David Bannister: Gold Remains Bearish, SP 500 Appears to Be Topping

Well, our time line for the crude oil pull back is upon us this week. Right or wrong we all fully backed by safe stops being in place. And David Banister appears to be making the same call in gold and the SP 500. His most recent forecasts for the SP 500 and Gold have been calling for interim peaks in both around Mid-January. Gold, he told his subscribers a few weeks ago, was definitely topping and likely to drop now to $1270-$1280 per ounce before resuming the Bull Market advance. The SP 500 he had forecasted a 1285-1315 topping area since the 1175 pivot lows on that index, and we are very close as well in that regard.

Gold has been in a 9 plus year bull market since 2001 and has another 3 years plus left on this Bull run. However, pauses must occur along the way and this should be a 4th wave corrective Elliott pattern if his views are right. This is taking the form of a 3-3-5 correction from the $1430 top. We are in the final 5 waves down now, and it’s about to get ugly near term so strap on your seat belts. His chart forecast is below and if he is right, there will be excellent opportunities to pick up some good Juniors and also the precious metals themselves around that $1270-$1280 area. Following this correction, we could have a run to about $1515 per ounce, and he expects this entire pattern to take 6 months to a year to play out from the $1430 top to the $1270 ish bottoms, and back to $1515.

The SP 500 is completing the final 5th wave movement from the 1010 Jul 1st lows this past summer. This is only the first full wave pattern movement of a big 5 wave leg up from July 1st. What this means in English is we have a near term top likely in the 1285-1315 areas, followed by a wave 2 correction to around the 1175-1180 areas. Sentiment right now is running at major extremes last seen at interim peaks in January of 2010 and April of 2010 where he had also forecasted tops within days of the peaks. Banister is looking for the SP 500 to end up around 1600 on the index after this coming wave 2 correction, but he reminds us to take it one pivot and step at a time. Below is his forecast chartwise:

If you would like to benefit from learning more about Elliott Wave based forecasting using David Banisters methods, which have been historically accurate, please check him out at Market Trend Forecast.com There is a coupon available if you’d like to subscribe or you can sign up for free occasional reports.

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Crude Oil, Energy and Food.....is This 2008 All Over Again?

Regular visitors here at The Crude Oil Trader may sometimes think we are always bearish and usually pushing the doomsday scenarios. But that couldn't be further from the truth, we do believe in Uncle Warren's "never bet against the U.S.". But what we call the new world economy has proven to us that future demand in China and India will create challenges for us that will make producing affordable food nearly impossible. And if we are to find a way it will take leadership in Washington that we have not seen in......oh, 100 years!

One of my favorite traders in the commodities trading is Dian L. Chu, and this week she wrote.......During the past decade, Finished Goods PPI has risen roughly 35% while the CPI was up about 30%, which seems to suggest producers typically pass through most of the cost increases to the end market.


And news such as the following could only mean that there’s pent up inflation pressure up the supply chain just waiting to be passed through. Commodity prices jumped to two year high on expectations for global economic growth and lower U.S. forecasts for agricultural inventories. The Food Price Index (See Charts Below) compiled by the U.N. Food and Agriculture Organization (FAO) surged 25% in 2010 and hit an all time high in December, at the level even worse than the food crisis in 2008. FAO acknowledged that this is unlikely the peak yet.

And if you think the 25% spike in food prices seems extreme, wait till you check out the Non-Food Agriculture (NFA) prices. The chart below from The Economist shows that the NFA prices were up almost 80% in 2010! NFAs are agricultural materials with heavy industrial applications such as cotton and rubber.

It's really not difficult math, it's as if we can't afford to let the economy get any better or we'll repeat 2008. Our economy can't stand the $4.00 gasoline of 2008, what will happen at $5.00. And it's not a matter of if we get $5.00 gas, just when. Should we be happy if we can just maintain the balance where we are at right now? Well, that isn't possible either as this current "rally" has no real merit as it is build upon a house of cards called QE and QE2. How long will oil rich nations continue to buy that debt?

This surely won't keep us from trading today, just gives us all the more reason to day trade using these pivot, support and resistance numbers.........

Crude oil was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends this week's rally, this year's high crossing at 92.58 is the next upside target. Closes below last Friday's low crossing at 87.25 would confirm that a short term top has been posted. First resistance is this year's high crossing at 92.58. Second resistance is weekly resistance crossing at 93.87. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Friday morning is 91.51.

Natural gas was steady overnight hinting that the two-day correction off Monday's low might be ending. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. Closes below the 20 day moving average crossing at 4.355 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.355. Second support is December's low crossing at 3.985. Natural gas pivot point for Friday morning is 4.424.

Gold was lower overnight as it consolidates some of this week's rally. Stochastics and the RSI are turning neutral signaling that sideways to lower prices are possible. If February renews last week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1388.20 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1388.20. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Friday morning is 1383.00.


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Gold, Silver, and the Dollar....How Does Their Future Look?

Chris Vermeulen has been telling us since mid-October of last year that gold was starting to give hints of distribution selling. Then in November silver started warning us that some big players were taking some profits off the table also. In todays post Chris reminds us that distribution selling is easy to spot on the charts. Saying that in short you will see heavy volume selling accompanied with strong moves to the downside.

Now if we look at the US Dollar chart we see the exact opposite price action. We see sharp rallies during October and November of last year. It’s normal to say that gold and silver move inverse to the Dollar so this price action makes perfect sense.

The interesting thing with the US Dollar is that in Nov-December it rallied breaking through a key resistance level and has been consolidating above support ever since. If this bullish pattern (bull flag) plays out, then it’s just a matter of time before the dollar makes another strong rally upwards, which will put downward pressure on stocks and commodities.

Take a look at the charts below....

US Dollar Daily Chart
The 50 period moving average has provided key support/resistance levels for the previous trends and if it holds true going forward then we are not far from another rally in the dollar.

Gold Futures Daily Chart
Gold moves inverse to the dollar so if we get a higher dollar then look for gold to have a stair step pattern lower.

Silver Futures Daily Chart
Silver looks about ready to do the same thing as gold.

Precious Metals and Dollar Trading Conclusion:
In short, we could see a major shift in momentum from up to down in both precious metals and the equities market. Keep in mind the market has a way of dragging out patterns/moves so while the chart looks bearish and I think a reversal is near, things could just chop around for another month or so before a definitive breakout is made. Choppy market conditions are great for trading options but no short term trend traders like myself. This is why you don’t want to anticipate moves (pick a top). Currently I am neutral on metals and the dollar waiting for a setup which must have clear risk/reward characteristics.

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Washington's Goal For Crude Oil Prices.......Everybody Sing "Can You Take Me Higher"

Preparing for our post this morning and another great day of trading I again was struck by the stark contrast in energy policies coming out of Washington and the policies....or should I say PROFITS coming out of CNPC. PetroChina's parent company.

Bloomberg News reported this morning....China National Petroleum Corp., the parent of the country’s biggest oil and gas producer, increased its profit by 30 percent last year as oil prices rose. The majority shareholder in Hong Kong listed PetroChina Co. earned 167.6 billion yuan ($25.4 billion), President Jiang Jiemin said in a statement on CNPC’s website today, without specifying whether the income was before or after tax. Profit reached 128.6 billion yuan in 2009, its annual report shows.

CNPC benefited from the 15 percent jump in oil prices last year and higher output from fields outside China. The Beijing based company, which holds assets and interests in 30 countries, said overall crude output may rise by an average of 2 million metric tons annually during the next five years, and CNPC is targeting a “rapid” increase in gas production.

“The estimated increases make sense,” Yin Xiaodong, chief oil analyst at Beijing based Citic Securities Co., said by telephone. “Gas production growth will definitely outpace increases in oil, and overseas acquisitions will give CNPC a strong boost in the long term.” CNPC’s oil and gas production in countries including Kazakhstan rose 14 percent last year. PetroChina said this week its venture with BP Plc met their 2010 output target for the Rumaila oilfield in southern Iraq.

All of this while oil prices soared after the release of the final scathing report by the White House oil spill commission. Co-Chairman William Reilly alluded to in a press conference that if you thought that the panel investigating the Deep Water Horizon disaster would fade away, well you have another think coming. Mr. Reilly says that he plans to make a “lot of noise”! This of course will send major oil companies scurrying to find oil in far away places that China has been doing business with for years now.

The energy policy coming out of Washington is simple. Make oil as expensive as possible making current food supply issues worldwide and for Americans an even larger burden. And keep the U.S. as reliant as possible on foreign oil and energy. And China just keeps expanding it's oil exploration at alarming rates, and good for them. I found this great website that we all might find very useful. Learn to Speak Chinese, if we are going to need to beg for food we better be using the right language. And yes, our fund has taken larger positions in both etf's MOO and DBA. Our favorite way to play food.

Let's try to make some money today so maybe we can afford that food and here is the numbers we are using........

Crude oil was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends this week's rally, this year's high crossing at 92.58 is the next upside target. Closes below last Friday's low crossing at 87.25 would confirm that a short term top has been posted. First resistance is this year's high crossing at 92.58. Second resistance is weekly resistance crossing at 93.87. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Thursday morning is 91.68.

Natural gas was lower overnight hinting that the two day correction off Monday's low might be ending. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 20 day moving average crossing at 4.343 are needed to confirm that a short term top has been posted. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.343. Second support is December's low crossing at 3.985. Natural gas pivot point for Thursday morning is 4.510.

Gold was lower overnight as it consolidates some of this week's rally. However, stochastics and the RSI have turned bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1388.10 are needed to confirm that a short term low has been posted. If February renews last week's decline, the reaction low crossing at 1331.10 is the next downside target. First resistance is the 20 day moving average crossing at 1388.10. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Thursday morning is 1383.70.

Don't miss our latest video "3 Smart Indicators To Trade Crude Oil With Synergism"

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U.S. Dollar Strength Will Trump Leaky Pipeline in the Oil Trade

Leaky pipelines might be big news to traders but international debt issues and it's effect on the dollar continue to be the driving force behind the oil trade. If we see a flight to quality in the U.S. dollar then look for oil bulls to sell off positions. The largest sell offs in 2010 were always over Greece and Ireland debt news. Japan moves eases concerns then that might be bullish for oil. News from Reuters reported that "Japan promised to buy euro zone bonds this month in a show of support for Europe's struggle with a seething debt crisis", and some traders believe that's enough to push oil through this years highs.

On Tuesday our "MarketClub Trade Triangles" issued a short term traders exit signal for all gold "short positions" on a Green Daily “Trade Triangle” @ $1,378.52. Our Trade Triangles are leaving intermediate traders in a sidelines position and our long term traders in a hold long position. If you are not yet a member of MarketClub see what you are missing in 2011 with a 30 Day Risk Free trial and receive 3 valuable bonuses just for giving us a try.

Here's your pivot points, resistance and support numbers for crude oil, natural gas and gold for Wednesday morning......

Crude oil was lower due to profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If February extends this week's rally, this year's high crossing at 92.58 is the next upside target. Closes below last Friday's low crossing at 87.25 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 91.74. Second resistance is this year's high crossing at 92.58. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Wednesday morning is 90.48.

Natural gas was higher overnight as it consolidates some of last week's decline. 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 4.332 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.332. Second support is December's low crossing at 3.985. Natural gas pivot point for Wednesday morning is 4.441.

Gold was lower overnight as it some of this week's short covering gains. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near. Closes above the 10 day moving average crossing at 1388.40 would confirm that a short term low has been posted. If February renews last week's decline, the reaction low crossing at 1331.10 is the next downside target. First resistance is the 10 day moving average crossing at 1388.40. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Wednesday morning is 1381.20.


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3 Smart Indicators To Trade Crude Oil With Synergism

The holidays are over and now that we have put what we call the "Silly Season" behind us, it's time to look at the crude oil market in a serious way again. Today's crude oil trading video will help us do just that. The oil market has been a disappointment to a lot of traders as it has been stuck in a broad trading range for the past 18 months.

The current trading range will eventually be broken and the market will move in the direction of the breakout. While our long term indicator, the monthly "Trade Triangle" continues to be positive, short term "Trade Triangles" are indicating weakness. With a score of -60 for February crude oil, we expect that this market will be range bound in the short term.

One of the indicators we discussed in an earlier video is in an oversold condition, indicating a potential rally from current levels could be at hand. That being said we would wait for some other combination of indicators to confirm that a move is underway.

For the past 18 months the best way to trade crude oil has been with the use of an oscillator indicator. The one we're looking at in today's video clearly shows you where the lows and highs are coming in and indicates a potential market bounce from current levels.

We expect that after such a long period of sideways action, almost 18 months, that the crude oil market will come alive and present some great trading opportunities in Q1 and Q2. As always our video's are free to watch and there are no registration requirements.

Watch "3 Smart Indicators To Trade Crude Oil With Synergism"

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Pipeline Closure....Higher Oil Prices or Jobs?

The possibility of supply constraints on crude oil from the closure of the Trans Alaska Pipeline helped crude oil spike up a $1.22 on Monday. This 800 mile long oil pipeline, which ships crude from Alaska's North Slope to the port of Valdez, is a vital supplier for refiners on the U.S. west coast.

The pipeline was shut down Saturday after Alyeska Pipeline Service discovered the leak. Alyeska has stated that they are developing a plan to restore the pipeline for the entire 800 mile line. Gasoline prices also came under pressure from traders for the closure.

In reports from Reuters News, "shutdown of one of the United States key oil arteries, which carries about 12 percent of the country's production, is the latest setback for the aging, 33 year old pipeline, which handles less than a third of the oil it did at its peak in the 1980s. Closures of the pipeline, although short, has provoked criticism of its operators, particularly major owner BP, whose reputation is already at an all time low after the Gulf of Mexico blow out last year, causing the largest ever U.S. oil spill.

The shutdown of the 800 mile line, which runs from the Prudhoe Bay oilfield to the tanker port of Valdez, has not yet affected shipments and tankers are being loaded on schedule at Valdez, meaning there is no immediate danger of restricted oil supply. Oil produced during the shutdown will be stored at Prudhoe Bay until the pipeline reopens".

With tankers loading on schedule this should have effect on futures prices but this will become a political football for both sides of the isle. The left will paint this as another reason to curtail oil production and the right will be calling for a new energy policy out of Washington. Jobs? Remember the 70's and all of the men traveling to Alaska to build the pipeline? A new pipeline and a few "fast tracked federal approvals" for some new nuclear power plants would go along way to getting to Americans back to work. And all done with private money, what a concept.

Just click here to get a FREE trend analysis of BP. Now let's trade some crude oil, natural gas and Gold today........

Crude oil was higher due to short covering overnight as it consolidates some of last week's decline but remains below the 20 day moving average crossing at 89.87. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If February renews last week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 89.87 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 89.87. Second resistance is last Monday's high crossing at 92.58. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Tuesday morning is 89.12.

Natural gas was slightly higher overnight as it consolidates some of last week's decline. 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 4.315 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.315. Second support is December's low crossing at 3.985. Natural gas pivot point for Tuesday morning is 4.390.

Gold was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 10 day moving average crossing at 1391.50 would confirm that a short term low has been posted. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. First resistance is the 10 day moving average crossing at 1391.50. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Tuesday morning is 1371.80.


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Crude Oil Rebounding But is $90 Our New Resistance Level?

Crude oil is rebounding this morning but still trading below 90 dollar levels at the moment. Traders seem to be focusing on the minimal impact the shut down of the Alaskan pipeline system is having and appear to be more concerned about Chinas sharp trade surplus decline. Is the $90 level showing itself to be firm resistance today?

Crude oil was higher in Sunday evenings overnight session due to short covering as it consolidates some of last week's decline but remains below the 20 day moving average crossing at 89.82. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends last week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.01 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.01. Second resistance is last Monday's high crossing at 92.58. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Monday is 88.98.

Natural gas was lower overnight as it extends last week's decline. 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 4.318 would confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.318. Second support is December's low crossing at 3.985. Natural gas pivot point for Monday is 4.479.

Gold was slightly lower overnight as it extends last week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1392.90 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1392.90. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Monday is 1372.00.


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Does This Indicator Make Gold an "Easy" Trade?

Gold bulls took one of their biggest hits in some time on January 4th and so far it has failed to appreciably recover. So what's next for this most precious metal? Take a few minutes and watch how this one little indicator has been catching the swings in gold incredibly well for the last several months. You may or may not be familiar with this little known profit maker, but if you're not yet using it you certainly want to learn how to profit from it in 2011.

We are talking about the Williams %R indicator. The Williams indicator is calculated using 14 periods and can be used on intraday, daily, weekly or monthly data. The time frame and number of periods will likely vary according to desired sensitivity and the characteristics of the individual security. And lately it has been very reliable for entry and exit strategies on gold. Watch our latest video from MarketClubs Adam Hewison on how he has used the Williams indicator for trading gold.

In December Hewsison told us "On charts, gold cut early losses, bouncing off lows at around $1,362 an ounce, a key support level in line with a series of lows set in December". Hewison also said "gold's bounce up from session lows signals that it has found support after falling this week. Every time when gold had gotten down to these levels, it's very close to making a reversal higher. Gold has risen toward its record $1,430.95 an ounce level three times since November but failed each time." Let's go to the video and see how Adam will trade gold using the Williams indicator.

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Crude Oil, Natural Gas and Gold Traders Respond to Labor Departments Employment Numbers

Crude oil did rebound overnight due to short covering after crude oil for February delivery settled at $88.38 a barrel, $1.92 lower than Wednesdays trading session. Big pressure was put on commodities as the U.S. dollar rose to a one month high against the euro on Thursday. But all markets were awaiting the U.S. Labor Department's monthly report that was expected to show that the unemployment rate dipped to 9.7 percent from 9.8 percent and that the economy created a net total of 145,000 jobs. But traders were disappointed as only 103,000 jobs were added bringing the unemployment rate down to 9.4%. The lowest unemployment rate in 19 months but not enough to give investors the confidence needed to rebound at Fridays opening.

While crude oil did consolidate some of Thursday's decline it remains below the 20 day moving average crossing at 89.84. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.31 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.31. Second resistance is Monday's high crossing at 92.58. First support is Thursday's low crossing at 87.85. Second support is the reaction low crossing at 87.43. Crude oil pivot point for Friday morning is 88.98.

Natural gas was lower overnight as it extends this week's decline. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.325 would confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.317. Second support is December's low crossing at 3.985. Natural gas pivot point for Friday morning is 4.479.

Gold was sharply lower overnight and has broken out below support marked by December's low crossing at 1361.60. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1393.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1395.90. Second resistance is Monday's high crossing at 1424.40. First support is the overnight low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Friday morning is 1372.00.


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