Let's Take a Look at Why Gold and Silver Collapsed

Did our Trade Triangle Technology get it right on these two metals?

With a Score of -60 on gold this market remains in a trading range. We would not rule out a pullback in gold to the $1,650 level. With our long term monthly Trade Triangle still in a negative red mode, we cannot get 100% excited about this market at the moment. We are not super bearish on this metal, we just need further confirmation with the tools we know are successful in trading gold. Long term term traders should be in short positions in gold with appropriate money management stops.

Gold closed sharply lower on Wednesday [April contract] and below the 20 day moving average crossing at 1745.50 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are diverging and turning bearish signaling that sideways to lower prices are possible near term.

If April renews the rally off December's low, the 75% retracement level of the September-December decline crossing at 1825.20 is the next upside target. First resistance is Tuesday's high crossing at 1792.70. Second resistance is the 75% retracement level of the September-December decline crossing at 1825.20. First support is today's low crossing at 1704.50. Second support is the reaction low crossing at 1652.20.

A possible outside negative engulfing line for silver today, which is surprising given the market action yesterday. We want to be patient and wait to see if this actually happens on Thursday and Friday. Our long term monthly Trade Triangle remains positive on silver. This particular indicator has done extremely well in the past. Long and intermediate term traders should be holding long positions in silver with appropriate money management stops.

Silver posted a key reversal down [May contract for silver] on Wednesday as it consolidates some of the rally off December's low. The low range close set the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 34.306 would confirm that a short term top has been posted.

If May extends the rally off December's low, the 75% retracement level of the August-December decline crossing at 39.521 is the next upside target. First resistance is today's high crossing at 37.580. Second resistance is the 75% retracement level of the August-December decline crossing at 39.521. First support is the 20 day moving average crossing at 34.306. Second support is the reaction low crossing at 32.715.

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Why Has Crude Oil Stalled?

Let's take look at crude oil with a critical eye and find out why this market has stalled.

The crude oil market is now getting into an oversold condition, which may be setting the stage for a perfect buying opportunity. We remain positive on this market. We are expecting oil to regroup over the $105 level and generate enough energy to push it to new highs over the $110 area. We are looking for crude oil to make its highs probably somewhere in the May period.

With a Score of +75, this market is in an emerging trend to the upside. We remain longer term positive on this market. With our monthly and weekly Trade Triangles in a positive mode, we expect we will see further gains in crude oil. All traders should be long this market with appropriate money management stops.

Crude oil closed higher on Wednesday ending a two day correction off last week's high. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 102.52 would confirm that a short term top has been posted.

If April extends this winter's rally, the 2011 high crossing at 114.09 is the next upside target. First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 106.05. Second support is the 20 day moving average crossing at 102.52.

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Musings: Did The Oil Sands Win Over Europeans With Report?

Last week the battle over the "dirty" oil from the oil sands reached a crescendo with the release of a study claiming that on a global scale, oil sands carbon emissions are not as bad as those that would be released by burning all the world's coal resources. Moreover, the study's conclusion shows oil sands emissions are actually less than those from other heavy crude oils being burned.

This report came merely days before a decision requiring greater environmental offsets for use of the fuel was to be rendered by the European Union (EU) Fuel Quality Directive Committee composed of experts from each of the 27 member countries of the EU. This committee was considering a proposal to revise the EU Fuel Quality Directive that has a mandatory target for fuel producers and suppliers to reduce greenhouse gas emissions (CO2) by 6% from 2010 levels by 2020.

The study's conclusion shows oil sands emissions are actually less than those from other heavy crude oils being burned.

While the proposal would not have banned the importation and use of oil sands bitumen, it would have assigned it a carbon footprint that is 23% greater than that of conventional crude oil. This would force users of oil sands bitumen to make significant improvements in their operations to offset the additional carbon emissions or buy green credits from others under the mandatory greenhouse gas reduction target.

For all practical purposes, the ruling would have been the equivalent of a ban. For Canada, this would be a problem as other governments around the world might use the EU determination as grounds to ban or restrict the use of this bitumen. That would shrink the markets available for this rapidly expanding output, with potentially significant implications for Canada's and Alberta's economy and employment.

The Committee failed to approve the policy as the vote was 89 for, 128 against with 128 abstentions. The Committee was using a qualified majority voting system that awards more votes to larger country members. Belgium, Germany, France, Cyprus, the Netherlands, Portugal and the U.K. all abstained. Had the proposal received 255 votes the ruling would have gone immediately into law. The proposal will now be considered in June by the Council of Europe, which is composed of the ministers from the 27 member countries in the EU.....Read the entire "Musings From the Oil Patch" article.

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Is a Short Term Top in for Crude Oil?

Crude oil closed lower due to profit taking on Tuesday as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top might be in or is near.

If April extends this month's rally, the 2011 high crossing at 114.09 is the next upside target. Closes below the 20 day moving average crossing at 102.13 would confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 105.49. Second support is the 20 day moving average crossing at 102.13.

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Crude Oil Declines the Most in Five Weeks

Crude oil fell the most in more than five weeks as U.S. orders for durable goods dropped in January by the most in three years, signaling slower economic growth and lower fuel demand.

Futures declined 1.9 percent in New York as data from the Commerce Department showed bookings for goods meant to last at least three years slumped 4 percent. An Energy Department report tomorrow will show U.S. crude supplies rose to the highest level in five months last week, according to the median of analyst responses in a Bloomberg News survey.

“The durable goods numbers do not paint a picture of robust demand going forward,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re going to see builds in this week’s report, which is also putting downward pressure on prices.”

Read the entire Bloomberg article

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Low Range Close in Crude Oil Gives The Bears Technical Advantage For Tuesday

Crude oil [April contract] posted an inside day with a lower close on Monday as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends this month's rally, the 2011 high crossing at 114.09 is the next upside target. Closes below the 20 day moving average crossing at 101.75 would confirm that a short term top has been posted. First resistance is last Friday's high crossing at 109.95. Second resistance is the 2011 high crossing at 114.09. First support is the 10 day moving average crossing at 104.95. Second support is the 20 day moving average crossing at 101.75.

Natural gas [April contract] closed lower on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If April renews the multi year decline, monthly support crossing at 1.960 is the next downside target. Closes above the reaction high crossing at 2.942 are needed to confirm that a short term low has been posted. First resistance is the reaction high crossing at 2.942. Second resistance is January's high crossing at 3.210. First support is January's low crossing at 2.438. Second support is monthly support crossing at 1.960.

Gold [April contract] closed lower due to profit taking on Monday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends the rally off December's low, the 75% retracement level of the September-December decline crossing at 1825.20 is the next upside target. Closes below the reaction low crossing at 1706.40 are needed to confirm that a short term top has been posted. First resistance is last Thursday's high crossing at 1789.50. Second resistance is the 75% retracement level of the September-December decline crossing at 1825.20. First support is the reaction low crossing at 1706.40. Second support is the reaction low crossing at 1652.20.

What To Expect in the Final Week Of February for Precious Metals, Gold Stocks & Dollar

What To Expect in the Final Week Of February for Precious Metals, Gold Stocks & Dollar

This morning we are seeing the US Dollar index move higher retesting a short term breakdown resistance level. What this means is that the dollar fell below support and is not slowing drifting back up to test the breakdown level. As we all know once a support level is broken it then becomes resistance. So if that holds true with the current move in the dollar we should see stocks and commodities find a short term bottom and continue higher today or tomorrow from the looks of things.

Gold has been pulling back the past couple trading session on light volume which healthy price action. It has done the opposite of what the dollar did above. Gold broke through a key resistance level and is slowly drifting back down to test the breakout level to see if it is support. If so then gold should continue higher in the coming days.

Both silver and gold miner stocks are lagging the price of gold. They have yet to break through their key resistance levels. That being said it could happen an day now as they have both been flirting with that level for a couple trading sessions now.

Crude oil continues to hold up strong and is headed straight for its key resistance levels without any real pullback. Chasing price action like this is not something do often because risk reward is not in your favor. I am staying on the sidelines for oil until I see a setup that has more potential and less risk.

The equities market remains in a strong uptrend at this time. I do feel a 1-3 weeks pause/pullback could take place at any time but in the grand scheme of things we could be only half way through this runaway stock market rally as noted in the video.

The equities market is going to gap down this morning which is typical in a bull market. Remember. in an uptrend the stock market tends to gap lower at the open and close higher into the close. And it’s the opposite in a down trend with stocks gapping higher and sell off through the trading session.

Watch Chris Vermeulens detailed video analysis for this week at The Gold and Oil Guy Videos

Chris Vermeulen
The Gold and Oil Guy .Com

EIA: Asia is the World's Largest Petroleum Consumer

2010

Asia surpassed North America as the largest petroleum consuming region in 2008. Asian demand surged nearly 15 million barrels per day from 1980 to 2010, an increase of 146%. North America's petroleum consumption increased 16% between 1980 and 2010. Global petroleum consumption increased 36%, nearly 23 million barrels per day, during the period.

Together, the Middle Eastern, Central & South American, and African share of total global oil demand grew from 11% in 1980 to 20% in 2010 (see chart below). European demand for petroleum decreased 5% from 1980 to 2010, while consumption in the Former Soviet Union fell 55% in the same period.

Source: U.S. Energy Information Administration, International Energy Statistics.

Note: Percents on graph represent that region's share of global petroleum production in that year. Percents do not sum to 100% for each year because the graph does not include Oceania, which only accounted for 1% of global consumption each year. 

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ONG: Crude Oil Weekly Technical Outlook For Saturday February 25th

From the staff at Oil N Gold......

Crude oil's rally continued last week as expected and reached as high as 109.95 so far. Initial bias remains on the upside this week and current rise should target a test on 114.83 key resistance next. On the downside, below 107.95 minor support will turn bias neutral and bring consolidations first before staging another rise.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

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.

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


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