Crude Oil Market Continues to Tease Us With It's Sideways Action

The crude oil market continues to tease us with its sideways action. While this market has been trending to the upside, we want to pay particular attention to the uptrend line from August 9th through today. We do not think that the crude oil market is ready to go higher based on our long term monthly Trade Triangle, which continues to be negative for this market.

The $90 a barrel resistance continues, as the market has had a difficult time moving over that area and maintaining a positive close above that zone. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil closed higher on Thursday and remains poised to extend 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 overbought, diverging but are neutral to bullish signaling that sideways to higher prices are still possible near term.

Closes above the May-July downtrend line crossing near 92.64 would confirm an end to this summer's decline. Closes below Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low.

First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.64. First support is Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 70

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Phil Flynn: The Worst Is Over?

Is it possible that the worst is over? Despite the separation anxiety in the Euro Zone and a rouge trade that took away UBS profits, many markets are signaling that they believe that at least for now, all the bad news is out. Or maybe that things can't get any worse. It looks like the plunging euro currency, the British Pound and the Swiss franc, is turning the corner as well as crude oil, a market by the way that we have called that the low is in for the year. Stocks seem to have found a bottom and their lows look like they might be in as well. Do we deserve all this optimism? It seems that support from German Chancellor Angela Merkel and French President Nicholas Sarkozy, is making the markets think there may be a master plan to save the Euro zone and the global economy as well.

Is the market right ? Do we deserve a bottom? Well whether we deserve it or not the indicators from the technical side seem to be in alignment. Oil is gaining confidence and we are seeing signs that products are bottoming. Besides, the market is rebounding from sharply lower expectations from the likes of many of the major agencies like OPEC, the Energy Information Agency as well as the International Energy Agency. Besides lowering demand, the other key for the direction of oil may be when Libya's oil comes back to the market. The International Energy Agency says that, "As the fighting in Libya begins to wind down and the Transitional National Council (TNC) establishes itself as the internationally recognized government, it is timely to review the many factors that will affect the pace and timing of the restart of the Libyan oil industry.

The TNC leadership, which views oil revenues as a means to rebuilding the country, and participants in world oil markets, who continue to grapple with tightness in the global supply of high quality crude, share a common interest in restoring Libya's oil production and exports. When this will happen is uncertain and depends to a significant extent on the political, military, and security situation that will determine when companies can return to oil fields to repair and/or restart production. It is also worth noting that at the time of writing, only the European Union and United Nations had lifted sanctions on Libya; U.S. sanctions remain in place"......Read the entire article.

Marcellus Committee Clears Permit Fee Hurdle in West Virginia

Natural gas operators would pay $10,000 to drill a well in West Virginia's share of the Marcellus shale field, and $5,000 for each additional well at the initial site, under a proposal adopted Wednesday by a special legislative committee.

The House-Senate panel also approved provisions increasing bonds posted for well projects, enhancing public notice of drilling and compensating the owners of surface land where operators drill their wells. With the committee resuming its work next month, Wednesday's changes move lawmakers closer to a regulatory bill that they hope to propose during a special session before year's end.

But the permit fee amendment has been considered a crucial hurdle in the process. Operators now pay just a few hundred dollars for a permit. The resulting revenues have helped to leave the Department of Environmental Protection's Oil and Gas office with a $1 million shortfall in its budget.....Read the entire AP article.

National Oil Well Varco and Ameron Announce Merger Agreement

National Oilwell Varco, Inc. (NYSE:NOV) and Ameron International Corporation, (NYSE:AMN) have entered into an agreement under which NOV will acquire Ameron in an all cash transaction that values Ameron at approximately $772 million. Under the agreement, Ameron's stockholders would receive $85.00 per share in cash in return for each of the approximately 9.1 million shares outstanding. The boards of directors of NOV and Ameron have unanimously approved the transaction, which is subject to customary closing conditions, including the approval of holders of at least a majority of Ameron's outstanding shares. Closing could occur as early as the 4th quarter of 2011.

Ameron is a multinational manufacturer of highly engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets. Ameron is a leading producer of fiberglass composite pipe for transporting oil, chemicals and corrosive fluids, and specialized materials and products used in infrastructure projects, such as poles and construction materials in Hawaii. Ameron is also a leading provider of water transmission lines and fabricated steel products, such as wind towers.

Ameron operates businesses in North America, South America, Europe and Asia, has a presence through affiliated companies in the Middle East, and has approximately 2,900 employees and 25 manufacturing locations on a worldwide basis.

NOV is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry.....Read the entire article.

Statements Out of Europe Not Enough to Push Oil Prices Through Resistance

The hope that the credit crisis in Europe will fade and support higher commodity prices itself is fading as oil traded slightly higher in Wednesday evenings overnight session. Crude oils Stochastics and RSI are overbought and diverging. If the bulls can break through strong resistance at 90.60 the May-July downtrend line crossing near 92.55 will be the next upside target.

Crude oil bears will gain a solid technical advantage if oil closes below Monday's low crossing at 85.17. This would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall.

First resistance is Wednesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.55. First support is Monday's low crossing at 85.17. Second support is last Tuesday's low crossing at 83.47. Crude oil pivot point for Thursday morning is 89.12.

Good News Out of Europe is Not Enough to Send Oil Higher

Yesterday, crude oil closed over the $90 a barrel level. Today is another story, as crude oil is down. This movement underscores the importance of knowing when there is a conflict between indicators. In this case, our monthly Trade Triangle which is the dominant trend indicator is pointing down, while our intermediate and daily Triangles are pointing up.

This creates a Chart Analysis Score of + 60, indicating a trading range. Presently we would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil posted an inside day with a lower close on Wednesday as it consolidated some of the rebound off Monday's low. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are neutral signaling that sideways trading is possible near term.

Closes below Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low. Closes above the May-July downtrend line crossing near 92.92 would confirm an end to this summer's decline. First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.92. First support is Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Crude Oil Trade Triangles......

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

David Banister: Gold Heading to $2,350 Per Ounce After 4th Wave Consolidation

In my most recent few forecasts for subscribers and public articles I’ve discussed a major correction in Gold, and it dropped $208 within 3 days of that forecast several weeks ago as Gold traders will recall. Last week I wrote about further consolidation being required in what I’m seeing as a either 4th wave likely “Triangle Pattern” that will consolidate the 34 month run from $681 to $1910 into August of this year, or a 3 wave “A B C” pattern. We are right now in some form of C wave, it’s just a matter now of confirming if we are going to get a “D and E” wave to follow, or the C wave drops lower before we bottom.

A Triangle pattern serves to let the “economics of the security” catch up with the prior large movement upwards in price. In essence, the crowd behavior pushed the price of Gold a bit too high too fast, and this consolidation pattern lets the fundamentals catch up to price action. We had a parabolic move I discussed many weeks ago, and those always end badly to the downside. The $208 drop in three days is a typical reaction to a spike run like that. At the end of the day though, I had been forecasting what I call a “Wave 3” top and was looking for a multi week or multi month consolidation pattern before Gold could move higher.

Let’s examine what that triangle projection may look like. 

They take the form of 5 waves, or what we can call ABCDE in a pattern. The biggest drop is always the “A” wave, and that was 1910 to 1702 in 3 days or less. The next biggest drop is the “C” Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop relative to the A wave. In other words, each successive wave down in the 5 wave triangle is smaller. This is due to the sentiment finally shifting and the trading patterns moving from people chasing the hot sector or stock or metal, to the long term investors accumulating the dips.

If we end up consolidating in a “Triangle”, then Gold should end up looking something like the below pattern I drew, with a target of $2,350 per ounce many months out:

The other pattern we are watching for at TMTF is the ABC Correction pattern. We had the A wave down to 1702, which corrected 50% of the move from 1480-1910 in 3 days. Rarely do you get a major move down like that and not get some type of “re-test” of that low, but because the fundamentals for Gold are strong and getting stronger, we are favoring the Triangle pattern still as most likely. With that said, there is a fat and juicy “Gap” sitting in the chart around 1660 on Gold and dropping down there is what a lot of traders are watching. If that were to fulfill, then we will see an ABC correction ending around $1643, and then Gold will begin another multi month rally to new highs:

At The Market Trend Forecast I teach people my crowd behavioral methodologies and give them reliable forecasts in advance so they can be prepared with their investments. Consider working with us and following the SP 500, Silver, and Gold by going to Market Trend Forecast.com You can take advantage of a 33% discount over the next 48 hours as well.

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Musings: Trying To Solve Mystery Of Missing Marcellus Resource

A tenant of America's gas shale revolution is that shale is ubiquitous and uniformly spread under our oil and gas producing basins. That belief has translated into growing estimates of the resource's potential and how it has radically changed the long term outlook for America's, and potentially the world's energy future. Is it possible this tenant has been knocked into a cocked hat by the latest estimate of the resource potential of one of our largest gas shale basins.... the Marcellus Shale?

The recent assessment by the U.S. Geological Survey (USGS) that the Marcellus Shale contains 84 trillion cubic feet (Tcf) of undiscovered natural gas and 3.4 billion barrels of undiscovered natural gas liquids was greeted with both joy and consternation. The joy came from the recognition that the USGS estimate was a huge increase from its prior assessment made in 2002 that said there was only about 2 Tcf of gas reserves in the shale formation that stretches from Alabama to New York.

The consternation stems from the assessment being about 80% less than an estimate promoted earlier this year by the Energy Information Administration (EIA) that there was 410 Tcf of gas in the basin. Talk about a gap wide enough to drive a truck through, how about a whole fleet of pickups?

First, it is important to understand that the USGS estimate is the mean of various estimates the agency prepared. Each estimate was assigned a confidence level based on how sure the agency was that the estimated volume actually is present. The estimates ranged from a very highly confident (95%) estimate of 43 Tcf to the estimate with the lowest confidence (5%) of 144 Tcf. The 50% confidence scenario estimated total gas reserves of 78.7 Tcf, or somewhat below the mean estimate the agency decided to publish.

Second, it is important to understand that these estimates reflect a view that the resources are technically recoverable, which, to quote from the agency's press release, means "are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations." The USGS went on to say, "…these estimates include resources beneath both onshore and offshore areas (such as Lake Erie) and beneath areas where accessibility may be limited by policy and regulations imposed by land managers and regulatory agencies."

Importantly, the USGS attributed the increase in its undiscovered resource estimate to the "new geologic information and engineering data, as technological developments in producing unconventional resources have been significant in the last decade." Clearly, the USGS was referring to the improvements in horizontal drilling and hydraulic fracturing, which the petroleum industry has embraced wholeheartedly in driving the gas shale revolution......Read the entire article.

Crude Oil Technical Outlook For Wednesday Morning Sept. 14th

Crude oil met strong resistance in overnight trading as the continued financial crisis in Europe weighs on traders. Worse then expected retail spending in the U.S., the IEA cut in global oil consumption forecasts for 2011 and 2012, the prospect of Libyan oil production coming back online and the end of hurricane season all contribute to the inability of oil to push through the 50 moving average near $91 per barrel.

Closes below last Tuesday's low crossing at 83.47 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall. If November extends the rebound off August's low, the May-July downtrend line crossing near 92.92 is the next upside target. WTI Stochastics and RSI are overbought this morning.

First resistance is last Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.66. First support is last Tuesday's low crossing at 83.47. Second support is the reaction low crossing at 79.76. Crude oil pivot point for Wednesday morning trading is 89.51.

Adam Hewison: The Big Picture

Let’s take a look at the big picture and what it means today. There are a number times when the markets trade erratically. When this happens, you get out of the market with some quick move either up or down against you. Then, the market immediately goes your way the next day and afterwards you say to yourself, “I should’ve stayed in!”

That’s why it’s important to look at the big picture, and the big trends. What looked like a possible reversal yesterday, did not change the big trends in the markets. It just doesn’t happen in one day.

So let’s look at the big trends in the various markets we cover. Equity markets, the big trend is down. Metal markets, the big trend is up. Crude oil, the big trend is down. The dollar index, the big trend is up. And lastly, the CRB index, the big trend is down. Providing you are trading in the direction of the major trend, you have the odds in your favor. Always remember to keep your trading logs and game plan up to date. They will help you become a better trader.

Let's look at where we stand in the crude oil and gold markets......

The crude oil market once again came very close to moving over the $90 a barrel level, and at the time of this report has failed. Presently the Trade Triangles are mixed, indicating that this market is in a trading range. We would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. The big trend monthly Trade Triangle remains negative for this market. Look for crude oil to continue to move in a sideways to lower manner.

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

With a golds chart analysis Score of + 55, it would appear that the gold market is in near term trading range. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. The Williams % R is not yet in an oversold condition. The $1,850 to $1,900 levels are resistance for gold, at the moment. Support comes in around the $1,800 area and extends all the way down to $1750. Looking at the market, it would possibly appear as though we have put in a double top. This will only be confirmed with a close below the $1,750 level. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55


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