COT Market Summary for Wednesday Sept.11th - Crude Oil, Natural Gas, SP 500, Gold and Coffee

October crude oil closed higher due to short covering on Wednesday as it consolidates some of this week's decline. The high range close sets the stage for a steady to higher opening when Thursday's night session begins. Stochastics and the RSI are turning neutral to bearish hinting that sideways to lower prices are possible near term. Multiple closes below the 20 day moving average crossing at 107.45 are needed to confirm that a short term top has been posted. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. First resistance is August's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 107.45. Second support is the reaction low crossing at 103.50.

Here's why the eMini is fast becoming our favorite market

October Henry natural gas closed lower on Wednesday. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 3.543 would confirm that a short term top has been posted while opening the door for additional weakness near term. If October renews the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.543. Second support is August's low crossing at 3.154.

Ready to start trading crude oil? Start right here....Advanced Crude Oil Study – 15 Minute Range

The December S&P 500 closed higher on Wednesday as it extends the rally off August's low. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the reaction high crossing at 1684.40 is the next upside target. Closes below the 20 day moving average crossing at 1646.12 would confirm that a short term top has been posted. First resistance is today's high crossing at 1680.70. Second resistance is the reaction high crossing at 1684.40. First support is the 20 day moving average crossing at 1646.12. Second support is August's low crossing at 1621.00.

Advanced Swing Trading methods from one of my favorite hedge fund managers. For free!

October gold closed lower on Wednesday extending yesterday's breakout below the 20 day moving average. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If October extends this week's decline, the reaction low crossing at 1351.60 is the next downside target. Closes above the 10 day moving average crossing at 1390.00 would temper the near term bearish outlook. First resistance is the reaction high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the reaction low crossing at 1351.60. Second resistance is August's low crossing at 1272.10.

How to Trade Small Cap Stocks and 3x ETF's Current

And we just can't help ourselves.....December coffee closed higher on Wednesday and above the 20 day moving average crossing at 118.88 confirming that a low has been posted. The high range close set the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends today's rally, August's high crossing at 12.70 is the next upside target.

Subscribe to our Free Market Technical Analysis and Commentary

Trading the eMinis....a lot easier then you think - New Video

Many traders are CRUSHING it in the eMinis right now! At the same time, far more traders are gripped with fear and struggling just to break even. The difference?

Trade with confidence and consistency

As you know, you build both when you understand the best times of the day to trade, and how to avoid the common mistakes and 'hidden' pitfalls that prevent consistent profits.

Trading veteran Todd Mitchell of Trading Concepts just came out with a video training that shows the hurdles holding back most traders from making money (using his actual charts!)

Watch closely as he shows you how to pull predictable profits from the eMinis while only using a single chart! The knowledge he shares will shortcut your learning curve and help you avoid falling victim to shady advice.

When you watch the video, I'm almost certain you'll uncover several nuggets of wisdom for eliminating mistakes that will cost you profits. This is not just about gain, it's about acting prudently to prevent and avoid financial pain!

Watch "eMini Trading Strategies, Tips and Techniques"

COT Market Summary for Tuesday September 10th - Crude Oil, Natural Gas, SP 500, Gold and Coffee

October crude oil closed lower on Tuesday and below the 20 day moving average crossing at 107.38. Multiple closes below the 20 day moving average would confirm that a short term top has been posted while opening the door for additional weakness near term. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. First resistance is August's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 107.38. Second support is the reaction low crossing at 103.50.

Check out our very interesting approach to eMini trading....Great Video

October Henry natural gas closed lower on Tuesday. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 3.530 would confirm that a short term top has been posted while opening the door for additional weakness near term. If October renews the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.530. Second support is August's low crossing at 3.154.

Day Trading History of 16 Major Candlestick Patterns

The December S&P 500 gapped up and closed higher on Tuesday as it extends the rally off August's low. The high-range close sets the stage for a steady to higher opening when Wednesday's night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the reaction high crossing at 1684.40 is the next upside target. Closes below the 10 day moving average crossing at 1640.95 would confirm that a short term top has been posted. First resistance is today's high crossing at 1675.00. Second resistance is the reaction high crossing at 1684.40. First support is the 10 day moving average crossing at 1640.95. Second support is August's low crossing at 1621.00.

How to Trade Small Cap Stocks and 3x ETF's Current Setups

October gold closed lower on Tuesday and below the 20 day moving average crossing at 1380.50 confirming that a short term low has been posted. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If October extends today's decline, the reaction low crossing at 1351.60 is the next downside target. Closes above the 10 day moving average crossing at 1395.70 would temper the near term bearish outlook. First resistance is the reaction high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the reaction low crossing at 1351.60. Second resistance is August's low crossing at 1272.10.

6 Things Successful Traders Have in Common

December coffee closed lower on Tuesday. The low range close set the stage for a steady to lower opening on Wednesday. Stochastics and the RSI have turned bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 118.99 would confirm that a low has been posted.

Subscribe to our Free Market Technical Analysis and Commentary

The Best eMini Short Cut EVER!

Here's the real reason why E-Minis are the secret money making weapon behind the greatest names in trading.

Let’s be honest, a lot of  the “free” trading videos are a complete waste of time, with presenters blowing a bunch of hot air. Right?

A few folks offer some interesting info but most leave out all the good stuff.

Then there is my good friend and trading partner Todd Mitchell who put together this great video.
In his latest video Todd makes his theory on the eMinis unfair advantage perfectly clear.

1,000's of traders will see the video this morning with many people claiming his free material that is worth much more than other courses they’ve paid for.

That’s why I insist you watch this.

Great content. Simple strategies. Very interesting approach.

Watch "Todd's Emini Success Formula" 

Please feel free to leave a comment and let us know what you think about the video


Ray @ The Crude Oil Trader

COT Market Summary for Monday - Crude Oil, Natural Gas, SP 500, Gold and Coffee

October crude oil posted an inside day with a lower close on Monday as it consolidated some of the rally off April's low. The low range close sets the stage for a steady to lower opening when Tuesday's night session begins. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. Closes below the 20 day moving average crossing at 107.28 are needed to confirm that a short term top has been posted. First resistance is August's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 107.28. Second support is the reaction low crossing at 103.50.

Ready to start trading crude oil? Start right here....Advanced Crude Oil Study – 15 Minute Range

October Henry natural gas closed higher due to short covering on Monday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20-day moving average crossing at 3.518 would confirm that a short term top has been posted. If October renews the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.518. Second support is August's low crossing at 3.154.

How to Trade Small Cap Stocks and 3x ETF's Current Setups

The December S&P 500 closed higher on Monday and above the 20 day moving average crossing at 1646.62 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening when Tuesday's night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the reaction high crossing at 1684.40 is the next upside target. Closes below the 10 day moving average crossing at 1638.32 would confirm that a short term top has been posted. First resistance is today's high crossing at 1662.00. Second resistance is the reaction high crossing at 1684.40. First support is the 10 day moving average crossing at 1638.32. Second support is August's low crossing at 1621.00.

Advanced Swing Trading methods from one of my favorite hedge fund managers. For free!

October gold closed lower on Monday. The low range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If October extends last week's decline, the reaction low crossing at 1351.60 is the next downside target. Closes above the 10 day moving average crossing at 1398.60 would temper the near term bearish outlook. First resistance is the reaction high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the reaction low crossing at 1351.60. Second resistance is August's low crossing at 1272.10.

The Gold & Oil Guys new Gold, Silver, & Mining Stocks Trade Setups

December coffee closed unchanged on Monday. The mid range close set the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 119.46 would confirm that a low has been posted.

Click Here to Subscribe to our Free Market Technical Analysis and Commentary

COT Week Ending Market Summary - Crude Oil, Natural Gas, SP 500, Gold & Coffee

October crude oil closed higher on Friday and is poised to extend the rally off April's low. The high range close sets the stage for a steady to higher opening when Monday's night session begins. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. Closes below the 20 day moving average crossing at 107.08 are needed to confirm that a short term top has been posted. First resistance is last Wednesday's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 107.08. Second support is the reaction low crossing at 103.50.

Ready to start trading crude oil? Start right here....Advanced Crude Oil Study – 15 Minute Range

October Henry natural gas closed lower on Friday confirming Thursday's key reversal down. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but are turning neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 3.500 would confirm that a short term top has been posted. If October renews the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.500. Second support is August's low crossing at 3.154.

Subscribe to our Free Market Technical Analysis and Commentary

The September S&P 500 closed higher on Friday and above the 20 day moving average crossing at 1654.38 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If September extends the rally off August's low, the reaction high crossing at 1667.00 is the next upside target. If September renews the decline off August's high, the 62% retracement level of the June-August rally crossing at 1611.47 is the next downside target. First resistance is today's high crossing at 1663.80. Second resistance is the reaction high crossing at 1667.00. First support is August's low crossing at 1625.00. Second support is the 62% retracement level of the June-August rally crossing at 1611.47.

How to Trade Small Cap Stocks and 3x ETF's Current Setups

October gold closed higher due to short covering on Friday. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If October extends this week's decline, the reaction low crossing at 1351.60 is the next downside target. Closes above the 10 day moving average crossing at 1399.90 would temper the near term bearish outlook. First resistance is last Wednesday's high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the reaction low crossing at 1351.60. Second resistance is August's low crossing at 1272.10.

Here's our New Gold, Silver & Mining Stocks Trade Setups

And you we can't help ourselves.....Our "lowly" September coffee closed higher on Friday as it consolidated some of this week's decline. The mid range close set the stage for a steady to higher opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends this summer's decline, monthly support crossing at 10.21 is the next downside target. Closes above the 20 day moving average crossing at 116.24 would confirm that a low has been posted.

Michelle "Mish" Schnieders new free eBook. Download now, and get "Mish's Daily" insight to the next moves!

How Fed Policy Has Devastated Three Generations of Retirees

By Dennis Miller

One aspect of the American Dream has always been the prospect of enjoying one's golden years in retired bliss. And while everyone knows that the rules of the game have been subject to change over the years, the recent, unprecedented changes in fiscal policy have proved to be a virtual wrecking ball to Americans' retirement dreams.

Over the past few years, the Federal Reserve has moved from simple interest rate manipulation to wholesale market interference with the goal of maintaining bank solvency and equity prices. This steamroller style interference in the markets has had massive consequences. And not just for the Baby Boomers who are now hitting retirement age, but also for their children and children's children—three American generations whose retirement hopes have been left to swing in the wind on a string of broken promises.

Baby Boomers Get Their Risk On

 

The Baby Boomer generation (born 1946 – 1964) is quite used to adjusting to ever-changing conditions when it comes to retirement.

For decades, receiving a pension was what one looked forward to for their old age. But as you can see in the chart below, at least in the private sector that idea has become as extinct as a T-rex.



Its replacement became the 401(k) and the IRA—tax-deferred vehicles that let savers take control of their own retirement, for better or worse.

Granted, Americans have built up a sizable nest egg in these defined-contribution retirement accounts—more than $5.4 trillion in IRAs alone—but the cumulative savings fail to tell the larger story. The dire truth is that Baby Boomers are caught in a trap, simultaneously trying to preserve capital and generate yield through wild market swings like 2000's massive crash, 2008's 30% correction, and 2010's flash crash.

The market's frequent large "corrections" have had a sobering effect on Boomers' investment behavior. In an attempt to avoid the swings while still making money to live off, Boomers have flooded the bond market with money and significantly reduced their stock market exposure.

As you can see in the right-most bars on the graph above, Boomers who are in their sixties today have significantly reduced the weighting of equities in their portfolios over the last decade—much more so than their peers of just 10 years earlier.

It's true that since the bursting of the housing bubble in 2007, major indexes have recovered to a point where anyone who stayed put after the crash should have been made whole again. Yet the actual market participation by the Boomers has been considerably lower—thrice bitten, twice shy—meaning many missed out on the equity market's recovery.

Instead, hundreds of billions of dollars flowed into the bond markets over the past five years, as evidenced by the $50 billion upswing in bond ETF assets in 2012, and the $125 billion in bond-based mutual fund net inflows over the same period.



Following a protective instinct, conservative investors shifted their money from stocks to bonds… at exactly the time interest rates were rapidly falling for most classes of income investments.

Boomers have suffered more losses and settled for lower income than ever before. The double whammy took a serious toll on the retirement dreams of many. But that was OK, because there was always Social Security as a backstop.

It's become increasingly obvious, though, that Social Security is not keeping up with the times.

By tying its payouts to the Consumer Price Index (CPI)—a measure as flawed at predicting actual consumer prices as a groundhog at predicting the weather (a consumer price that doesn't include fuel or food?)—as a net effect, the real value of Social Security payouts has shrunk dramatically.

Here's a chart of official consumer inflation vs. the real numbers calculated by economist John Williams of ShadowStats (he uses the US government's unadulterated accounting methods of the 1980s). While the official number is 2%, real inflation is in the 9% range.



Washington has been cutting Social Security payments for years, just in a way that wasn't obvious to most newscasters and taxpayers—at least not until it was time to collect, as increasing numbers of Boomers now are.

Between the downfall of the pension, Boomers' eschewing of the stock market, and the government's zero interest rate policy, for many Americans retiring in their sixties has become little more than wishful thinking—and a financially comfortable retirement now requires taking significantly more risk than most are willing or able to handle.

Generation X Strikes Out

 

Traditionally, the 45-55 age group has been the most fervent retirement savers, but that has changed drastically in the last 25 years. As you can see in this chart, the most rapid declines in participation rate for the black line (age 45-54) coincide with major dips in the market, such as in 2001 and 2007.



To make matters worse, Gen-Xers (born 1965 – 1980) are also the most debt-ridden generation of the past century.

According to the Pew Research Center, Gen-Xers and Baby Boomers alike have much lower asset-to-debt ratios than older groups. Whereas War and Depression babies got rid of debt over the past 20 years, Boomers and Gen-Xers were adding to their load:

• War babies: 27x more assets than debt
• Late Boomers: 4x more assets than debt
• Gen-Xers: 2x more assets than debt

That situation deteriorated further in the last six years; while all groups lost money in the Great Recession, the Gen-Xers were the hardest-hit.

As Early and Late Boomers struggled with asset depreciation of 28% and 25%, respectively, Gen-Xers lost almost half (45%) of their already smaller wealth. They also lost 27% of home equity during the crisis, the largest percentage loss of the groups studied by Pew.

 

Millennials: Down a Well and Refusing the Rope

 

The effects of a prolonged period of low interest rates on current and near-term retirees are obvious. But the long-term effects on those now in their early years of working and saving may be much greater.

We've all been taught about the power of compound interest. Put away $10,000 today, compounding at 7%, and in 20 years you have about $40,000 and in 30 years nearly $80,000.

As powerful a tool as long-term compounding is, though, nothing can cut the legs out from under it more than saving less early on or earning less in the first few years. Any small change to the input has a drastic effect on what comes out the far end.

The Millennials—those born between 1981 and 2000—are suffering from both right now. It's no secret that interest rates are low, and there is little that their generation, whose oldest members are now in their early thirties, can do about it.

Shrinking interest rates are wreaking real havoc on the Boomers' children, extending the time to retirement for that generation by nearly a decade.

Why would any politician pass legislation to change Social Security eligibility, a measure that usually doesn't bode well for reelection, if they can simply rely on fiscal policy to accomplish the same net effect?
To make matters worse, the years of financial turmoil, a tough post-college job market, high levels of student loans, and numerous other factors have kept most Millennials out of the stock markets.

Millennials are far less likely to open a retirement savings account than previous generations.  According to a recent Wells Fargo survey, "In companies that do not automatically enroll eligible employees, just 13.4% of Millennials participate in the plan."

This is worse even than the number EBRI collected in the graph presented earlier, which still pegged retirement plan participation rates at all-time lows for the 20-something set. Only a small percentage of Millennials are taking even the most basic step toward taking charge of their own retirement.

With their parents and grandparents showing them the failure of the pension system and Social Security first-hand, one would think the opposite might be true. But the numbers clearly show that Millennials are less interested in saving for their future retirement than their parents were.
Having seen it happen to their own grandparents, maybe they are just resigned to the idea that they'll have to work well into their golden years anyway. And who could blame their generation for not trusting the stock markets with their capital after seeing what happened to their parents’ nest eggs so many times during their own childhoods?

The youngest working generation is eschewing investment, at what might be a great cost down the road.

Adapt to Survive

 

Multiple years of shrinking interest rates, thanks to heavy bond buying by the Federal Reserve in its Quantitative Easing program, have taken an immense toll on generations of savers. The increased risk that current and future retirees have to take on to meet their income needs has left many shaken and financially insecure.

As a result, many are now looking to new strategies to make up for the shortfall the Fed's zero interest rate policy has created—shifting their focus from bonds to dividend-paying stocks and adapting as they go along.
Dennis Miller is a noted financial author and “retirement mentor,” a columnist for CBS Market Watch, and editor of Miller’s Money Forever (www.millersmoney.com), an independent guide for investors of all ages on the ins and outs of retirement finance—from building an income portfolio to evaluating financial advisors, annuities, insurance options, and more.  He also recently participated alongside John Stossel and David Walker in America’s Broken Promise, an online video event that premieres Thursday, September 5^th.
 
Like Outside the Box?

Sign up today and get each new issue delivered free to your inbox.

It's your opportunity to get the news John Mauldin thinks matters most to your finances.


© 2013 Mauldin Economics. All Rights Reserved.

6 Successful Trader Things In Common

Crude Oil Bulls Gain Momentum Despite "Weak" Washington News on Syria

October crude oil closed higher on Thursday and poised to extend the rally off Tuesday's low. The high range close sets the stage for a steady to higher opening when Friday's night session begins. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 106.69 are needed to confirm that a short term top has been posted. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. First resistance is last Wednesday's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 106.69. Second support is the reaction low crossing at 103.50.

6 Things Successful Traders Have in Common

October Henry natural gas posted a key reversal down on Thursday and closed below the 10 day moving average crossing at 3.591 signaling that a short term top might be in or is near. The low range close sets the stage for a steady to lower 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 October extends the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. Closes below the 20 day moving average crossing at 3.489 would confirm that a short term top has been posted. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.489. Second support is August's low crossing at 3.154.

How to Trade Small Cap Stocks and 3x ETF's Current

The September S&P 500 closed higher on Thursday and above the 20 day moving average crossing at 1656.33 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If September extends the rally off August's low, the reaction high crossing at 1667.00 is the next upside target. If September renews the decline off August's high, the 62% retracement level of the June-August rally crossing at 1611.47 is the next downside target. First resistance is today's high crossing at 1658.00. Second resistance is the reaction high crossing at 1667.00. First support is August's low crossing at 1625.00. Second support is the 62% retracement level of the June-August rally crossing at 1611.47.

Statistical Edge Floor Traders Use to Beat The Market

October gold closed lower on Thursday and below the 20 day moving average crossing at 1367.20 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening when Friday's night session begins trading. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If October extends today's decline, the reaction low crossing at 1351.60 is the next downside target. Closes above the 10 day moving average crossing at 1397.50 would temper the near-term bearish outlook. First resistance is last Wednesday's high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the reaction low crossing at 1351.60. Second resistance is August's low crossing at 1272.10.

Ready to start trading crude oil? Start right here....Advanced Crude Oil Study – 15 Minute Range

Things That Make You Go Hmmm…A Barrel of Monkeys

By Grant Williams

"What's more fun than a Barrel of Monkeys?

Nothing!"

Not my words, but those of the Milton Bradley Co., which still produces under license a game first created by a gentleman named Leonard Marks, who sold the rights to his simple but addictive game to Lakeside Toys in 1965.

It would be difficult to imagine a simpler premise for a game than that of Barrel of Monkeys. The rules of the game, printed on the bottom of the plastic barrel in which the monkeys are contained, are simplicity itself:

Dump monkeys onto table. Pick up one monkey by an arm. Hook other arm through a second monkey's arm. Continue making a chain. Your turn is over when a monkey is dropped.

Easy!

Each barrel contains 12 monkeys but can accommodate, at a push, 24, which makes the game so much more enjoyable. What could be better than assembling a long chain of tangled monkeys, each reliant on those either side of it for purchase, with just the one person holding onto a single monkey's arm at the top end of the chain, responsible for all those monkeys dangling from his fingers.

Of course, with great power comes great responsibility; and that lone hand at the top of the chain of monkeys has to be careful — any slight mistake and the monkeys will tumble, and that, I am afraid, is the end of your turn. You don't get to go again because you screwed it up and the monkeys came crashing down.

On May 22nd of this year, Ben Bernanke's game of Barrel of Monkeys was in full swing. It had been his turn for several years, and he looked as though he'd be picking up monkeys for a long time to come. The chain of monkeys hanging from his hand was so long that he had no real idea where it ended.

That day, in prepared testimony before the Joint Economic Committee of Congress in Washington, DC, Bernanke stated that the Fed could increase or decrease its asset purchases depending on the weakness or strength of data:

The program relates the flow of asset purchases to the economic outlook. As the economic outlook — and particularly the outlook for the labor market — improves in a real and sustainable way, the committee will gradually reduce the flow of purchases.

To assuage any lingering doubt, he continued:

I want to be very clear that a step to reduce the flow of purchases would not be an automatic, mechanistic process of ending the program. Rather, any change in the flow of purchases would depend on the incoming data and our assessment of how the labor market and inflation are evolving.

Markets fluttered a little as they tend to do around these carefully stage-managed performances, but remained largely sanguine. However, in the Q&A session that followed his prepared remarks, Bernanke, in response to a fairly innocuous question, went a little off-piste, straying into some improv, making a suggestion that, within minutes, had given rise to a phenomenon which by the end of the day had earned its very own soubriquet: the "Taper Tantrum":

If we see continued improvement and we have confidence that that's going to be sustained then we could in the next few meetings ... take a step down in our pace of purchases. If we do that it would not mean that we are automatically aiming towards a complete wind down. Rather we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward.

The statement contained the usual bit about the Fed being open to both decreasing OR increasing bond purchases; but it added one, as it turned out vital, piece of information:

"... we could in the next few meetings ... take a step down in

 our pace of purchases."

Boom! That's all it took. The monkeys began to shiver, shake, and screech.

Now, I have been saying for the longest time that these days nothing matters to anybody until it matters to everybody, and that is largely down to the Fed themselves (and their peers across the various oceans and borders who are complicit in this era of free money). The proof of my statement is seen in the fact that as soon as Bernanke mentioned that the "taper" — which, let's face it, EVERYBODY knows has to happen sooner or later — would possibly begin before the end of 2013, markets began to crumble.

The S&P 500 dropped a quick 6% on the outlandish idea that free money by the trillion wasn't going to continue forever, and this came as something of a shock to investors who had watched the index levitate relentlessly as the stimulus being applied by the Fed to the tune of $85bn a month did its job — and by "did its job" I wish I were talking about lowering unemployment and stimulating growth; but, alas, I'm talking about bolstering bank balance sheets and driving equity prices to unsustainable and unfairly valued levels.
As you can see from the chart below, the market turned around and recovered its losses pretty quickly as a seemingly endless procession of Fed governors and "friendly" journalists were rolled out to explain — in increasingly panicked tones — that everything was OK and that the esteemed Chairman didn't actually say they would definitely be cutting off the easy money.

Source: Bloomberg

In his own prepared remarks the following morning, Fed mouthpiece and Wall Street Journal reporter Jon Hilsenrath was quick to soothe:

(WSJ): The next step by the Fed could be especially tricky. One worry at the central bank is that a single small step to shrink the size of the program could be interpreted by investors as the first in a larger move to end it altogether. [Yesterday] Mr. Bernanke sought to dispel that view, part of a broader effort by Fed officials to manage market expectations.

If the Fed takes one step to reduce the bond buying, it won't mean the Fed is "automatically aiming towards a complete wind-down," Mr. Bernanke said. "Rather we would be looking beyond that to seeing how the economy evolves and we could either raise or lower our pace of purchases going forward. Again that is dependent on the data," he said.

It's OK, folks. Ben's got this. Calm down.

After the scrambling was over and the 6% air pocket was safely navigated, the S&P 500 first regained and then surpassed its previous high. At this point, the Punditocracy (as my buddy Scott calls it) declared that any "taper" had now been priced in.

And there the story should have ended. Nothing to see here folks, get back to your couches.
But of course it didn't end.

To continue reading this article from Things That Make You Go Hmmm… – a free weekly newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore – please click here.

Crude Oil Traders Appear to Shrug Off Syria News....Prices Headed Lower

October crude oil closed lower on Wednesday as it consolidated some of Tuesday's key reversal up. The low range close sets the stage for a steady to lower opening when Thursday's night session begins. Stochastics and the RSI are bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 106.46 are needed to confirm that a short term top has been posted. If October renews this summer's rally, weekly resistance crossing at 114.83 is the next upside target. First resistance is last Wednesday's high crossing at 112.24. Second resistance is weekly resistance crossing at 114.83. First support is the 20 day moving average crossing at 106.46. Second support is the reaction low crossing at 103.50.

Ready to start trading crude oil? Start right here with our "Advanced Crude Oil Study – The 15 Minute Range"

October Henry natural gas closed higher on Wednesday and above the 38% retracement level of the May-August decline crossing at 3.680. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If October extends the rally off August's low, the 50% retracement level of the May-August decline crossing at 3.842 is the next upside target. Closes below the 20 day moving average crossing at 3.475 would confirm that a short term top has been posted. First resistance is the 38% retracement level of the May-August decline crossing at 3.680. Second resistance is the 50% retracement level of the May-August decline crossing at 3.842. First support is the 20 day moving average crossing at 3.475. Second support is August's low crossing at 3.154.

Get our "Gaps and Candlesticks" Advanced Training

The September S&P 500 closed higher on Wednesday as it extends the rebound off the 50% retracement level of the June-August rally crossing at 1629.45. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI are diverging and are turning neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1657.83 would confirm that a short term low has been posted. If September renews the decline off August's high, the 62% retracement level of the June-August rally crossing at 1611.47 is the next downside target. First resistance is today's high crossing at 1654.20. Second resistance is the 20 day moving average crossing at 1657.83. First support is last Wednesday's low crossing at 1625.00. Second support is the 62% retracement level of the June-August rally crossing at 1611.47.

Advanced Swing Trading methods from one of my favorite hedge fund managers. For FREE!

October gold closed lower on Wednesday as it extends the decline off last Wednesday's high. The low range close sets the stage for a steady to lower opening when Thursday's night session begins trading. Stochastics and the RSI have turned bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1367.20 would confirm that a short term top has been posted. If October renews the rally off June's low, May's high crossing at 1489.00 is the next upside target. First resistance is last Wednesday's high crossing at 1432.90. Second resistance is May's high crossing at 1489.00. First support is the 20 day moving average crossing at 1367.20. Second resistance is August's low crossing at 1272.10.

Take the Quiz. Find your best match: Market, Timeframe, Trading System