overall near term technical advantage, but the bulls this week have gained upside momentum.
Crude oil hit a two year high as US product and oil exports soar, but perhaps the eventual fate of oil and its price level really will be determined by the action or the inaction from the G-20 nations. Imports and exports will be on their mind as China and the US are at a standoff as to whose policies are a bigger threat the global economic recovery.The Chinese really love QE2 because it really takes the focus off of them for being the only currency manipulator.
Of course the Chinese policy of restraining their currency may help them in the short run but it could also be the seeds of their economic problems in the fore. The Chinese may feel that they have to cheat the world to be successful by controlling their currency, but the truth is if they want to maintain their meteoric economic growth over the long run, they would be better served by allowing the market not the government to moderate their economy.
The truth is that the Chinese current manipulation is creating a bubble in their own economy that will burst at some point in the future. And eventually cause major pain for them in the future. Right now of course that may be hard to imagine as everyone on the globe seems to be so bullish on China that they cannot see the major flaw in this story that is staring us right in the face.
The risk of their bubble bursting is increasing everyday yet they refuse to allow their currency to float. You seein a way the Chinese currency manipulation was just as much a factor in the global economic meltdown as was the Fed and the US government’s ill fated Fannie and Freddie excesses......Read the entire article.
It has been a roller coaster week thus far as stocks and precious metals plunged on heavy selling volume on the back of a rising dollar, only to make a strong rebound Wednesday. While there has been significant intraday price movement, it was no surprise to us as we have been anticipating this pullback since discussing it in my Sunday Gold Newsletter. Let’s take a quick look at the charts....
US Dollar Daily Trading Chart
The past couple weeks the dollar has traded in a choppy fashion, and last week I mentioned to subscribers to keep any new positions small. The dollar looked ready to make a bounce and if it reverses we will see stocks and commodities correct rather sharply.
Last week we trimmed some profits on our gold and SP500 trading positions in anticipation of a rising dollar/lower equity and metals prices. The dollar is currently in a down trend so we are still trading with the trend, but the next couple sessions could potentially change that.
As you can see on the chart a similar pattern to what we saw during the May/June top earlier this year has now formed in reverse this month. It’s a simple pattern I call a drop-n-wash. It is like dropping a knife – you panic, then take action (move foot, then wash the kife). That is typically how the market reacts to this type of price pattern after an extended trend has taking place for a long period of time.
The dollar made an obvious breakdown which the entire world witnessed, causing traders who recently went long to panic and sell their positions. Those who like to short the dollar would have taken a short position, only to see the market reverse and head straight back up again. This pattern has yet to confirm, but through the use of the shorter time frame charts (5 Min, 10 Min, 30 Min), I have a feeling the dollar may continue to rise. However, until the dollar shows considerable strength I am still playing the long equities / long gold side of the equation.
SPY – SP500 ETF Trading Fund
The SP500 made a nice move up last week and we trimmed our position back to lock in more gains as I anticipated this pullback and possible gap fill. As you can see on the chart the moving averages are all heading up and that’s the direction we are still focusing on playing (buying dips).
The morning dip on Wednesday the market sentiment started to shift to become extremely bearish on the short term time frame (10 minute charts). If the market drops down to fill the rest of that gap, I have a feeling the majority of traders will panic out of their position giving us an extreme sentiment buy signal. Also a gap fill will bring the price down to the key moving averages which will act as a support level. I will notify members to add more to my SP500 long position if that happens.
GLD – Gold ETF Trading Fund
Gold has much of the same story as the SP500 but with a couple twists. Gold has huge global demand from banks, investors and traders adding more buying power to this investment than stocks right now. We could see gold hold up above its gap that formed last week. That being said, a pullback to the key moving averages would not only act as a major support level but also fill the gap. We currently have our long positions, but trimmed some profits near the highs and are sitting tight letting the market work it’s self out.
Mid-Week ETF Trading Conclusion:
In short, the focus should be kept on trading with the underlying trends until a trend change has been confirmed. So that means short the dollar, long equities, metals and oil.
That being said, because things are starting to look unstable it is crucial to trade smaller position sizes during times of uncertainty like this. Anticipating major market tops is very difficult and generally costly play, just ask everyone who has been trying to pick a top for the past 2 months… Anticipate trend changes, but don’t trade them until the price/volume action confirms the new trend.
Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are still possible.
If December extends the aforementioned rally, the 87% retracement level of May's decline crossing at 90.82 is the next upside target. Closes below the 20 day moving average crossing at 83.80 are needed to confirm that a short term top has been posted.
First resistance is the overnight high crossing at 88.63
Second resistance is the 87% retracement level of May's decline crossing at 90.82
Crude oil pivot point for Thursday morning is 87.37
First support is the 10 day moving average crossing at 85.62
Second support is the 20 day moving average crossing at 83.80
We have been trading the ETF FXE for some time now in MarketClub’s Perfect “R” Portfolio and today we exited our long position at $136.64, which produced a profit of $8.14 a share. This market has performed very well for us and we have only had two major trend changes for the year so far. The FXE is an ETF that mimics the Euro versus the US Dollar, so there’s always plenty movement which equals opportunity in the market. That is one of the principal reasons why we chose to include this ETF in the Perfect “R” Portfolio. Right now our score is a -60, meaning one should be on the sidelines until a more defined trend takes place. This is one of the beauties of this portfolio; you are not in the market all the time.
Crude oil for December delivery surged to $88.21 a barrel Wednesday before settling at $87.81. The day's peak oil futures price, a two year high, followed a U.S. Department of Energy report showing that commercial crude inventories fell by 0.9 percent last week. According to the department's Energy Information Administration, oil stocks had declined to 364.9 million barrels as of last Friday 3.3 million barrels lower than the previous week's figure. The most recent number represents the first decline in crude stocks that EIA has reported in the past four weeks. December crude oil bottomed out at $86.10.
Natural gas futures, meanwhile, fell 3.8 percent after the EIA reported that U.S. natural gas inventories rose to record territory last week. December natural gas settled at $4.05 per thousand cubic feet, a 16 cent drop from Tuesday, after trading within a range from $4.06 to $4.25. According to EIA, the amount of natural gas in storage hit 3,840 billion cubic feet (Bcf) as of November 5. The 19 Bcf net injection week-on-week propelled the inventory statistic to a new all time record. In addition, the figure is approximately 10 percent higher than the five year (2005-2009) average. The December gasoline futures price ended the day at $2.24 a gallon, slightly more than a nickel higher than Tuesday's settlement. Gasoline traded from $2.18 to $2.25.
