ONG: Crude Oil Weekly Technical Outlook

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Crude oil dropped further to as low as 90.93 last week and broke mentioned 92.52 support. Initial bias remains on the downside this week and further fall should be seen to 61.8% retracement of 74.95 to 100.55 at 88.55. Strong support is anticipated at this 88.55 fibonacci level to bring rebound. On the upside, above 94.16 minor resistance will turn bias neutral and bring recovery. But upside should be limited by 100.68 support turned resistance and bring another fall.

In the bigger picture, price actions from 114.84 are developing into a three wave consolidation pattern. And, the third leg should have already started at 110.55. Deeper fall should eventually be seen to 74.95 low and possibly below. Though, we'd likely see strong support from 64.23 cluster level, 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise. Hence we'll look for reversal signal 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.

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

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It's a Wrap....Energy Futures End The Week Down

Make sure you understand the simple truth about trends.

The energy futures are down once again today and trading right near the lows of the trading week with crude oil down another $1.35 this Friday morning due to more pessimism about the European debt situation causing prices to be down around $5 dollars for the trading week from last Fridays closing price of 96.50 down around 4% for the week while unleaded gasoline for the June contract is higher by 150 points currently trading at 2.90 a gallon in a quiet trade so far in New York.

Heating oil futures are down slightly currently trading at 2.84 a gallon also sliding for the week around 1200 points from last Fridays close of 2.96 a gallon and in our opinion, like we have been stating in previous blogs, if you look back at 2010 when this problem came up for the first time crude oil prices plummeted on that news and then rebounded later in the year so prices are still relatively high if the situation gets worse but only time will tell.

Natural gas futures are sharply higher once again today up another 14 points in the June contract to seven week highs at 2.74 with renewed optimism that demand will come back into this market with the next major level of resistance around 2.90.

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Phil Flynn: Quantitative Conundrum

10,000 Trades have viewed this video this morning.... Here is the simple truth about trends

Gold and silver soars and oil sinks in what can be best described as a quantitative easing conundrum. Many people were confused how gold might rally after briefly dipping in bear market territory after the dollar rallied for a record 14 days. The day after the Fed minutes showed that several Fed Officials would be open to more economic stimulus if the economy turned worse all of a sudden it seemed that indeed thinks look worse.

Against a backdrop of Europe coming apart at the seams somehow contraction in the Philly Fed Manufacturing Index and Leading Economic Indicators that are leading us in the wrong direction the odds of quantitative easing are rising Howard Packowitz at Dow Jones “The Wizard of Fed Fund Future Odds” showed that Fed funds futures traders now believe that the FOMC will wait two years or longer before it begins raising the funds rate.

Packowitz pointed out that trading volume heavier than usual for longer dated contracts as July 2014 fed funds price in a 40% chance for the Fed to boost the rate to 0.5% by then, down from a 44% chance at Wednesday's settlement. November '14 fed funds see 88% chance for a 0.5% rate, down from a 96% chance at Wednesday's settlement.

Yet while those odds rise the dollar rises as it is clear that it won’t just be the US that will have to come to the printing presses. The pressure on governments around the globe are clear in the currency differentials as the British Pound and Euro falls and yen rises. China and other markets may have to stimulate. Gold now is pricing in easing.

The Brent Crude WTI spread came in as Japan announced the restart of some nuke plants and the historic reversal of the Seaway pipeline is ready to begin!

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Crude Oil May Fall as Seaway May Prove Insufficient to Ease Glut

Here is the simple truth about trends

Crude oil may decline next week on concern that the reversal of the Seaway Pipeline will not be enough to alleviate a record supply glut in the central U.S., a Bloomberg survey showed.

Nineteen of 34 analysts, or 56 percent, forecast oil will drop through May 25. Nine respondents, or 26 percent, predicted prices will rise and six estimated they will be little changed. Last week, 48 percent of surveyed analysts expected a decrease.

Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD) completed the pipeline reversal yesterday and plan to start shipping oil this weekend from Cushing, Oklahoma, the delivery point for West Texas Intermediate oil futures traded in New York, to the Gulf Coast. U.S. oil inventories rose to a 22 year high and Cushing stockpiles peaked in the week ended May 11 as domestic output increased, according to the Energy Department.....Read the entire Bloomberg article.


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Crude Oil Falls Below 50% Retracement Level, Gold Bounces on Short Covering

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Crude oil closed lower on Thursday extending this week's breakout below the 50% retracement level of the 2011-2012 rally crossing at 93.99. The low range close sets the stage for a steady to lower opening on Friday.

Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If June extends this month's decline, the 62% retracement level of the 2011-2012 rally crossing at 89.90 is the next downside target. Closes above the 20 day moving average crossing at 100.02 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 95.75. Second resistance is the 20 day moving average crossing at 100.02. First support is Wednesday's low crossing at 91.81. Second support is the 62% retracement level of the 2011-2012 rally crossing at 89.90.

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Natural gas closed lower due to light profit taking on Thursday. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally off last week's low, the 25% retracement level of the 2011-2012 decline crossing at 2.757 is the next upside target. Closes below the 20 day moving average crossing at 2.327 would signal that a short term top has been posted.

First resistance is today's high crossing at 2.676. Second resistance is the 25% retracement level of the 2011-2012 decline crossing at 2.757. First support is the 10 day moving average crossing at 2.464. Second support is the 20 day moving average crossing at 2.327.

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Gold closed higher due to short covering on Thursday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Friday.

Stochastics and the RSI are oversold but remain neutral to bearish signaling sideways to lower prices are possible near term. If June extends the decline off February's high, the 38% retracement level of the 2008-2011 rally crossing at 1487.50 is the next downside target. Closes above the 20 day moving average crossing at 1619.60 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 1589.00. Second resistance is the 20 day moving average crossing at 1619.60. First support is Wednesday's low crossing at 1526.70. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1487.50.

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Gold Bulls Continue to Get Bad News, Now it's Lack of Physical Demand

Here is the simple truth about trends

Jon Nadler, senior analyst at Kitco.com, says the demand for physical gold has plummeted and smaller miners may need to alter their plans.



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King Dollar Dominates, Crude Oil and Gold Continues the Free Fall

E-Minis Unfair Advantage....Have You Watch This Yet?

Crude oil closed down $1.23 a barrel at $92.75 today. Prices closed near mid range today and hit a fresh 6 1/2 month low. The bears have the solid overall near term technical advantage. A stronger U.S. dollar index today was again bearish for the crude market.

Natural gas closed up 12 1/2 cents at $2.625 today. Prices closed near the session high again today and hit a fresh 10 week high. More short covering and bargain hunting buying were featured today. The bulls have upside near term technical momentum. The bears do still have the slight overall near term technical advantage, however.

The U.S. dollar index closed up 14 points at 81.52 today. Prices closed near mid range today and hit another fresh four month high. More safe haven buying of the greenback was seen today. Bulls have gained solid upside near term technical momentum and have the solid overall near term technical advantage.

Gold futures closed down $25.20 an ounce at $1,531.70 today. Prices closed nearer the session low today and hit a fresh 10 month low. The key “outside markets” were again in a bearish posture for gold today, as the U.S. dollar index was higher and the crude oil market was lower. Serious near term chart damage has been inflicted recently. Now, gold prices are nearing major psychological support at the $1,500.00 level.

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Petrobras Quarterly Profit Beats Estimates on Export Growth

E-Minis Unfair Advantage....Have You Watch This Yet?

Petroleo Brasileiro SA (PETR4), the world’s biggest oil producer in deep waters, said first quarter profit topped analysts’ expectations because of increased revenue from crude exports and higher fuel prices.

Net income dropped 16 percent to 9.2 billion reais ($4.6 billion), or 71 centavos a share, from 10.99 billion reais, or 84 centavos, a year earlier, Brazil’s state controlled producer said late yesterday. Per share profit beat the 64 centavo average of four analysts’ estimates compiled by Bloomberg.

Petrobras increased prices for gasoline and diesel by 10 percent and 2 percent, respectively, on Nov. 1. The first boost in more than three years reduced the discount to international prices. Oil exports rose 20 percent to 497,000 barrels a day after the company sold inventories it accumulated in late 2011, Petrobras said in a regulatory filing.

“The company’s increase in oil exports and its use of inventories at lower prices mainly explained the better than expected operating performance in the period,” Bradesco SA analysts led by Auro Rozenbaum said in a note to clients distributed today.

Read the entire Bloomberg article




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Exiting an Option Position

From guest blogger Todd Mitchell.......

Once you own options, there are three methods that can be used to make a profit or avoid loss: exercise them, offset them with other options, or let them expire worthless. By exercising what you have purchased, you are choosing to take delivery of (call) or to sell (put) the underlying asset at the option’s strike price. Only buyers have the choice to exercise an option. Sellers, on the other hand, may experience having an option assigned to a holder and subsequently exercised.

Offsetting is a method of reversing the original transaction to exit the trade. If you bought a call, you have to sell the call with the same strike price and expiration. If you sold a call, you have to buy a call with the same strike price and expiration. If you bought a put, you have to sell a put with the same strike price and expiration. If you sold a put you have to buy a put with the same strike price and expiration. If you do not offset your position, then you have not officially exited the trade.

If an option has not been offset or exercised by expiration, it expires worthless. If you originally sold an option, then you want it to expire worthless because then you get to keep the credit you received from the premium. Since a seller wants options to expire worthless, the passage of time is a seller’s friend and a buyer’s enemy. If you bought, the premium is nonrefundable even if you let the it expire worthless. As it gets closer to expiration, it decreases in value.

It is Important to note that most options traded on u.s. exchanges are American style. In essence, they differ from European options in one main way. American style options can be exercised at any time up until expiration. In contrast, European style options can be exercised only on the day they expire. All the options of one type (put or call) which have the same underlying security are called a class of options. For example, all the calls on ibm constitute a class. All the options that are in one class and have the same strike price are called a series. For example, all ibm calls with a strike price of 130 (and various expiration dates) constitute a series.

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Crude Oil and Gold Continue Strong Down Trend, Natural Gas Enjoys the Stronger Dollar

Rags to riches, don't miss this short cut!

Crude oil closed down $1.70 a barrel at $93.08 today. Prices closed near the session low today and hit a fresh 6 1/2 month low. The bears have the solid overall near term technical advantage and gained still more power today. A stronger U.S. dollar index today was bearish for the crude market. With a Trade Triangle Technology Score of -100, this market is in a strong downtrend. All traders should be in short positions in crude oil with appropriate money management stops.

Natural gas closed up 7.0 cents at $2.501 today benefiting from the U.S. Dollars solid upside and near term momentum and overall near term advantage over other currencies. Natural gas prices closed near the session high today and saw short covering. And while the nat gas bulls still have some upside "near term" technical momentum, the nat gas bears do still have the overall near term technical advantage, however.

Gold futures closed down $4.20 an ounce at $1,556.80 today. Prices closed near mid-range today and hit another fresh 4 1/2 month low. The key “outside markets” were again in a bearish posture for gold today, as the U.S. dollar index was higher and the crude oil market was lower. Serious near term chart damage has been inflicted recently. Gold bears have the solid near term technical advantage. With a Trade Triangle Technology Score of -90, the gold market is in a strong downtrend. All traders should still be in short positions in gold with appropriate money management stops.

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