Crude Oil Bears Take a Clear Near Term Advantage

Crude oil was higher due to short covering in overnight trading as it bounces off the 38% retracement level of the October-November rally crossing at 92.68. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, the 50% retracement level of the October-November rally crossing at 89.37 is the next downside target. Closes above the 20 day moving average crossing at 98.11 are needed confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 98.11. Second resistance is last Tuesday's high crossing at 101.25. First support is the 38% retracement level of the October-November rally crossing at 92.68. Second support is the 50% retracement level of the October-November rally crossing at 89.37. Crude oil pivot point for Monday morning is 93.83.

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ONG: Crude Oil Weekly Technical Outlook For Sunday Dec. 18th

Crude oil dropped to as low as 92.52 last week as correction from 103.37 resumed. Further decline is expected this week as long as 95.99 minor resistance holds. Current fall should extend to 138.2% projection of 103.37 to 94.99 from 102.44 at 90.86. On the upside, above 95.99 will indicate that a temporary low is at least formed and should flip bias back to the upside for rebound back to 100 psychological level and above.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another low below 74.95.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

ONG Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts


Precious Metals, Equities and Crude Oil Long Term Outlook

"Murder Cross" in Silver [SLV] is Starting to Get Some Serious Attention

Silver is not looking good here long term, sure we can get a few bounces upwards but an event occurred two days ago that put the nail in this precious metal coffin for at least a few months and possible a 15% decline, that event is the "Murder Cross".   The murder cross is similar to the "Death Cross" of the 50 ma crossing below the 200 ma but the "Murder Cross" is the 70 ema crossing the 200 ema.  This cross eliminates many of the false signals that the "Death Cross" can give.  Here is a link to a post explaining it more.

SLV or  the Silver ETF has been on a steady decline from its high of 50.  The decline has wiped out almost all of the gains from the 10-11 run up with SLV retracing more the 61.8% of its move and it looks like more of a decline can be instore.  The "Murder Cross" on SLV happened 3 times in the last 20 years in 06, 07 and 08.  In 06 SLV dropped 23% before it bounced, in 07 it dropped 10% and in 08 in dropped 25%.  If we use this historical information it is possible for more of a decline in SLV.   In fact a drop of around 18% or 17% would put SLV right at support and its long term trend line a logical support level. ( see second chart below)

Below is a chart of SLV and it highlights the muder cross.  Right now SLV has been able to find support at the low 28's and high 27's.  This was a crucial level for SLV this level of support lead to the breakout to the high 50's.  The more important support is at 26, this was the swing low before the run up and the last support level for a while.  Resistance for SLV is at 30.06 and 32.50, a retrest of 30 is likely but it will be hard to get above that.   The trendline from 2010 should be the final resting spot for SLV as it would be a price target for the murder cross and is a strong established uptrend for SLV.  SLV is not looking health for a long term buy on a technical level and with the occurrence of the "Murder Cross" there is even more bearish sentiment to this metal.

check out more great post from the Pike Trader at  Pikertrader.com

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EIA: Market Changes Contribute to Growing Marcellus Area Spot Natural Gas Trading

Marcellus-area spot natural gas trading (InterContinentalExchange (ICE) day-ahead transactions) has more than doubled from under 1 billion cubic feet per day (Bcfd) to almost 2 Bcfd on average since 2005 (see chart). The largest gains in Marcellus area trading volumes were at the Tetco M3 trading point, up 178% to 0.5 Bcfd and at the Dominion South trading point, up 168% to 0.7 Bcfd since 2005. Key factors likely contributing to increased natural gas spot trading in the Marcellus area include: rapid increases in Marcellus shale gas production; direct deliveries of Wyoming gas to the Ohio/Pennsylvania border through the Rockies Express Pipeline; and increased use of natural gas for power generation.

Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite.

Note: New Marcellus in the graph includes the Leidy, TGP 219, TGP 313, and TGP Zone 4 Marcellus trading points. 2011 includes data through November.

 Several factors are likely contributing to increased natural gas spot trading in the Marcellus area:

• Marcellus production gains. Bentek Energy, LLC estimates that Marcellus natural gas production now exceeds 4 Bcfd, up significantly in recent years.
• New trading points. In addition to several new Marcellus production area trading points, the extension of the Rockies Express Pipeline (REX) to Clarington, Ohio led to new natural gas trading points formed to facilitate commercial transactions. REX deliveries to Clarington, Ohio averaged over 1 Bcfd from January through December of 2011.
• Greater reliance on natural gas for electricity generation. Falling natural gas prices coupled with historically high spot coal prices created incentives for generators to use more natural gas to fuel their plants. Pennsylvania is one state that has seen significant growth in natural gas-fired electric generation.

Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite. 

Crude Oil? Bah Humbug!

Oil traders need to get visited by the ghosts of Christmas oil trading past, present and future to get that holiday risk taking sprit. Remember those famous Christmas spikes on Iran rumors or when Russia cut off gas supplies to Europe? Yesterday oil traders acted like someone told them there was no Santa Claus the way they pulled in their bull horns and hid from risk.

This is despite the fact that all of the economic data that was released such as weekly jobless claims, the Empire State and Philly Fed Manufacturing numbers and good numbers from FED-EX, should have got the bullish juices flowing, yet after the blood bath the day before, kept traders cautious and fearful. Oh, some Scrooge may point out that the Industrial Production number had a lot to be desired but the preponderance of the evidence suggests that the US economy is indeed improving.

Of course we know what the problem is. The problem is Europe. Europe continues to miss opportunities to try to set the market straight as their aversion to stimulus and euro bonds is holding us back. You can be pro quantitative easing or anti quantitative easing but based on the US data, compare the US debt with record low yields against Europe with record high yields, at least for now quantitative easing seems to be working better than the European inflation aversion. Ben Bernanke may be smiling......Read the entire article.

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Adam Hewison: Five Ways to Improve Your Trading During “Silly Season”

About a year ago I wrote a blog on the “silly season,” as I call it. The silly season starts on December 15 and extends through the first week of January. The silly season has nothing to do with telling jokes and laughing at funny things, but everything to do with trading.

Trading is a serious business. If you want to be successful you have to practice, just like an athlete would. I don’t think there is an athlete out there who just woke up and said I’m going to be a world class athlete and achieved that goal without practicing.

After December 15 most successful traders who made their money during the year are headed to either Florida, Palm Springs, or just taking a break to spend time with family. What makes the silly season, silly?

It has everything to do with the lack of volume in trading. When you have very little volume it is easy for markets to be, forgive me because I am about to say the M word – manipulated – by just a few traders. You do not want to be ending your year at the mercy of markets that are erratic at best. You may as well just head out to Las Vegas and take a shot at the roulette wheel.

So how can you avoid this trading trap? Here’s what I do every year.....

After the 15th I close out all of my positions win, lose, or draw, and say thank you very much for another good year. Once I have cleared my trading book I’m free to enjoy the silly season without falling prey to the big M. I let the markets be the markets, because I know they will be there next year and I want to be prepared physically and mentally to take advantage of them.

That being said, here are my five key recommendations for you during silly season.....

1. Enjoy time with your family and friends.

2. Be appreciative what you have, not what you don’t have. There are a lot more folks that have a whole lot less than you than folks who have more.

3. Give something back. It doesn’t matter what it is, or how small, give something back; it will make you feel good.

4. Enjoy the season. Forget about the markets they will be there next year.

5. Take some quiet time for yourself to regenerate your spirit.

For me, number 5 means sitting in a quiet room by myself and thinking about all of the different things that have happened in the past year. Doing this keeps me grounded and prepares me for the year ahead. This quiet time helps me put everything into perspective and gets me in the right frame of mind for trading in the New Year. This quiet time restores your inner strength, which is something you need in trading.

So there you have it. That is how I avoid silly season and prepare myself for the new trading year.

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Bears Maintain Near Term Technical Advantage Going Into Fridays Session

Crude oil closed lower on Thursday as it extends Wednesday's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If January extends this week's decline, the 38% retracement level of the October-November rally crossing at 92.68 is the next downside target.

Closes above Tuesday's high crossing at 101.25 would confirm that a short term low has been posted. First resistance is Tuesday's high crossing at 101.25. Second resistance is November's high crossing at 102.44. First support is the 38% retracement level of the October-November rally crossing at 92.68. Second support is the 50% retracement level of the October-November rally crossing at 89.37.

Precious Metals, Equities and Crude Oil Long Term Outlook

Precious Metals, Equities and Crude Oil Long Term Outlook Part II

It’s that time of year again and I’m not talking about the holiday season...... What I am talking about is another major market correction which has been starting to unfold over the past couple weeks.

I have a much different outlook on the markets than everyone else and likely you as well. However, before you stop reading what I have to say hear me out. My outlook and opinion is based strictly on price, volume, inter market analysis, and crowd behavior and you should put some thought as to what I am saying into your current positions.

Two weeks ago I sent my big picture outlook to my subscribers, followers, and financial websites warning of a major pullback. You can take a quick look at what the charts looked like 2 weeks ago...... 

"The Currency War Big Picture Analysis for Gold, Silver & Stocks"

Since my warning we have seen the financial markets fall:
SP500  down 2.6%
Crude Oil down 4.4%
Gold down 9.6%
and Silver down 12.2%

If you applied any leverage to these then you could double or triple these returns through the use of leveraged exchange traded funds. The amount of followers cashing in on these pullbacks has been very exciting to hear. The exciting part about trading is the fact that moves like this happen all the time so if you missed this one, don’t worry because there is another opportunity just around the corner.

While my negative view on stocks and precious metals will rub the gold and silver bugs the wrong way, I just want to point out what is unfolding so everyone sees both sides of the trade. I also would like to mention that this analysis can, and likely will change on a weekly basis as the financial markets and global economy evolves over time. The point I am trying to get across is that I am not a “Gloom and Doom” kind of guy and I don’t always favor the down side. Rather, I am a technical trader simply providing my analysis and odds for what to expect next.

Let’s take a look at some charts and dig right i........

Dollar Index Daily Chart:

 

SP500 Futures Index Daily Chart:

Silver Futures Daily Chart:

Gold Futures Daily Chart:

Crude Oil Futures Daily Chart:

Mid-Week Market Madness Trend Analysis Conclusion:

In short, stocks and commodities are under pressure from the rising dollar. We have already seen a sizable pullback but there may be more to come in the next few trading sessions.

Overall, the charts are starting to look very negative which the majority of traders/investors around the world are starting to notice. With any luck they will fuel the market with more selling pressure pushing positions that my subscribers and I are holding deeper into the money.

Now that the masses are starting to get nervous and are beginning to sell out of their positions, I am on high alert for a panic washout selling day. This occurs when everyone around the world panics at the same time and bails out of their long positions. Prices drop sharply, volume shoots through the roof, and my custom indicators for spotting extreme sentiment levels sends me an alert to start covering my shorts and tightening our stops.

Hold on tight as this could be a crazy few trading session........

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Chris Vermeulen

OPEC Agrees to 30 Million Barrel Output Limit

OPEC decided to increase its production ceiling to 30 million barrels a day, the first change in three years, moving the group’s supply target nearer to current output. “We have an agreement to maintain the market in balance and we’re going to adjust the level of production of each country to open space for Libyan production,” Venezuelan Energy Minister Rafael Ramirez said after the Organization of Petroleum Exporting Countries meeting ended today in Vienna.

The group won’t set individual quotas for each member nation, a person with knowledge of OPEC policy said earlier today while the ministers were still in talks. The 30 million barrel a day limit is for all of OPEC’s 12 member nations, including Iraq and Libya, United Arab Emirates Oil Minister Mohamed al-Hamli said after the meeting ended.

OPEC is raising its quota to more closely match actual production while at the same time gauging the possibility of a slowing global economy and rising Libyan supply. Its last meeting in June broke up without consensus when six members including Iran and Venezuela opposed a formal push to pump more oil by Saudi Arabia and three.....Read the entire Bloomberg article.


The Currency War Big Picture Analysis for Gold, Silver & Stocks

Crude Jumps On False Iran Rumor, But Holds Onto Gains

Crude oil futures leapt more than three percent in just minutes Tuesday on a market rumor that Iran closed a major oil shipping channel, but then pared gains as the rumor proved untrue.

According to the rumor, the Iranian government closed the Strait of Hormuz. The strait, located between Iran and Oman, is the most important oil shipping channel in the world, handling about 33% of all ocean borne traded oil, according to the U.S. Energy Information Administration.

The rumor was picked up on financial blogs and a handful of news web sites, and sent Nymex crude futures rocketing as high as 3.6% over Monday's settlement, to $101.25 a barrel.

An Iranian official later dismissed the rumor, and a spokeswoman for the U.S. Navy's 5th fleet in Bahrain said shipping traffic in the strait was flowing normally. The rumor appeared to be founded on a news item from Monday afternoon, in which a member of the Iranian parliament said its military was preparing to practice closing the straight......Read the entire Rigzone article.


How to Trade Using Market Sentiment & the Holiday Season