Is The Line Drawn in the Sand For This Crude Oil Market?

Even though the bulls got a break on wall street today the crude oil market continues to be in a negative trend, and the Dollar Index and the CRB index are for the most part in a sideways mode. Please be aware that our comments are based on the total contract.

The rally has pushed this market back in to an area where you should find resistance right around the 85.30 level. This is a 61.8% Fibonacci retracement. We expect this market to come under pressure on Wednesday or Thursday.

Long term and intermediate term traders should hang on for the ride and protect profits with money management stops. Short term traders should be on the sidelines in this market. The longer term trend for crude oil is down based on our Trade Triangle technology.

Crude oil closed higher due to short covering on Tuesday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning neutral to bullish hinting that a low might be in or is near.

Closes above the 20 day moving average crossing at 88.12 are needed to confirm that a low has been posted. If October renews this summer's decline, the 75% retracement level of the 2009-2011 rally crossing at 71.72 is the next downside target.

First resistance is the 20 day moving average crossing at 88.12. Second resistance is this month's high crossing at 98.60. First support is this month's low crossing at 76.15. Second support is the 75% retracement level of the 2009-2011 rally crossing at 71.73.

Crude oil Trend Analysis and Trend Score for Tuesday evening....

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

David Banister: Is Gold on the Verge of Major Correction?

Just under two weeks ago I wrote about gold likely running to a final top with various levels ranging from 1862 to 1907 per ounce as likely. So far, we bottomed with a pivot at $1730 which I mentioned to my paying subscribers and we have run to as high as $1898 per ounce counting futures trading on August 22nd. What should we expect now as the most likely intermediate trading pattern for Gold?

Clearly, Gold is overbought on traditional technical measures such as RSI, MACD, and Moving Averages and more, so that is one warning flag. To wit, Gold historically pulls back pretty aggressively anytime it has run much above its 20 week EMA line. On a daily chart that stands at about $1730 per ounce, and on a weekly chart around $1580 per ounce. This week marks Fibonacci week #8 from the 1480 pivot lows of a wave 4 pattern I outlined for my subscribers as likely to turn gold higher to 1730 plus. In addition, we are 34 Fibonacci months into this 5 wave Bull Run from the October 2008 $681 lows.

I use Elliott Wave Theory combined with sentiment indicators and other measures to help determine major buy and sell pivots for Gold, and this methodology has been extremely accurate and successful for years. Right now I can count Gold as coming into a final 5th wave thrust to all time highs with sentiment running at huge extremes and technical patterns screamingly overbought. This action in Gold over the last many weeks reminds me of the final blow off top of the NASDAQ in 2000 as it ran from 4000 to 5000 in a few months and exhausted the buyers. This 5 wave pattern began 34 months ago and the final 5th wave usually drags as many taxi cab drivers onto the back of the Bull just in time to dump them off with a bag in their hand and no ride.

The bottom line is Gold is in a 13 year upwards cycle, and we are in about year 10 and it’s due for a likely pause in the uptrend, and certainly a correction of 10-15% would be normal in any massive bull cycle to kick all the bulls and latecomers off the back of the charging Bull. This pause should be a Primary wave 4 consolidation, where 2 and 4 are corrective and 1, 3, and 5 are bullish cycles.

Below is the latest chart on gold, not counting the overnight $1898 highs last night, but you can see that Gold is above the normal pivot high lines where we have seen major corrections over the past 34 month up cycle. A major parabolic blow off rise is of course possible, but hedging long positions and or considering shorting gold for the more aggressive players is advised:

Consider joining us at TMTF for forecasts and tradable pivot ideas on the SP500, Gold, and Silver with stunning accuracy. Check us out at Market Trend Forecast.com for a 33% discount coupon or to sign up for occasional updates.

Adam Hewison: Forget The News If You Want To Trade Successfully!

Many news stories, particularly when it comes to the markets, are basically fed to reporters by folks who have a vested interest in that particular market. I’ve seen this happen time and time again, when information is given to an online anchor or someone else who is on air and reading the latest news. The information that they report, may be not accurate. In the competitive rush to get news online, and be the 1st to break a story, very few stories are ever checked and triple checked.

So we wake up this morning with the potential conflict in Libya over, and Libya’s Colonel Qaddafi’s 42 year reign of insanity has maybe come to an end. Based on that news, the Dow rallies up over 200 points. Let’s see, that little conflict cost the US about 1 trillion dollars, money we don’t have. How could that be good for the market?

Now we are tying the news in Libya to the markets here and the terrible economic conditions that exist, it is a stretch by anyone’s imagination. The truth is, that the markets probably rallied based on a short covering. Many active traders went home with short positions over the weekend. When the markets did not follow through to the downside they quickly covered their short positions and pushed the market higher.

So here’s my advice, do not pay too much attention to the news. Let the market, and the price action give you all the direction you need. Market action is the # 1 item to watch to be a successful trader.

Now, let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Remember, despite the big call this morning, the major trend is down for the equity markets. Today’s strong rally was probably an opportunity to go short. We see this market going lower.

SILVER
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Our Trade Triangles kicked in perfectly with a buy at 42.20 basis spot. Based on this signal, all traders should be long this market or looking to trade silver from the long side.

GOLD
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops. It looks more and more likely that we will get close to the magical $2,000 an ounce. We expect to see professional profit taking and some shorting at that level.

CRUDE OIL 
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Despite the knee jerk reaction rally based on the news out of Libya, the trend in crude oil is bearish. Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops. The longer term trend for crude oil is down based on our Trade Triangle technology.

DOLLAR INDEX
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55
This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of + 55 we would want to approach this market using our Donchian Trading Channels as well as our Williams %R indicator. The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.

REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario. We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside. Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.

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Chris Vermeulen: Crude Oil and Gold Thoughts....What is Next?

The past few weeks have been fast moving with fearful investors clearly in control. As we all know fear is the most powerful force in the financial market and when the hedge funds and the masses get spooked they all dart in one direction like a school of fish. Watching the charts and volume levels it’s clear that money was/is flowing out of stocks and into precious metals as the risk off safe play. 

To make a long story short, I feel as though Euro-Land is going through something similar to what we (the USA) went through in late 2008 and first quarter of 2009. Keeping my analysis simple and to the point it’s very likely that Euro-Land will resolve their financial issues and their stock markets will bottom in the next month or so… If their market bottoms, so will the US market, which will be perfect timing as the market is currently oversold, sentiment is now turning bearish and we have had a sizable pullback in line with normal bull market corrections.

My thinking looking forward 2-6 weeks is that stocks rally, financials rocket higher, bond prices fall, gold falls and oil rises as it will be a risk off trading environment again. Of course all this would happen after Euro-Land resolves some of their key financial issues. I’m being very optimistic here but we could be nearing a major low that could kick start another massive 1 year rally.

Stepping away from that longer term outlook let’s take a peek at the shorter term trends for oil, gold and stocks.

Crude Oil 60 Minute Chart (1 month view)
The recent price action for crude oil remains bearish/neutral in my opinion. We saw a drift higher into resistance with declining volume then a sharp pullback on heavy volume. This tells me oil remains in a down trend. It may be forming a base which would act as a launch pad in the coming weeks for higher prices but only time will tell and I will update as price unfolds.

Gold 4 Hour Chart (One Month View)
Gold has been performing very well for our entry point but the recent price action is starting to look toppy. Gold and many commodities regularly form this pattern of three wave pushes to new highs just before a sizable correction takes place. I am bullish on gold long term and for a few more weeks, but I do feel as though there will be a multi month correction in the price of gold (Read More) soon so be sure to tighten your protective stops as price moves higher.

SPY ETF Weekly Chart (Two Year View)
The stock market has been hit hard and a lot of damage has also been done to the charts on a technical stand point. The amount of damage and fear that has happening generally takes some time to stabilize and heal before another move takes place. Until Euro-Land resolves some of their major issues the US market will be held hostage and under pressure. So I anticipate several weeks of volatility and wild daily price swings similar to what we saw in July of 2010. This type of trading environment can work very well for options traders (Read More).

Weekly Trading Conclusion:
In short, the market price action is favoring very short term traders (day traders). We are seeing complete price swings which can normally be swing traded happen in just hours… Until we get another extreme setup or stabilization (less big headline news) in the market we will be more of a spectator than a trader to preserve capital.

Consider subscribing to Chris Vermeulens calls so that you will be consistently informed, have 24/7 Email access to me with questions, and also get Gold, Silver, SP500 and Oil Trend Analysis on a regular basis. Subscribe now at The Gold and Oil Guy.Com

Oil N Gold: Mondays Crude Oil Daily Technical Outlook

Intraday bias in crude oil remains on the downside for a test on 75.71 support. Break there will confirm resumption of whole fall from 114.83 and should target 70 psychological level next. On the upside, though, break of 89.00 resistance will dampen this bearish view and bring stronger rebound towards 100.62 resistance instead.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should now target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38). Sustained break will pave the way to retest 33.2 low. On the upside, break of 89.61 resistance is needed to be the first signal of bottoming or we'll stay bearish.

Posted courtesy of Oil N Gold.Com

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Weekend Video Update: European Sovereign Debt Problems Spill Over into Global Equity Markets

Once again, the problems with sovereign debt in Europe  spilled over into the global equity markets,  and in particular the bank stocks. Europe is “the tail that wags the dog”, and in this case,  it’s the world.

Weekend Video Update Here.

For the 4th straight week, US equities closed lower and under heavy selling pressure.  Gold on the other hand soared to new highs, on fears that the sovereign debt crisis is escalating and getting totally out of hand. (It’s already out of hand).

With world equities coming under pressure crude oil was not immune to the potential of less demand for this commodity. With that in mind crude oil slipped 3.6% for the week.

So there you have it, the trends continue,  and these trends are likely to continue in the near future.

Now,  let’s go to the weekly charts and see what happened last week in the major markets according to our Trade Triangle technology.

S&P500: change for the week: – 4.68%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 100

Silver: change for the week: + 9.76%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Positive
Combined Strength of Trend Score: = + 100

Gold: change for the week: + 6.02%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 100

Crude Oil: change for the week: – 3.65%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 90

Dollar Index: change for the week: – .77%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 55

CRB Index: change for the week: + 2.97%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 100

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What Are Hedge Fund Managers Buying Amid Falling Prices.....Ensco and Schlumberger

Hedge funds bought $1.6 billion of shares in two oil-services companies in the second quarter as analysts said a drilling boom in the U.S. may spread overseas, helping reverse a slump in the companies’ stock prices.
Ensco Plc (ESV) and Schlumberger Ltd. (SLB) received the most new investment by hedge funds of all energy companies, beating producers such as Marathon Oil Corp. (MRO), according to calculations by Bloomberg from regulatory filings this week. MHR Fund Management LLC, Vinik Asset Management LP and SAC Capital Advisors LP topped the list of buyers.

Oil companies have to boost drilling in expanding areas of the world such as in Asia and off the coasts of Brazil and West Africa to meet growing energy demand. Drilling for crude and natural gas in North America increased at five times the pace of the rest of the world in the past year.

“International has yet to really inflect, but we’re beginning to see some progress on that front,” said Bill Herbert, an analyst at Simmons & Co. in Houston, who has an “overweight” rating on Schlumberger and Ensco. “You’re going to see meaningful growth on international, deepwater and exploration-related activity.”
New York based MHR acquired $325 million of Ensco stock based on June 30 prices, and Vinik of Boston added $137 million of Schlumberger shares, the filings at the Securities and Exchange Commission in Washington show.

MHR Managing Principal Hal Goldstein didn’t respond to a phone message seeking comment. An executive at Vinik who asked not to be named said the firm never comments to the media......Read the entire article.

Oil N Gold: Crude Oil Weekly Technical Outlook

Crude oil's recovery should have completed at 89.00 after failing mentioned 89.61 support turned resistance as expected. Initial bias remains mildly on the downside for retesting 75.71 support first. Break there will confirm resumption of whole fall from 114.83 and should target 70 psychological level next. On the upside, though, break of 89.00 resistance will dampen this bearish view and bring stronger rebound towards 100.62 resistance instead.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should now target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38). Sustained break will pave the way to retest 33.2 low. On the upside, break of 89.61 resistance is needed to be the first signal of bottoming or we'll stay bearish.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Posted courtesy of Oil N Gold.Com

Adam Hewison: The Trend is Your Friend – How True Those Words are Today!

We have been on the right side of the markets for quite some time now.  It is in times like these when technical analysis really shines.  It doesn’t matter if you have a strong upward trend in gold or a downward spiraling trend in stocks, technical analysis works.

We feel we have a target rich area for trading opportunities right now.  Some of the best money can be made during periods just like this.  A key to being successful in markets that are having large moves is to be disciplined and follow MarketClub’s Trade Triangles.

So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011. 

S&P 500

Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100

Today’s action in the S&P 500 is a further reinforcement of the downward trend that has been in place for quite some time.  As we said in yesterday’s comments, you must remember that the major trend is down for the equity markets and strong rallies represent shorting opportunities.  Looking at the weekly charts, a close at current levels would be extremely negative.  The lowest close we have seen on the S&P500 this year is 1119.46.  This is another level to watch carefully.  We see this market going lower.

SILVER

Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 75

Consider these words of wisdom… Do not buy silver because you think it is cheap in comparison to gold.  The market continues to be in a broad trading range without a clear-cut trend at this time. Intermediate term traders should be on the sidelines and out of silver.  A Chart Analysis Score of + 75 indicates a two-way market and a trading range.  Let us be patient and wait for our Trade Triangles to kick in and give us a solid signal.

GOLD

Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Positive
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 100

The gold market moved to new highs today taking out the previous high of $1814.41. This last surge in gold was caused by a panicky situation in Europe, especially with the European banks.  Uncertainty over bank stocks pushed many of the European banks and the US banks to the downside today.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.

CRUDE OIL 

Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100

$88.32 was a 50% Fibonacci retracement area, and this level was hit yesterday.  It was enough to stop this market on the upside.  As you know, we have been bearish on crude oil from the weekly Trade Triangle on August 1st at $94.02 a barrel.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.  The longer term trend for crude oil is down based on our Trade Triangle technology.

DOLLAR INDEX

Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 60

Our comments today remain pretty much the same as they were yesterday, as there has been very little directional change in this market.  The 73.50 level continues to act as support for the dollar index. This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of -60 we would want to approach this market using our Donchian Trading Channels as well as our Williams %R indicator.  The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.

REUTERS/JEFFERIES CRB COMMODITY INDEX

Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100

The Reuters/Jefferies CRB commodity index has turned back from the Fibonacci retracement level of 50% at 332.95.   This level was hit yesterday.  While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario.  We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.

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As always, we rely on our market proven Trade Triangle technology for catching the big moves.

Who is Producing How Much Crude Oil?

So what is the pecking order for oil production in 2011? Here is a chart produced by our friends at ConocoPhillips.