Adam Hewison: This Little European Country Holds the Key to Our Economic Future

It would appear that this little country in Europe holds the key to either economic disaster or economic enslavement. The entire country of Slovakia has a population of a little over four million people and a workforce of maybe two million people. These two million people are now being asked to shoulder the debt burden of $5 billion as their share of the European recovery program. That does not seem fair to me.

This tiny country has a better GDP growth rate than the United States. It also has a population that is 99% literate. And I heard this morning, their tax rate is 19% for individuals and 19% for corporations, and the country is thriving in relative terms. Maybe we can all learn something from how this country is run.

GDP (2010 est.): $88.4 billion.
GDP growth rate (2010): 4.0%.
Nominal GDP per capita (2010): $16,288 (ING Bank).
Unemployment (2010): 13.5%.
Consumer price inflation (2010): 1% (Ministry of Finance).
Public deficit (2010): 7.8% GDP.

Now let’s see what our Trade Triangle technology is saying about crude oil......

Please note that we are switching to the December contract for crude oil. Presently this market is overbought and we expect to see a pullback from current levels. We are not totally convinced that this market has made a reversal to the upside and expect it to once again reverse back down and test the $80 level. As you know this market has been closely tied in to the movements of the S&P 500. Overall we still view the trend in this market as negative. Intermediate and Long term traders should continue to be short the crude oil market.

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

November crude oil closed up $0.65 a barrel at $86.05 today. Prices closed nearer the session high again today and hit another fresh three week high. Bulls have gained solid upside technical momentum just recently. Prices have rallied around $10.00 a barrel from last week's low. The bulls have the near term technical advantage.

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John Woods: Crude Oil Prices Not Trading on Fundamentals

John Woods of JJ Woods & Associates explains why oil prices are not taking into account supply and demand fundamentals but are being dominated by traders.



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Phil Flynn: The Good, The Bad And The Bullish And Bearish

It was easy to get caught up in all of the exhilaration as oil rallied strong in the glow of a global bailout frenzy. Promises of re-capitalization of European banks by the French and the Germans and word that a Chinese sovereign wealth fund was buying shares of faltering Chinese banks, eased the markets darkest fears causing a run out of the safe haven dollar and a run in to the euro.

The oil of course dutifully rallied as the risk appetite came back and the VIX fear index fell. Yet despite the fact that it was bailout mania that drove most of the commodity complex, we would be remiss not to point out other bullish factors that were at play in a marvelously bullish day.

For oil there was a lot of bullish news and bullish speculation surrounding Saudi Arabian production. Private forecasters are reporting that Saudi production is falling perhaps by as much as 4% as they seek to take back that extra oil they pumped to replace lost Libyan crude. Also were reports that the Saudis have put on hold their plans to expand production capacity and that was also a potential long term supportive story the crude complex.

What is more OPEC just lowered their global demand forecast by 180,000 barrels per day and at the same time, is warming they are staying alert to market imbalance risk. In other words, if oil prices fall too hard they will take steps to cut production even further. Ah, yes the OPEC boys doing their part to screw up the global recovery.

Even sugar for the ethanol traders had a big news. Floods in Thailand, one major sugar producer and worries about the smaller than expected Brazilian crop shot sugar back above 30. Dow Jones said that strong ethanol demand in Brazil could reignite a rally in sugar futures before the front-month contract expires next March. That is of curse assuming the Europe does not fall on its face again.

Copper soared again on the hope for an improving economic outlook but also as reports of violence at the world's third largest copper mine in Indonesia. Freeport McMoran Copper & Gold Inc says that is continuing to produce and ship copper concentrates at reduced levels from its Indonesian mine while violence broke out and at least one death was reported. In the meantime copper traders are looking for a surge in copper demand from China as they expect that they will be looking to replenish stockpiles. Of course if the economy slows it might not happen.

Jean Claude Trichet in Brussels EU is warning of large scale systemic risk that could impact even the larger countries in the EU! Wow, who knew? Those concerns of course are another reason why the market is wondering whether all of that exuberance was justified. Earnings season begins today and the world is waiting on Slovakia to pass its partipation in the larger EU bailout fund. That's right, Slovakia. The market is worried that a "no" vote could crash the global markets.

In the mean time, mergers and acquisitions in the oil patch could be exploding. Yesterday China raised eyebrows with a major accusation play in the Canadian oil sands. Chinese owned Sinopec signed an agreement to purchase Canadian oil and gas exploration and production company Daylight Energy. Now the question is whether or not the Canadians will approve the deal. Stay tuned!


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Crude Oil, Natural Gas and Gold Market Commentary For Tuesday Morning Oct. 11th

Crude oil started the trading day lower as it consolidates some of the rally off last Monday's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If November extends the aforementioned rally, September's high crossing at 90.60 is the next upside target. Closes below the 10 day moving average crossing at 81.13 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 87.99. Second resistance is September's high crossing at 90.60. First support is the 20 day moving average crossing at 83.08. Second support is the 10 day moving average crossing at 81.12. Crude oil pivot point for Tuesday morning is 84.75.

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Natural gas was slightly lower at the open as it remains entrenched in the decline, which began in June. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If November extends the aforementioned decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.755 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.618. Second resistance is the 20 day moving average crossing at 3.755. First support is Monday's low crossing at 3.455. Second support is monthly support crossing at 3.225. Natural gas pivot point for Tuesday morning is 3.521.

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Gold was lower in overnight trading as it extends the trading range of the past ten days. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1692.20 are needed to confirm that a short term low has been posted. If December renews the decline off September's, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. First resistance is the overnight high crossing at 1686.70. Second resistance is the 20 day moving average crossing at 1692.20. First support is September's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20. Golds pivot point for Tuesday morning is 1663.50.

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Adam Hewison: If Slovakia Votes No, Crude Oil Tanks on Tuesday

This morning I was reading that there are approximately 3.2 million job openings here in the United States. With more than 14 million people out of work in this country, how can we possibly have 3.2 million job openings still not filled?

These are job openings that the private sector needs to fill. I know from our own experience here at our company, finding competent people it extremely difficult. Part of the problem, in my opinion, is that many job applicants have no skills.

The CEO of Cummings, Tim Selso said he can’t find skilled workers for his manufacturing plants. This is a common complaint that many CEOs share.

According to economists, the average worker contributes about $45,000 a year to GDP. If we could just fill 1/3 of those jobs, it would have a huge impact on the economy.

Like many traders today, we were surprised at the velocity of the rally which is based on a potential agreement coming into place in Europe. At the moment no one knows what the deal is, and nobody in a position of authority is indicating what the deal is. The vote from Slovakia has the potential to torpedo any recovery and is a big hurdle approaching tomorrow. If that tiny country votes “no” to this proposed agreement, it could send stocks, and in particular bank stocks, to the cellar!

That leaves us with just one option.....What are the Trade Triangles saying?

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

The November crude oil market has rallied back to an area that was previous support and should present some fairly serious resistance. We were somewhat surprised at today’s action however, our Trade Triangles remain in a sideways mode indicating a trading range.

We are not totally convinced that this market has turned around and we expected to once again reverse and test the $80 level. As you know, this market has been closely tied in to the movements of the S&P 500. Overall we still view the trend in this market as negative. Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed up $2.40 a barrel at $85.38 today. Prices closed nearer the session high again today and hit a fresh three week high. Bulls have gained solid upside technical momentum just recently. Prices have rallied around $10.00 a barrel from last week's low. Higher U.S. stock indexes and a sharply lower U.S. dollar index helped to boost the crude oil market again today. The bulls have the near term technical advantage.


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Crude Oil Rallies on Euro Zone Pledge

Trading was light on the holiday that commemorates Christopher Columbus' arrival in the New World, but news from the other side of the Atlantic helped crude oil start the week with a rally.

Light sweet crude oil for November delivery gained nearly three percent Monday, settling at $85.41 a barrel, after the leaders of France and Germany reported progress in developing a comprehensive plan to stabilize the euro zone's economy. The Brent contract price rose at a similar rate, ending the day at $108.95 a barrel.

Presenting a united front during a Sunday press conference in Berlin, French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged to unveil by month's end a complete plan to recapitalize ailing banks, bolster the euro zone's bailout fund and provide financial aid to Greece. Although the announcement was short on specifics, it prompted rallies in equity markets and helped the euro to strengthen against the U.S. dollar. Because crude oil is priced in dollars, a weaker greenback tends to be bullish for oil and other commodities.

The WTI traded within a range from $82.75 to $86.09 while the Brent fluctuated from $105.78 to $109.20.

November natural gas also finished the day higher, gaining 1.7 percent to settle at $3.54 per thousand cubic feet. Natural gas peaked at $3.56 and bottomed out just under $3.46.

Reformulated gasoline for November delivery rose by nearly two percent, settling at $2.70 a gallon after fluctuating from $2.65 to $2.72.


Posted courtesy of Rigzone.Com


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Crude Oil, Natural Gas and Gold Market Commentary For Monday Oct. 10th

Crude oil moved higher this morning along with equities as it extends the rally off last Monday's low. Stochastics and RSI are bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 83.31 are needed to confirm that a short term low has been posted. If November renews this year's decline, the 75% retracement level of the 2009-2011 rally crossing at 72.20 is the next downside target. First resistance is the 20 day moving average crossing at 83.31. Second resistance is the reaction high crossing at 84.77. First support is last Monday's low crossing at 74.95. Second support is the 75% retracement level of the 2009-2011 rally crossing at 72.20. Crude oil pivot point for Monday morning trading is 82.78.

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas extends it's decline off June's high. Stochastics and RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If November extends the aforementioned decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.778 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.645. Second resistance is the 20 day moving average crossing at 3.778. First support is the overnight low crossing at 3.455. Second support is monthly support crossing at 3.225. Natural gas pivot point for Monday trading is 3.517.

Just click here for your FREE trend analysis of UNG, the Natural Gas ETF

Gold extends the trading range of the past nine days. Stochastics and RSI are bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1700.20 are needed to confirm that a short term low has been posted. If December renews the decline off September's, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. First resistance is last Monday's high crossing at 1681.50. Second resistance is the 20 day moving average crossing at 1700.20. First support is September's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20. Gold pivot point for Monday morning trading is 1643.80.

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Phil Flynn: Bail Out Bonanza

Another day, another bailout and yes, bailouts are bullish! Another plan to save Europe and rising expectations of the US economy has oil back on an upward track. Oil got an initial bounce off of a jobs report that seemed to suggest that we are not in a recession. Yet after a surprise downgrade of Italy and Spain, oil took a late drop. Holy Fitch! Yet over the weekend German Chancellor Angel Merkel said that Germany and Spain have a plan to bail out European banks. Well at the very least they have a plan to make a plan and the details will be forthcoming. Huh? Well no matter, enjoy the ride!

Plus there are reports that the French-Belgian bank Dexia agreed to the nationalization of its Belgian banking division and secured 90 billion euros or $121 billion dollars in state guarantees. Now it appears that other banks in Europe will be backed by the governments in an effort to forestall an economic collapse. Bloomberg News reported that Angela Merkel and Nicolas Sarkozy turned their crisis fighting focus to banks, promising a recapitalization blueprint this month that will overtake a 12 week old rescue plan that has yet to be put into place. “We will recapitalize the banks,” the French president said in Berlin yesterday at a joint briefing with the German chancellor without providing details. “We’ll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing.”

Of course the recent drop in crude oil price may cause some to change their long term demand forecasts and their outlook for future production capacity as well! The Saudis announced that they have put on hold their expansion of oil production capacity. The Saudis had planned to add another 2.5 million barrels of day of capacity to meet growing global demand. That would have the Saudi's production capacity at around 15 million barrels per day. The Wall Street Journal reported that Saudi Aramco Chief Executive Khalid Al Falih said, "There is no reason for Saudi Aramco to pursue 15 million barrels (of output capacity),"It is difficult to see (an increase in capacity) because there are too many variables happening," he said. "You've got too many announcements about massive capacity expansions coming out of countries like Brazil, coming out of countries like Iraq.

The market demand is addressed by others." He went on to say, "Our objective is not to grow our production for the sake of growing our production," Falih said, "but to be there for the market if the market needs it, and we are waiting to see what happens on the supply side as well as how demand stabilizes. Our planning horizons are in the decades and most of our investments are investments that will do very well at the end of an economic recession so we will pursue them ... regardless of what happens in Europe or in the U.S.," he said.

Now some peak freaks will claim the real reason is because the Saudis can't raise production because they are running out of oil. Yet the truth is that they are worried that an increase in capacity will put downward pressure on price at a time when global demand is faltering.


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OPEC Likely to Agree to Keep Output Target Unchanged

OPEC’s members are likely to decide to keep their output target for oil unchanged when they meet in December, Iran’s representative to the Organization of Petroleum Exporting Countries said.

Producers and consumers are satisfied with the current price level for crude, Iran’s Governor to OPEC Mohammad Ali Khatibi said, according to Shana, the Iranian Oil Ministry’s news website. “The situation is such that most OPEC members are expected to agree with maintaining the current level of oil production,” Khatibi said.

OPEC is responsible for 40 percent of global oil output, and the group’s 12 members are to meet Dec. 14 in Vienna to review output policy. Iran is OPEC’s second largest producer after Saudi Arabia. When the group last gathered on June 8, Iran and five other members rejected a Saudi proposal to raise output by 1.5 million barrels a day, and the meeting ended without agreement for the first time in at least 20 years.

The average price for OPEC’s main crude oil grades fell below $100 a barrel last week for the first time since Feb. 18, before rising back above that level on Oct. 6. The price for the so called OPEC basket of crudes advanced to $101.63 from $99.90 on Oct. 5, according to OPEC’s website. The basket price is calculated using one key export blend from each of the organization’s members and weighting each according to production.

Before last week, the OPEC price had exceeded $100 since the beginning of 2011. “Prices aren’t expected to fluctuate much,” Khatibi said.


Posted courtesy of Bloomberg News

Oil N' Gold: Crude Oil Weekly Technical Outlook

From the staff at Oil N' Gold.Com, their weekend market update.......

Crude oil breached 75.71 to 74.95 initially last week but that was brief. It then rebounded strongly to as high as 84.00. Initial bias is mildly on the upside this week and further rebound might be seen to 84.77 and above. But there is no change in the bearish view that decline from 114.83 is not finished. Hence, we'd expect upside to be limited well below 90.52 key resistance and bring another fall. Below 79.08 minor support will flip intraday bias back to the downside. Break of 74.95 will target 70 psychological level.

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 target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

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.

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