CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.
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Thursday, September 23, 2010
Stock Market and Commodities Summary For Wednesday Evening
Crude oil closed higher on Thursday as it consolidates some of the decline off last week's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If November extends the decline off last week's high, August's low crossing at 71.49 is the next downside target. Closes above last week's high crossing at 78.86 are needed to renew the rally off August's low. First resistance is the 10 day moving average crossing at 76.19. Second resistance is last Monday's high crossing at 78.86. First support today's low crossing at 73.58. Second support is August's low crossing at 71.49.
Natural gas closed higher on Thursday however, profit taking tempered early gains and the low range close sets the stage for a steady to lower opening on Friday. However, stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If October extends last week's rally, the 38% retracement level of the June-August decline crossing at 4.321 is the next upside target. Closes below Monday's low crossing at 3.806 would temper the near term friendly outlook. First resistance is last Friday's high crossing at 4.060. Second resistance is the 38% retracement level of the June-August decline crossing at 4.321. First support is Monday's low crossing at 3.806. Second support is August's low crossing at 3.697.
Gold closed higher on Thursday as it extends the rally off July's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project as it extends this year's rally. Closes below the 20 day moving average crossing at 1260.06 would confirm that a short term top has been posted. First resistance is Wednesday's high crossing at 1298.00. First support is the 10 day moving average crossing at 1272.60. Second support is the 20 day moving average crossing at 1260.06.
The U.S. Dollar posted an inside day with a higher close on Thursday as it consolidates some of the decline off August's high. The mid-range close sets the stage for a steady opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends the decline off August's high, the 87% retracement level of this year's rally crossing at 78.66 is the next downside target. Closes above the 20 day moving average crossing at 82.20 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 81.39. Second resistance is the 20 day moving average crossing at 82.20. First support is Wednesday's low crossing at 79.77. Second support is the 87% retracement level of this year's rally crossing at 78.66.
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Phil Flynn: The Autumn Un-Equinox
While their manufacturing sector is still expanding the market was looking for a number closer to 55.7%. This slower pace comes a day after a very bearish Energy Information Agency report that showed a surprise increase in crude supply and a depressing feeling on demand. If you were worried about the impact that the Enbridge pipeline shutdown and inclement weather might have had on supply I guess you shouldn’t have because supplies increased anyway. Crude defied expectations rising by.....Read the entire article.
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EIA: Weekly Natural Gas Update For Week Ending Sept. 22nd
At the New York Mercantile Exchange (NYMEX), the futures contract for October delivery at the Henry Hub settled yesterday at $3.966 per MMBtu, falling by $0.029, or about 1 percent, since the previous Wednesday.
Natural gas in storage totaled 3,340 billion cubic feet (Bcf) as of September 17, about 6.2 percent above the 5 year (2005-2009) average. The implied net injection for the week was 73 Bcf.
The spot price for West Texas Intermediate (WTI) crude oil decreased by $2.92 per barrel since Wednesday, September 15, ending the report week at $72.98 per barrel, or $12.58 per MMBtu.
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Oil Fails to Benefit from USD Weakness
The US house price index surprisingly contracted -0.5% m/m in July, following a downwardly revised -1.2% decline in the prior month. The market had anticipated a milder drop of -0.1%. Moreover, the MBA's new purchase mortgage applications index plunged3.3% last week, with the 4-week average down -37% y/y. The readings reminded investors the vulnerability of the housing market and would be taken as a factor pushing the Fed closer to further easing. The dollar tumbled, weakening against major currencies except for Canadian dollar. EURUSD added more than +1% despite disappointments from Eurozone's industrial orders and consumer confidence index. GBPUSD climbed +0.3% even though the BOE minutes hinted the central bank might move towards further easing.
Shrugging off the threat of further intervention, Japanese yen rose for a 3rd day against the US dollar. Concerning commodity currencies, AUDUSD hit a 2-year high and is approaching parity as RBA signaled further rate hike might be earlier than market forecasts. NZDUSD also edged higher yesterday but gains were erased in Asian session today as 2Q10 GDP growth missed expectations. Canadian dollar was the only major currency that fell against the US dollar yesterday. Canada's retail sales contracted -0.1% n/n in July after gaining +0.1% in the prior month. The market had anticipated a growth of +0.6%. Excluding auto, the decline extended to -0.5% from -0.3% in June.
Currently hovering around 74/75, crude oil price has dropped almost -6% year to date and around -15% from this year high of 87.15. However, OPEC appears satisfied with the price. The group will be meeting on October 14 but OPEC President Wilson Pastor said there are ‘no plans to change OPEC policies regarding production or prices… The world economy is growing, it's exiting the recession and as the economy grows, that will go hand in hand with robust growth in oil prices'. The comment was made although the group downwardly revised the 2011 demand forecast for its oil output earlier this month. Notwithstanding expansion in non OPEC production and abundant inventories in advanced economies, many OPEC members have been producing exceeding their quotas. In August, the 11 members bearing quotas produced 26.80M bpd, compared with the limit of 24.85M bpd. Compliance level climbed slightly to 53.5% from 52.6% in July but remained significantly lower than78.6% in March 2009.
Nigeria's Petroleum Minister Diezani Alison-Madueke said the country will ask OPEC to increase its quota from 1.673M bpd. The country produced 2.01M bpd in August. In our opinion, lack of commitment from OPEC members to control production in an environment of high oil inventory and flaggy demand in advanced economies would damp the outlook of crude oil price.
Courtesy of ONG Focus.....
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SP500 Pierces, Bonds Rally, Dollars Fall Out the Window
From Chris Vermeulen at The Gold And Oil Guy.Com.......
It’s been a wild ride the past few days OptionsX, Obama and FOMC comments. Seems like everyone is waiting to see what the market is going to do going forward at this pivotal point…
Since the market topped in April and has since been trading sideways in this rather large range, everyone has small positions at work but waiting for a decisive move before fully committing to one side. There could be a few opportunities in the coming days using bonds, the dollar and the SP500 if all goes well which I explain below.
Lets take a look at the charts.....
SP500 – SPY ETF, Daily Chart
There has been a lot of talk about a sharp rally if the SP500 could break the 1130 level or the neckline everyone is talking about. Well this week Obama was on TV and the market rallied into that, then again after. I don’t really thing investors or traders were buying things up as he said the same boring stuff he always says without anything new. I feel there could have been another force at work, which we can discus another time .
Anyways, the market pierced those resistance levels and I’m sure a ton of traders have switch their view on the market from bearish to bullish. While I prefer to trade with the trend I can’t help but feel this market is still range bound, which is why I am still bearish at these shakeout levels. The SP500 did break resistance BUT the following candle did not close above the breakout candles high to confirm the move.
That said, the market is now trading back down at support and the next couple of days I’m sure will shed some like on the direction.
20 Year Bonds – TLT Fund, Daily Chart
We have seen the bond price pullback in a bull flag formation. It touched support before bouncing to break short term resistance as it looks to have started another rally. The chart below overlays both the candlesticks of the bond price and the SP500 which is the white line. You will notice they have an inverse relationship. If bond prices continue to rally then lower SP500 could start to rollover.
US Dollar – UUP Fund, Daily Chart
The dollar has fallen sharply the past 10 trading session and it looks to be oversold for a couple reasons. The past couple days the price has dropped straight down and gapped lower. This recent drop has reached a gap window which will act as support and could provide a tradable bounce in the coming days depending how things unfold.
In short, the SP500 is flirting with resistance and has yet to confirm the breakout. Bond prices look to be headed higher which will makes me think equities could start to sell off any day now… It’s also important to note that the big banks GS and JPM shares have been under pressure and they tend to lead the broad market. Another point to add is the fact the oil has not rallied even though the dollar dropped like a rock? What happens if the dollar bounces? Could oil finally start its next leg down?
Gold and silver continue their steady grind up. The price action reminds me of the 2009 Nov –Dec move. Once that train de-rails its going to have a sharp correction…
You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 3-5 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis as it allows me toe get more into across to you quicker and is more educational, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward.
Let the volatility and volume return!
Chris Vermeulen....The Gold And Oil Guy.Com
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It’s been a wild ride the past few days OptionsX, Obama and FOMC comments. Seems like everyone is waiting to see what the market is going to do going forward at this pivotal point…
Since the market topped in April and has since been trading sideways in this rather large range, everyone has small positions at work but waiting for a decisive move before fully committing to one side. There could be a few opportunities in the coming days using bonds, the dollar and the SP500 if all goes well which I explain below.
Lets take a look at the charts.....
SP500 – SPY ETF, Daily Chart
There has been a lot of talk about a sharp rally if the SP500 could break the 1130 level or the neckline everyone is talking about. Well this week Obama was on TV and the market rallied into that, then again after. I don’t really thing investors or traders were buying things up as he said the same boring stuff he always says without anything new. I feel there could have been another force at work, which we can discus another time .
Anyways, the market pierced those resistance levels and I’m sure a ton of traders have switch their view on the market from bearish to bullish. While I prefer to trade with the trend I can’t help but feel this market is still range bound, which is why I am still bearish at these shakeout levels. The SP500 did break resistance BUT the following candle did not close above the breakout candles high to confirm the move.
That said, the market is now trading back down at support and the next couple of days I’m sure will shed some like on the direction.
20 Year Bonds – TLT Fund, Daily Chart
We have seen the bond price pullback in a bull flag formation. It touched support before bouncing to break short term resistance as it looks to have started another rally. The chart below overlays both the candlesticks of the bond price and the SP500 which is the white line. You will notice they have an inverse relationship. If bond prices continue to rally then lower SP500 could start to rollover.
US Dollar – UUP Fund, Daily Chart
The dollar has fallen sharply the past 10 trading session and it looks to be oversold for a couple reasons. The past couple days the price has dropped straight down and gapped lower. This recent drop has reached a gap window which will act as support and could provide a tradable bounce in the coming days depending how things unfold.
In short, the SP500 is flirting with resistance and has yet to confirm the breakout. Bond prices look to be headed higher which will makes me think equities could start to sell off any day now… It’s also important to note that the big banks GS and JPM shares have been under pressure and they tend to lead the broad market. Another point to add is the fact the oil has not rallied even though the dollar dropped like a rock? What happens if the dollar bounces? Could oil finally start its next leg down?
Gold and silver continue their steady grind up. The price action reminds me of the 2009 Nov –Dec move. Once that train de-rails its going to have a sharp correction…
You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 3-5 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis as it allows me toe get more into across to you quicker and is more educational, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward.
Let the volatility and volume return!
Chris Vermeulen....The Gold And Oil Guy.Com
Get More Free Reports and Trade Ideas Here for Free: FREE SIGN UP
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Crude Oil Technical Outlook For Thursday Morning Sept. 23rd
If November extends this decline, the reaction low crossing at 73.08 is the next downside target. Closes above the 10 day moving average crossing at 76.10 would confirm that a short-term low has been posted.
First resistance is the 20 day moving average crossing at 75.82
Second resistance is the 10 day moving average crossing at 76.10
Crude oil pivot point for Thursday morning is 74.85
First support is Wednesday's low crossing at 73.84
Second support is the reaction low crossing at 73.08
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Wednesday, September 22, 2010
Irans Option In Case Of Attack On Its Nuclear Facilities
A 30 day Congressional review of the deal will likely begin within the next month and the White House is touting the deal as a major boon for the US economy that will support at least 75,000 jobs in the defense industry.
The deal is also designed to cement US preeminence in the Saudi oil sector, which is under significant threat from the increasing penetrations of Chinese, Russian, and Indian carbon economy interests. Saudi Arabia has the ability to pick and choose with whom it does business given that some are saying peak oil is already upon us.
US media is suggesting that the deal means that Israel no longer finds a threat in Saudi Arabia and sees the advanced aircraft package as containment against Iran. Speaking of which, sources in the Gulf region report that Iran is preparing for a possible attack by Israel and/or the United States on one or more of its nuclear production units by stockpiling arms and munitions with its proxy militias in Kuwait and Bahrain.
We have received all kinds of back channel dialogue from the UN General Assembly gathering in New York City this week so I include a special commentary from Claude Salhani, who has been covering terrorism issues in the Middle East for quite a number of years and checks in with a column titled, "Iran's Option In Case of Attack On Its Nuclear Facilities."
By Claude Salhani
Sources in the Gulf region report that Iran is preparing for a possible attack by Israel and/or the United States on one or more of its nuclear production units by stockpiling arms and munitions with its proxy militias in Kuwait and Bahrain. Earlier this month the tiny Kingdom of Bahrain announced the arrest of 23 men whom it accused of wanting to commit acts of terrorism and plotting to overthrow the government. Bahrain may well be the smallest of Arab countries yet it contributes greatly to the overall security of the Gulf region and the Middle East. Among other things Bahrain serves as the regional headquarters to the US Navy fleet operating in the Persian Gulf.
Strategically located at about halfway up the important sea lanes in the Gulf and through which most of the world's oil is carried from extraction sites to refineries aboard super tankers, the island nation of Bahrain is linked to the Saudi Arabian mainland by a 15-mile (24 km) causeway over the azure waters of the Persian Gulf. The causeway takes one into Saudi Arabia's Eastern Province, where the largest Saudi oil fields are located. Saudi's Eastern Province is largely Shiite.
Bahrain's population of 729,000 is composed of 70 percent of Shiites and the rest are Sunni. The Sunnis hold all the top positions of power in the country, from the king on down to every major office. The Shiites, who generally feel they are treated as second-rate citizens, relate to their coreligionists in the nearby Islamic Republic. Iran periodically likes to remind the Bahrainis that their island used to belong to Iran and that the Iranians have not forgotten that.
This is a part of the world where tensions run high and conflicts can easily ignite, particularly given that all the ingredients for an explosive situation are present: oil, religion and politics. The events that unfolded in recent days in Bahrain could well serve as the foundation for a John LeCarré novel, with one exception: this was no fiction. It's real and it could represent a very real and present danger to the security of the region. The men arrested in Bahrain were said to be working for "outside forces," the term usually meant to indicate Iran. Pointing the finger directly at the Islamic Republic can prove to be a dangerous gamble. Yet that language remains clear.
The report of an attempted coup in Bahrain is something that must be taken very seriously and should send alarm sirens wailing all the way from Manama, the capital of the tiny kingdom to the corridors of power in Washington. Tehran realizes two very important facts in case of attack against its nuclear facilities: First is that if attacked by Israel and/or the United States it will be incapable of striking back directly seeing the US' domination of the skies and Israel's quasi impregnable air defense system (with US contribution).
And second, Iran also knows that it must retaliate at all costs or lose all credibility. Hezbollah, the Lebanese Shiite paramilitary movement is in a perfect position to hit Israeli towns and cities from the north and could target large centers of population as far south as Hadera and possible further. Hezbollah's arsenal includes long range field artillery and Iranian supplied medium range rockets. From the south, Hamas, the Palestinian Islamic Resistance Movement can target Israeli locations the suburbs of Tel Aviv. Hamas' artillery is more antiquated and their Qasam rockets are home made and inaccurate, though they can still cause damage and casualties.
In the Gulf, Iran supports and arms and trains Kuwait's very own Hezbollah, who in turn is believed to have been supplying training and weapons to the Bahraini Shiites, such as the 23 men who were recently arrested in Bahrain. And of course one must not forget the influence Tehran carries in Iraq, where the US still has some 50,000 troops deployed and where Iranian-backed militias would very likely go on a shooting spree.
How seriously should one take the accusations?
Iran has periodically reminded Bahrain that the island is/was part of Iran. And if attacked by Israel and/or the US Iran might decide to push the envelope, especially if they feel they have popular support on the island.
Claude Salhani is a political analyst specializing in the Middle East and terrorism
Courtesy Oil Price.Com
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Phil Flynn: Crude Oil And The Fed
When the Fed tells us that household spending, while rising, is being constrained by high unemployment or that housing stats are at a distressed level, it is hard to get too excited about energy demand at a time of near record high supply. The question is not whether the Fed statement was bullish for oil because it was, but the question really is how far oil would have fallen if it were not for the Fed pointing to more quantitative easing. You see the price of oil can’t fall too hard because of its impact on overall inflation or deflation expectations and it can’t rally too high because we are in the weakest time of the year. With the October contract expiring into a near record.....Read the entire article.
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BOE may Ease Further, Conforming to Our View on Low Rate Environment
Stocks gained in Asian session as driven by Australia and Hong Kong shares. Just 2 days after RBA governor Glenn Stevens saying that Australia’s economy will growth above trend in 2011, Westpac Leading Index unexpectedly rose +0.4% m/m in July, following a contraction of -0.1% in the prior month. Australia’s S&P/ASX Index added +0.21%. In Hong Kong, the Monetary Authority said the city will grow at a moderate rate through the end of the year. This lifted the Hang Send Index by +0.21%.
In Europe, equities were generally lower with benchmark indices losing 0.5-0.9%. Eurozone’s industrial new orders surprisingly fell -2.4% m/m in July from a downwardly revised +2.4% growth in June. The market had anticipated a milder drop of -1.4%. As stated in the minutes for BOE’s September meeting, economic data released in the past month has showed a ‘reduction in growth prospects’. The minutes also revealed.....Read the entire article.
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