Trade ideas, analysis and low risk set ups for commodities, Bitcoin, gold, silver, coffee, the indexes, options and your retirement. We'll help you keep your emotions out of your trading.
Yesterday the gold market took its first corrective action on the downside. The question many traders will have now is, have we hit the high end for gold this year?
In our latest video we examine that question in some of the internals that we see and feel are important in this market.
Just Click Here to watch the video and as always our videos are free to watch and there is no need to register. Please take a minute to leave a comment and let us know what you think about the direction of gold.
Is it possible that our US jobless recovery might not be so jobless after all? Weekly jobless claims fell 12,000 to 502,000 giving the dollar a boost and the crude a trouncing even before the bearish Energy Information Agency weekly inventory report. Oh sure the overall jobless rate is still lousy but that puts the four week average at the best level in over a year and that gave some life the beleaguered dollar. Now with Obama on his way to China, the dollar could be poised for more short covering. We may see that happen when the Census Bureau releases the September balance, or should I say the imbalance, of trade data. The U.S. trade deficit is expected to widen to $32 billion from $30.7 billion in August. Most of that is with China.
There is growing global pressure on China to allow the Yuan to appreciate. The goal is to take some of the heat off the dollar and at the same time global commodity prices. All commodity prices have been as dependant on the dollar as the US is dependent on China buying our debt and as the Chinese are dependent on us buying their stuff. The Wall Street Journal says that the Federal Reserve's trade weighted dollar index, which measures the greenback against a broad basket of currencies including the Chinese yuan, has fallen nearly 22% since 2002. Some argue that the 63% increase in U.S. exports during that time is no coincidence.....Read the entire article.
Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according to EIA estimates. This represents a net increase of 25 Bcf from the previous week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above the 5 year average of 3,404 Bcf. In the East Region, stocks were 118 Bcf above the 5 year average following net injections of 8 Bcf. Stocks in the Producing Region were 223 Bcf above the 5 year average of 976 Bcf after a net injection of 10 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,813 Bcf, total working gas is above the 5-year historical range. Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2004 through 2008. Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report." The dashed vertical lines indicate current and year ago weekly periods.
On Wednesday, 11/11/09, the Dow Jones Industrial Index rallied to a 50% retracement level based on MarketClub’s Fibonacci measuring tool. The action today indicates that this level is very important and that it could be an important top for this market.
In our latest video we cover both the Dow and the S&P 500 and tell you what we think is going to happen to both of these markets in the near and intermediate term.
Just Click Here to watch our latest video and as always our videos are free to watch and there’s no need to register. Please take a moment to let us know what you think of the video by leaving a comment.
Ray C. Parrish President/CEO, The Crude Oil Trader
What does OPEC and the International Energy Agency have in common? Well usually not too much but there are exceptions.
OPEC represents the interests of oil producers whose club pumps about 40 percent of the of the global oil supply and the International Energy Agency (IEA) which acts as energy policy advisor to 28 oil consuming nations rarely see eye to eye to eye on many of the big energy issues of the day. Yet it seems in this era of economic stress even this odd couple may share some of the same ideas on energy without driving the other one crazy.
Well for one thing they both generally believe that the demand for oil is getting better. The IEA was the latest agency to upwardly revise its forecast for global oil demand predicting a consumption average rate of 86.2 million barrels a day up 140,000 barrels from their October report. That was the day after OPEC predicted a demand increase to 85.07 million barrels a day 50,000 barrels a day higher than their last report. Usually the IEA likes to estimate demand on the high side and OPEC on the low side yet a demand increase. Yet it is not just increasing demand that they agree on. They agree that the increasing price of crude may be a threat to the economic recovery.....Read the entire article.
U.S. crude oil refinery inputs averaged 13.8 million barrels per day during the week ending November 6, 145 thousand barrels per day below the previous week’s average. Refineries operated at 79.9 percent of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production increased last week, averaging 4.1 million barrels per day. U.S. crude oil imports averaged 8.7 million barrels per day last week, up 530 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.5 million barrels per day below the same four week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 732 thousand barrels per day. Distillate fuel imports averaged 177 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.8 million barrels from the previous week. At 337.7 million barrels, U.S. crude oil inventories are slightly above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 2.5 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components increased last week. Distillate fuel inventories increased by 0.3 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories decreased by 1.2 million barrels last week and are in the upper half of the average range. Total commercial petroleum inventories increased by 1.0 million barrels last week, and are above the upper limit of the average range for this time of year.
Total products supplied over the last four week period has averaged 18.7 million barrels per day, down by 4.7 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 8.9 million barrels per day, down by 1.0 percent from the same period last year. Distillate fuel demand has averaged 3.6 million barrels per day over the last four weeks, down by 13.8 percent from the same period last year. Jet fuel demand is 4.0 percent lower over the last four weeks compared to the same four week period last year. The average world crude oil price on November 6, 2009 was $76.34 per barrel, $0.15 less than last week’s price but $17.68 above a year ago. WTI was $77.40 per barrel on November 6, 2009, $0.36 more than last week’s price and $16.34 above a year ago.
The spot price for conventional gasoline in the New York Harbor was 192.15 cents per gallon, 5.70 cents less than last week’s price but 51.75 cents above last year. The spot price for No. 2 heating oil in the New York Harbor was 195.44 cents per gallon, 1.03 cents less than last week’s price and 0.91 cent under a year ago. The national average retail regular gasoline price decreased to 266.6 cents per gallon on November 9, 2009, 2.8 cents per gallon less than last week but 44.2 cents above a year ago. The national average retail diesel fuel price decreased to 280.1 cents per gallon, 0.7 cent per gallon less than last week and 14.3 cents below a year ago.....Read the entire report.
Crude oil fell after a government report showed a larger than forecast gain in stockpiles as sinking demand pushed refinery operating rates to the lowest level in more than a year. Supplies of crude oil rose 1.76 million barrels to 337.7 million last week, the Energy Department report showed. Analysts surveyed by Bloomberg News forecast a 1 million barrel gain. Refinery operations declined to the lowest level since September 2008, when units were shut in the aftermath of hurricanes Gustav and Ike.
“The big problem is that demand is week, and refiners are starting to feel pain,” said Carl Larry, president of Oil Outlooks & Opinions LLC, a Houston based energy adviser. “It’s good for consumers that crude oil stocks increased, but with demand so low, refiners aren’t going to need it to make gasoline and other fuels.” Crude oil for December delivery fell $2.14, or 2.7 percent, to $77.14 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Prices are up 73 percent this year. Futures traded at $77.32 before the report’s release at 11 a.m. in Washington.....Read the entire article.
Crude oil has a nice bull flag and we are waiting for a breakout and setup while natural gas continues to see selling pressure.
USO Fund Trading – Daily Fund Chart The USO oil fund broke out a few weeks ago from the large pennant pattern. The price has been flagging for about 3 weeks now. It looks like we are getting close to a low risk setup so I am keeping a close eye on this fund.
UNG Fund Trading – Daily Fund Chart Natural gas continues to under perform the rest of our commodities. This fund is starting to look like another good by point but we need a few things to fall into place before that happens. Let’s not jump the gun because this fund is still in a bear market. Waiting for a setup.
Waiting for these exchange traded funds to generate low risk setups and watching our current positions mature is the boring part of trading. It’s these slow times when traders get bored and start taking more risk by entering positions that do not have clear entry and exit points. Not having clear entry and exit points will lead to traders holding on to losing trades and not taking profits on winning trades. Be sure you enter positions which you know where you should get out if the trade goes against you and where to take some money off the table if it rallies higher.
ETF Trading Conclusion: We continue to wait for trading opportunities to unfold. We focus on taking advantage of low risk setups and avoiding times the market when things are choppy and unclear.
Crude oil rose as Chinese crude imports neared a record and the dollar weakened to a 15 month low, buoying demand for commodities. China’s net oil imports were almost 19 million tons, or 4.5 million barrels a day, the second highest level ever, according to data from the Beijing based customs office. Oil rose and gold surged to a record as the dollar’s slide bolstered purchases of raw materials by investors seeking alternative investments. “The Chinese numbers are obviously very supportive,” said John Kilduff, partner at Round Earth Capital, a hedge fund that focuses on food and energy commodity investments, in New York.
“The consistently high import numbers fly in the face of those who say there is nothing fundamental about the rise in oil prices.” Oil for December delivery rose 82 cents, or 1 percent, to $79.87 a barrel at 10:01 a.m. on the New York Mercantile Exchange. Futures have climbed 79 percent this year. Chinese imports increased as industrial production soared 16 percent from a year earlier, spurring fuel use. Last month’s net imports were the highest since July’s record 19.2 million barrels. China is the second largest oil consumer after the U.S.....Read the entire article.
After hitting our first upside target of $1,110 two days ago, gold prices backed off but still managed to close at their best levels today for a new record high close in New York basis the spot gold.
The main trend continues to be positive and we believe that any pullback in this market should be met with good support. It is possible that we could see a pullback of $20-$25 which would not change the overall positive trend of the market which we see continuing until the end of the year.
As readers of this blog know, we have an upside target zone of $1,250-$1,300 an ounce for gold. While that target zone is still in place, we believe that the huge “energy field” that we’ve discussed in our earlier gold videos is capable of pushing this market higher.
In this new video we explain some of the areas that we are looking at and also some of the places where you can place tight stops to lock in profits.
Just Click Here to watch the video and as always the videos are free to watch and there is no need to register. We would love to hear your views on gold in our so please feel free to leave a comment.
After surging yesterday on the weak dollar and now tropical storm Ida, I think we can focus on all the bearish stuff that did not seem to matter. You know stuff like gas gluts and supply surpluses. As Ida hits the coast the market realizes that there is plenty of oil, products and spare production capacity to easily weather this tropical storm. More oil is on the way as the Saudis and OPEC send signals that more oil production is likely at the December OPEC meeting and news that China is raising the domestic cost of gasoline which could put a dent in China’s domestic oil demand.
Reuters News reported that Saudi Arabia, the world's top oil exporter, has increased December supplies to large companies, and one Asian customer is expected to receive full contract volume. Bloomberg News reported that OPEC is increasing output at the fastest pace in two years, adding to near record inventories. This is raising speculation that this is a precursor to OPEC oil increase at the December OPEC meeting. Yet Dow Jones reports that.....Read the entire article.
Crude oil fluctuated as Tropical Depression Ida weakened and the dollar gained against the currencies of major U.S. trading partners. Ida’s sustained winds have dropped to 35 miles (56 kilometers) per hour from 45 mph earlier, the National Hurricane Center said on its Web site. Producers have begun preparations to resume operations. A stronger dollar reduces the appeal of commodities to investors looking for an inflation hedge.
“I doubt there was any severe damage caused by Ida,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There will probably be some impact on next week’s inventory data, but that’s it.” Crude oil for December delivery fell 32 cents, or 0.4 percent, to $79.11 a barrel at 11:36 a.m. on the New York Mercantile Exchange. Futures dropped as much as 88 cents and climbed as much as $1.08 today. Prices have increased 77 percent this year.....Read the entire article.
The Dow jumped to new highs for the year, extending its gains from the lows seen in March.
What does this mean for the future?
The Dow is now within 100 points of being into thin air as it has retraced close to 50% of its down move. The NASDAQ has already done this, and the S&P 500 has come very close to achieving this goal. Clearly the trend continues to be positive for the Dow with today’s new highs. The other two indices, while closing very well and on an upbeat note, must clear their previous highs to start another push to the upside. It remains to be seen whether or not that will take place.
Clearly this is an emotional market that’s been driven more by sentiment then hard economic news.
Having said that, one must take into consideration the perception of the marketplace, and as of right now that perception continues to be friendly towards the long side of these markets.
In our new video we show you some of the key points to look at in terms of where these markets could potentially break down, and possibly reverse to the downside.
Just Click Here to watch the video, and as always please feel free to leave a comment and let us know where you think the Dow is headed.
What are the questions that educated investors ask in oil and gas?
Last month I gave investors 10 questions they should be asking management teams, or searching for on the company website, in a recent article. They were basic questions, and you can read them here. After those first 10 are answered, you know how much production a company has, how fast they’re growing, how much cash or debt they have etc. But if you’re still not sure if you want to invest in the company after all that, or just want to know more…what are the right questions to ask? What pitfalls or opportunities might an investor uncover?
1. Decline rates are something management teams don’t really hide, but don’t really talk about either. Every well has declining production until it’s uneconomic. The new shale gas plays often have 85% decline in production in the first year. Tight oil plays (Bakken, Lower Shaunavon etc) have 75% initial decline rates. Decline rates are increasing over time now as the industry drills deeper and tighter plays. Ask management what the initial decline rate is, both company wide, and specifically on their main, big play that they believe will be the growth engine of the company. Then ask what the decline rate flattens out to it’s usually 20-30%.
Why is this important? Because many investors, when forecasting growth, use the only public numbers given for a well – the ones in the press release. Most companies have a production decline graph in their powerpoint, but few actually say what the production levels in the wells in the area flatten out at.....Read the entire article.
Crude oil rose as a falling dollar bolstered investor demand for commodities and Tropical Storm Ida entered the Gulf of Mexico, forcing BP Plc and Chevron Corp. to cut output. Oil climbed more than $2 after the greenback fell against a basket of six major currencies following a decision by the Group of 20 governments to maintain economic stimulus measures. Workers were evacuated in the region, an area that accounts for 27 percent of U.S. crude production and 15 percent of natural gas output. “The G-20 didn’t comment about the dollar, which indicates that no action will be taken, and the greenback will further deteriorate,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “A weak dollar translates into higher oil prices.”
Crude oil for December delivery rose $2.01, or 2.6 percent, to $79.44 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices rose as much as 3.6 percent to $80.19, the biggest gain since Sept. 30. Oil is up 78 percent this year. Prices dropped $2.19, or 2.8 percent, to $77.43 on Nov. 6, the lowest settlement since Oct. 30, after a report showed unemployment in the U.S., the world’s biggest energy consuming country, climbed to 10.2 percent, the highest in 26 years......Read the entire post.
I think it is because they try to apply a long term strategy to a short term time frame. Once they get on the right side of the trade, they have the illusion that they are going to ride that trade for 60, 80, or 100 pips. Most of the time they get a price reversal, stopped out or scared into a losing trade. There are a few exceptions when you can ride price like that, but normally you can not, so let's deal with the everyday market.
If you are going to be a long term successful day trader; it is imperative that you understand that you are not going to ride a 5min set-up into everlasting pip glory. On a short term trade set-up like your 5 chart, look to get in after a confirmation in the direction of the trend, then get out quickly.
After a confirmation, you can usually get out with about 5-10 pips, before price begins to retrace(in the candles) on you or it begins to trade sideways. I think your 15 min chart is a better chart to trade from as a short term trader. Be sure to trade in harmony with the trend.
In the morning, draw a short term trendline on your chart. Be sure to also check to see what the trend is on your daily chart. I generally check my hourly, 4 hour and daily, just to see. If I have an evening star pattern on my hourly chart, then I am not going to take a trade to the long side on my 5 min chart. You have a much stronger chance of quick profit if all or most of your charts agree. You will have the opportunity to go short or long on your 5min chart, but your most successful and profitable trades are going to come when you trade in harmony with your trend.
Keep in mind that your trend is likely to CHANGE or take a BIG DIP or a HUGE SPIKE, so watch your candles for that.
I know traders who get 200 or more pips many days. I can tell you I don't even close to net those kind of pips on an average day. I usually set my TP level for 5-7pips on my 5 min chart and 10-12 on my 15 min chart. I use my small trades to build up my accounts, and I use my larger trade set-ups for my profit rides. My smaller trades during the day give me that extra SL money I need to facilitate my longer term trading, so if I am stopped out, then it doesn't hurt nearly as bad.
(K.I.S.S), Keep it simple sexy. Trading is not physics, it is just a bit tricky until you get use to the way price moves.
I am an equal opportunist and trade all time frames, and I can tell you from experience that a valid set-up on a larger time frame is going to give you more accurate and profitable rides. The downside to longer term trading is that you have to wait longer for those trade set-ups. The downside to day trading is that your profit run isn't as long and the trend within a trend can get confusing, and you must be very good at getting in and getting out quickly. The benefit of course is that you get more trading opportunities and you don't wait as long for valid set-ups.
Short term trades - GET IN, GET OUT!!!!!! Longer term trades - sit back and enjoy the ride!
Learn your candlestick patterns and always let price be your first indicator. Only take trades with proper confirmations.
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John's seminars are usually reserved for an elite few so please take advantage of the chance to learn from a man with over 30 years successfully trading using technical analysis.
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Everyone is talking about commodities as the place to be in the coming months. I tend to agree, but it is still important to know where each commodity is trading to maximize returns and reduce risk.
That being said we are also seeing money flow out of the small cap stocks and into the large cap blue chips Stocks. These companies prove year after year that they are profitable and that’s where investors have been putting their money the past couple weeks. This can be seen by simply looking at the Dow Jones Industrial Average and the Russell 2000 index as the Russell has dropped in value much more than the Dow. But if we see the market turn back up and make a new yearly high in the coming weeks, small cap stocks will most likely provide explosive opportunities for traders.
Below is some analysis on Crude oil, Natural Gas, Gold and Silver....
GLD ETF Trading – Weekly Trading Chart By looking at the weekly chart of gold we can see two simple things. 1 – Each breakout is happening quicker as money continues to move into gold. 2 – This step like pattern (bull flags) is very powerful and can continue for a very long time.
GLD ETF Trading – Daily Trading Chart This chart shows the same price action but on a daily chart. It also shows one way to find and trade low risk setups for the GLD ETF traded fund.
SLV ETF Trading – Weekly Trading Chart Silver ETF trading has not been as exciting. Silver has yet to breakout above the 2008 high. It is actually trading at a major resistance level and still has some work to be done before looking really bullish in my eyes. This is acting like major resistance level for two main reasons.
1 – It is testing the 2008 highs where a lot of traders bought silver over a 5-6 month period. There are a lot of sellers to flush out before moving higher.
2 – The drop in silver price in late 2008 was so scary for investors who bought at $16-20 that they cannot believe they are getting their money back. I think this is making a higher volume of investors sell their positions at break even because they just want out after seeing 50% loss at one point last year.
UNG Fund Trading – Daily Trading Chart UNG has been sliding lower and lower since hitting its head on resistance back in October. The gap down on Friday is bearish indicating traders are starting to panic out of UNG and willing to get out at any price.
UNG Fund Trading – Natural Gas Seasonality Timing UNG and the seasonality chart seem to be spot on for timing the price of natural gas. Keeping an eye on seasonality and general market seasonal patterns can really help improve ones performance. It may be better to trade stocks or commodities, or maybe just carry more cash depending on the timing and situation the market is in.
USO Fund Trading – Daily Trading Chart USO has broken out from its large multi month consolidation from August – early October and is now forming a bull flag. While this flag could last a couple months I have feeling we will see a breakdown or a breakout sooner than later. This is just a gut feel and I will continue to watch and wait for a low risk setup.
Commodity Trading Newsletter Conclusion: To sum up next weeks market action I feel it will not be anything to write home about. Gold and silver will most likely trade sideways or up, natural gas should continue lower and crude oil should trade sideways. With any luck stocks will continue to rally and test the highs once again.
GLD ETF continues to be our investment of choice as it provides the more accurate low risk setups time and time again. With any luck we could get some low risk setups this week but I am not counting on it.
Saudi Aramco is abandoning the West Texas Intermediate benchmark to price oil for sale to U.S. consumers because it is “disconnected” from the company’s customers, Chief Executive Officer Khalid Al-Falih said. The state owned oil company said on Oct. 29 it will start using the Argus Sour Crude Index published by Argus Media Ltd, from next year. Sour refers to the oil’s sulfur content.
“WTI has really become disconnected with the market where we sell and what we sell -- we sell sour crude, heavier sour crude in the U.S. Gulf coast, that is where most of our barrels in North America go,” al-Falih told reporters today in Rabigh, near the Red Sea town of Jeddah in Saudi Arabia. Aramco has priced its U.S. deliveries against WTI, a light, sweet crude delivered at Cushing, Oklahoma, since 1994. The price is determined by oil futures traded on the New York Mercantile Exchange and published by Platts, the energy- information division of McGraw Hill Cos.....Read the entire article.
Sponsors of the United States Natural Gas Fund, UNG, took baby steps toward restoring the fund’s ability to issue new shares yesterday.
UNG is an exchange traded fund that invests in the natural gas futures market. The fund stopped issuing new shares on Aug. 12, citing regulatory uncertainty in the commodities marketplace. The Commodity Futures Trading Commission is investigating the role of ETFs in the commodities market and is expected to announce strict position limits for such funds. Many expect the $4 billion UNG ETF to exceed the allowable limits, as it controls a significant portion of the front-month natural gas futures market.
Since halting the issuance of new shares, UNG has traded at a sharp premium to its underlying net asset value, as demand for the fund has outstripped supply. As of 2:32 p.m. ET, Aug. 21, it was trading at a 16% premium to NAV. The sponsors of UNG have been looking for ways to maintain exposure to the natural gas market while reducing the number of futures contracts they hold. Yesterday, UNG secured a $500 million total return swap that could help.
Total return swaps are privately negotiated agreements between two parties to exchange cash flows based on the performance of a target index. In this case, UNG entered into an agreement with a bank to exchange cash flows based on the performance of a front month natural gas futures contract. Because swap contracts are privately negotiated and not linked to any underlying holding, they should not count toward any new CFTC limits.....Read the entire article.
