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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Commodity Corner: Crude Oil Rallies to 2 Year High on Economic Optimism

Crude rallied Thursday to a two year high on rising equities and an increase in economic optimism. Oil for January delivery gained $1.25, settling at $88.00 a barrel Thursday. Oil prices peaked at $88.13 during Thursday's trading session and bottomed out at $86.27. According to the U.S. Department of Labor, initial unemployment benefit claims increased by 26,000 to 436,000 from the previous week. However, the four week moving average decreased by 5,750 a two year low.

In addition, reports on an increase in retail and the housing market sales also boosted the U.S. economy. The National Association of Realtors reported a 10 percent increase in pending home sales for the month of October after dropping 1.8% in September. The greenback fell Thursday against the euro on news that the European Central Bank will delay its withdrawal of stimulus measures and keep its interest rate at a record low of 1 percent. A weaker dollar increases oil prices making it cheaper for buyers with foreign currencies.

Likewise, gasoline futures rose to a six month high Thursday, closing the trading session at $2.36 a gallon. The nearly six cent increase came as East Coast supplies declined. Investors fear that imports may decline on tightening supply conditions in the New York harbor. RBOB gasoline fluctuated between $2.29 and $2.36 Thursday.

Front month natural gas futures continued to climb higher Thursday for the eleventh straight day. Natural gas lost earlier rebounds, gained from cooler weather, after inventories fell below market expectation. The Energy Information Administration reported a 23 billion cubic feet drop for the week ended Nov. 23. Natural gas prices settled at $4.34 per thousand cubic feet, up 7.4 cents from the previous day. The intraday range for natural gas was $4.20 to $4.38.

Posted courtesy of Rigzone.Com



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Phil Flynn: Is Europe Too Big To Fail?

Forget about all of that stellar manufacturing data and jobs data. Ok sure, that may have helped rally the oil yet it was the story that the U.S. stands ready to bail out Europe that sent the dollar falling and the oil on a second wind rally. Reuters News reported that an unnamed US official said the U.S. was prepared to support the European Union’s rescue fund through the International Monetary Fund and the largest contributor is the U.S.. The official said the spread of contagion through the euro region would be a problem for the global economy and because of that I guess the U.S. printing presses are ready to roll.

In other words, it looks like the U.S. just said that we are going to make good on all of Europe’s bad debts and make sure that European citizens can retire when they are 50. Ok maybe they did not say that exactly and they defiantly did not say anything about Europeans retiring when they are 50.( Maybe it was 60) And later the story was denied but don’t you tell that to the investment world because once you make a statement like that it is hard to take it back. Based on the weakness in the dollar after the story broke, it seems the market is convinced that come hell or high water the U.S. will back Europe in their time of economic need.

If the market believes it then there is a lot of pressure on the IMF and the US to make it so. If you don’t think so then you have forgotten the lessons of Fannie and Freddie. They were entities that were supposed to be independent but investors like the Chinese were led to belive that the government sponsored entity was backed by the full faith and credit of the good old American taxpayer. The same taxpayers that we have found out have backed a wide......Read the entire article.


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Do You Really Understand How to Use Market Sentiment and Herd Mentality in Your Trading

We don't know of any trader better suited to teach us how to take advantage of market psychology then Chris Vermeulen of The Gold and Oil Guy.Com. In this report Chris is going to teach you how to read market sentiment so you can day trade and swing trade consistently to earn 3-5% per month trading ETFs. I remember always hearing the pro’s say “if you want to make money, you need to trade against the herd (masses)”. This sounds easy but just how do we go about doing that? I am about to show you…

In short, you must start looking at the market completely backwards. I focus on buying into heavy volume sell offs (panic) and selling position into heavy volume breakouts (greed). This was a very tough transition for me to make and its best to paper trade it for while until you are comfortable with buying into fear and selling into greed. It will feel completely wrong at the beginning but the profits speak for themselves!

The Four Charts I Follow Closely
The 4 main tools need to make money from trading against the herd. While this is only one of my trading strategies it is my favorite. I trade the ES futures contract and some sometimes the SDS and SSO exchange traded funds. This may seem basic at first glance but when you combine them you end up with a highly effective trading strategy.

SP500 - 5 Minute Chart
Here is a 5 minute chart of the SP500 showing where I went short. It is important to know that over the past 2 years the SP500 has provided a 1.25% profit on average each time one of these extreme sentiment readings occur on the charts.

The red indicator on the chart is a simple volume based indicator which measures fear and greed in the market and is very powerful for picking market tops and bottoms. It’s calculated by taking the NYSE up volume and dividing it by the down volume. In short, when you see this indicator start to rise it tells us the majority of traders (the herd) are buying and we should start to look at taking a short position.

Let me show you how to find the trade using the market sentiment....

The NYSE advance/ decline line
Is the most easy to understand. How I use this is simple, when there are 1500+ stocks trading up on the day then the market is getting overbought meaning too many stocks have moved up in a short period of time and traders will most likely start taking profits or exit their positions. I also look at the intraday chart for topping patterns or resistance levels then wait for the other two indicators to confirm Selling Volume on the chart above and the put/call ratio before going short the market.

The last indicator I follow is the put/call ratio
This indicator can be a little tougher to use at times because when the market is trending down the ratio tends to fluctuate near the top or bottom of its range during up or down trends. In a down trend is stays near the top which the chart below shows.

When the broad market bounces and we see the put/call ratio drop into the lower band it’s telling me the majority of traders have finally become bullish. This tends to happen once a previous high is broken as it triggers short covering and breakout traders start to buy.

Trading Market Sentiment Conclusion:
All you need to use these indicators, focus on the 15 minute charts, trade only with trend, and take profits at 1%, 2% and keep a small position open for much larger gains.

It is critical that once you take partial profits once you reach a 1% gain then you must start moving your protective stop into the money to lock in a profit for the balance of the position. All three indicators need to reach the extreme levels at the same time for a trade to be triggered. I have seen the market trend in the extreme levels for several weeks continuing to move up day after day and you will get stuck in that situation if you jump the gun entering a trade before each indicator signals an extreme level.

Final thoughts, his strategy works just as well in a bull market but there are some minor changes required on each of the indicators. Also I use inter market analysis following the US Dollar, Gold, Bonds and the Volatility Index for other trading strategies which I incorporate using the market sentiment.

If you would like to get Chris Vermeulen's ETF Trade Alerts for Low Risk Setups checkout his service at The Gold And Oil Guy.com



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Crude Oil, Natural Gas and Gold Market Commentary For Thursday Morning Dec. 2nd

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

If January extends the rally off last week's low, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 83.82 would temper the near term friendly outlook.

First resistance is the overnight high crossing at 87.10
Second resistance is November's high crossing at 89.10

Crude oil pivot point for Thursday morning is 85.78

First support is the 20 day moving average crossing at 84.95
Second support is the 10 day moving average crossing at 83.82

Natural gas was higher overnight as it consolidates some of the decline off last week's high. However, stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term.

If January renews this week's decline, November's low crossing at 3.853 is the next downside target. Closes above the 10 day moving average crossing at 4.312 would temper the near term bearish outlook.

First resistance is the 10 day moving average crossing at 4.312
Second resistance is last week's high crossing at 4.515

Natural gas pivot point for Thursday morning is 4.252

First support is Tuesday's low crossing at 4.126
Second support is November's low crossing at 3.853


Gold was higher overnight as it continues to rebound off the mid-November low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If December extends the rebound off the mid-November low, November's high crossing at 1424.30 is the next upside target. Closes below the 10 day moving average crossing at 1370.40 would confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 1396.60
Second resistance is November's high crossing at 1424.30

Gold pivot point for Thursday morning is 1,389.90

First support is the 10 day moving average crossing at 1370.40
Second support is the 25% retracement level of this year's rally crossing at 1330.20


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Commodity Corner: Crude Oil Up 3%

Crude oil rebounded Wednesday on positive manufacturing data from China, encouraging U.S. employment data, and word that the United States may join a European bailout program. Oil for January delivery rose $2.64 to settle at $86.75 a barrel. One factor providing momentum for oil was a monthly update of the China Purchasing Managers Index (PMI).

According to the China Federation of Logistics and Purchasing, the PMI increased by 0.9 percent in November. Also benefiting oil was an ADP Employer Services report indicating that private sector employers in the U.S. added 93,000 jobs last month. The finding was above expectations.

In addition, the prospect of U.S. backing for faltering banks in European Union countries proved bullish for oil. Citing an unnamed U.S. official, Reuters reported Wednesday that the U.S. might augment a $980 billion dollar fund to bail out heavily indebted EU region banks using money from the International Monetary Fund (IMF). Other news reports, however, quoted a Treasury Department official who denied that talks were underway to contribute funds to the so called European Financial Stability Facility. January crude traded from $83.63 to $86.62.

Bullish sentiment also was evident in the natural gas futures price. January natural gas increased nine cents to settle at $4.27 per thousand cubic feet. Projections of below normal temperatures through next week in the Northeast and Midwest provided an impetus for Wednesday's increase. The natural gas futures price fluctuated from $4.16 to $4.32.

Gasoline for January delivery also ended the day higher, gaining 13 cents to settle at $2.30 a gallon. It peaked at $2.31 and bottomed out at $2.18. The December gasoline contract, which expired Tuesday, finished at $2.27.

Posted courtesy of Rigzone.Com


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Bloomberg: Crude Oil Rises on Gain in Chinese Output, Reduced European Debt Concern

Crude oil climbed on greater than forecast growth in U.S. private employment and Chinese manufacturing and on signals the European Central Bank will act to prevent the spread of the region’s debt crisis. Prices surged as much as 2.8 percent as companies in the U.S. boosted payrolls the most since November 2007, according to figures from ADP Employer Services. Chinese manufacturing grew at the fastest rate in seven months. Futures reached the day’s high after Goldman Sachs & Co. said oil will average $110 a barrel in 2012, up from a forecast $100 of a barrel next year.

“As the global economy goes, so goes oil,” said Andre Julian, chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “The economic numbers in China and elsewhere today have been very strong and point to accelerating growth.” Crude oil for January delivery increased $2.16, or 2.6 percent, to $86.27 a barrel at 12:30 p.m. on the New York Mercantile Exchange. Prices climbed to $86.47, the highest level since Nov. 12.

Brent crude oil for January settlement rose $2.32, or 2.7 percent, to $88.24 a barrel on the London based ICE Futures Europe exchange. Goldman increased its forecast for U.S. gross domestic product growth next year to 2.7 percent from 2 percent. The U.S. economy will expand 3.6 percent in 2012, according to a report sent to Goldman Sachs clients today. The global economy will expand 4.6 percent next year and 4.8 percent in 2012, the bank said.

“Goldman has been banging the bull drum all year,” said Phil Flynn, a Chicago-based analyst and trader with investment adviser PFGBest.......Read the entire article.


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Is Gold Headed For a Major Correction?

David Banister of Market Trends.Com has been hitting gold spot on. And we are lucky enough to get another guest post from him. Let's see what David is thinking about the possibility that gold will head to 1480-1525 before a major correction......

Gold has been consolidating other than a spike to an intermediate wave 3 top of $1424, for about 7 weeks or so now. It’s typical to see Fibonacci periods of time as part of consolidations whether it be an individual stock or a precious metal in this case. Gold was overbought at the $1425 pivot highs a few weeks ago, and that terminated what I label a “wave 3″ pattern. This led us into a 4th wave corrective pattern which we remain in now. My worst case pivot low is expected at $1,321 and so far we have seen $1,331 an ounce and then an ensuing bounce to $1370 ranges.

In the intermediate term then, I’m looking for further consolidation likely for another week or so followed by a breakout over $1425 leading to my objectives of $1480-$1525 to complete the entire rally from the $1040 lows in February of this year. Many are starting to get bearish on Gold and Silver up here, and to me that is bullish and indicative of “4th wave mentality”. In a 4th wave, there is growing bearish sentiment, but not so much as to topple the bull structure.

To wit, last week in my ATP service I recommended a brand new Core Position in a Gold,Silver stock and it rallied as much as 40% intra-week at it’s highs. We are in a super bull market for Gold stocks as I outlined in August of 2009, and we have another four years left to go. I’m seeing alot of amazing chart patterns in the Junior space that are in relentless climbs. Owning the the explorers that are finding the Gold is how best to take advantage of the remaining four years. At ATP, we are exposed to Rare Earths, Silver, Gold, and Oil and Gas related plays in our Core Positions. Make sure you own hard assets and precious metals resources one way or another. My silver forecast in late August was basically predicated on the small investor swarming into the Silver market to buy up coins, look for that to continue and Silver to be over $30 in the not too distant future.

Below is my updated Gold forecast using a weekly chart, remember to Keep it Simple!

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Phil Flynn: A Study In Contradictions

It's no wonder that oil is on track to have one of its flattest trading years since 2003. The last minute late November sell off was another sign that the bulls and bears lack true conviction as they to make sense of some obvious and some obscure fundamentals that are driving the price in this somewhat wide swinging emotional oil market. In fact the trading swan song for November and the first of December snap back really symbolizes omneity of the entire year in the oil market. In a normal time, better than expected readings on U.S. Manufacturing and consumer confidence might inspire an oil rally. You might think that oil would celebrate the fact that business expanded at a faster pace than thought for as the Institute for Supply Management-Chicago Inc. rose to 62.5 the highest since April from 60.6 in October increasing hopes that manufacturers would hire and invest in new equipment as their business booms.

Or perhaps the market might take heart from the fact that consumer confidence soared to a reading of 54.1, the highest level since June in the heart of the Christmas shopping season. Yet with the dark clouds emanating out of Europe and commodity funds getting frustrated with their $100 barrel oil bets, prices drove lower as funds wanted to take what profit incentive fees they could before they go flat for the holiday and start shopping for that GI Joe with the Kung-Fu grip for their kids. That was the case even as the dollar rallied, capping off a month where the dollar rallied off its QE2 lows hitting the highest levels since the Fed hinted that they would print more money as investors seek shelter from economic storm clouds in Europe. The oil bulls lost their moxie as risk in the......Read the entire article.

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Crude Oil, Natural Gas and Gold Market Commentary For Wednesday Morning Dec. 1st

Crude oil was higher overnight and is poised to extend the rally off last week's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends the rally off last week's low, November's high crossing at 89.10 is the next upside target. Closes below the 10 day moving average crossing at 83.12 would temper the near term friendly outlook.

First resistance is Tuesday's high crossing at 85.90
Second resistance is November's high crossing at 89.10

Crude oil pivot point for Wednesday morning is 84.52

First support is the 10 day moving average crossing at 83.12
Second support is last Tuesday's low crossing at 80.28

Gold was higher overnight as it continues to rebound off the mid-November low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If December extends the rebound off the mid-November low, November's high crossing at 1424.30 is the next upside target. If December renews the decline off last month's low, the reaction low crossing at 1315.60 is the next downside target.

First resistance is the overnight high crossing at 1396.60
Second resistance is November's high crossing at 1424.30

Gold pivot point for Wednesday morning is 1,380.40

First support is the 25% retracement level of this year's rally crossing at 1330.20
Second support is the reaction low crossing at 1315.60

Natural gas was higher overnight as it consolidates some of the decline off last week's high. However, stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, November's low crossing at 3.853 is the next downside target. Closes above the 10 day moving average crossing at 4.295 would temper the near term bearish outlook.

First resistance is the 10 day moving average crossing at 4.295
Second resistance is last week's high crossing at 4.515

Natural gas pivot point for Wednesday morning is 4.187

First support is Tuesday's low crossing at 4.126
Second support is November's low crossing at 3.853


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