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Crude oil's sharp retreat from 80.61 argues that rebound from 69.50 is not ready to resume yet and turned intraday bias neutral again. More sideway trading might be seen. But after all, outlook remains bullish as long as 77.05 support holds. Break of 80.61 will indicate rally resumption and should target 83.95 high next. However, note that below 77.05 support will argue that rebound from 69.50 is completed with a double top. In such case, focus will be shifted back to 69.50 support instead.
In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
Crude oil closed lower due to profit taking on Monday. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top is in or is near.
Closes below the 20 day moving average crossing at 77.32 would confirm that a short term top has been posted. If May resumes the rally off February's low, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target.
First resistance is last Monday's high crossing at 81.15 Second resistance is the 75% retracement level of the January-February decline crossing at 81.63
First support is last Thursday's low crossing at 77.44 Second support is the 20 day moving average crossing at 77.32
Natural gas closed lower on Monday and below the 87% retracement level of the December-January rally crossing at 4.819. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.
If May extends this winter's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.236 are needed to confirm that a low has been posted.
First resistance is the 10 day moving average crossing at 5.036 Second resistance is the 20 day moving average crossing at 5.236
First support is today's low crossing at 4.740 Second support is December's low crossing at 4.656
The U.S. Dollar closed higher due to short covering on Monday but remains below the 50% retracement level of the 2009 decline crossing at 81.32. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are diverging and are neutral to bearish signaling that a short term top might be in or is near.
Closes below the reaction low crossing at 79.61 are needed to confirm that a short term top has been posted. If March renews this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.
First resistance is the reaction high crossing at 81.43 Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92
First support is the 20 day moving average crossing at 80.34 Second support is last Tuesday's low crossing at 80.15
Strong data out of Europe and weak data out of China should give us a mixed picture. In the Euro Zone manufacturing hit 30-month high in February. The unemployment rate in Europe came in at a better than expected 9.9%. This seemed to over shadow the fact that the HSBC China Manufacturing Purchasing Managers Index fell to 55.8 in February from 57.4 in January. While still showing expansion it also shows that the world’s second largest oil consumer may be slowing its demand for oil. We see that demand is still weak with ample global supply.
In fact just last week the Energy Information Agency estimated that supply in OECD countries was 2.69 billion barrels at the end of 2009 which is the equivalent of about 58 days of forward demand cover and a whopping 90 million barrels above the 5-year average. With supplies so strong it is hard to imagine that even an increase in demand will really start getting us going.
The EIA says that they expect the world oil market will gradually tighten in 2010 and 2011, as the global economic recovery continues and world oil demand begins to grow again. Of course for that to happen they are counting on OPEC to hold back supply. And as the EIA said OPEC cut its crude oil production by 2.2 million barrels per day in 2009 and is one reason why WTI crude oil prices stabilized between $70 to $80 per barrel since the middle of last year. This range is consistent with the "fair price" range for crude oil proposed by King Abdullah of Saudi Arabia at the beginning of 2009.
Oil prices hovered in this range despite sustained high levels of oil inventories and rising spare production capacity, which rose, in part, because of cuts in OPEC production. OPEC surplus crude oil production capacity currently stands at about 5 million bbl/d and could grow to 6 million barrel per day. However the EIA warns that most of this surplus capacity is concentrated in Saudi Arabia, which is not likely to use it as long as the oil market is stable and its price target range is being met. Yet the Saudis might get tired of carry the burden as the rest of the cartel cheats away. Bloomberg News reported that OPEC increased crude oil production to a 14 month high in February, led by a Saudi Arabian gain.
According to the Bloomberg Survey OPEC output rose 125,000 barrels a day, or 0.4 percent, to an average 29.17 million barrels a day, the highest level since December 2008. January production total was revised 45,000 barrels a day higher. Bloomberg says that OPEC cut its production quotas by 4.2 million barrels to 24.845 million barrels a day beginning in January 2009 as fuel demand tumbled during the worst global recession since World War II. The Saudis boosted output by 100,000 barrels to 8.25 million barrels a day, the highest level since December 2008. It was the largest increase of any member. The kingdom exceeded its quota by 199,000 barrels a day.
Despite oil marching in like a Lion, we fully expect the month to go out like a lamb. With OPEC cheating and demand still weak we feel the bulls are on borrowed time!
You can contact Phil directly at pflynn@pfgbest.com You can also see him each day on the Fox Business Network!
Crude oil rose to a six week high after U.S. consumers increased spending for a fourth consecutive month in January, signaling that fuel demand may climb.
Oil climbed as much as 1.2 percent after the Commerce Department reported a 0.5 percent increase in purchases. Prices advanced on Feb. 26 following a report by the department that U.S. gross domestic product increased by the most in six years, renewing optimism about the strength of the economic recovery.
“If consumer spending is up, we can expect to see higher demand going forward,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Crude oil for April delivery rose 46 cents, or 0.6 percent, to $80.12 a barrel at 9:48 a.m. on the New York Mercantile Exchange. Futures touched $80.62, the highest level since Jan. 13. Oil is up 79 percent from a year earlier.
The Standard & Poor’s 500 Index gained 6.95, or 0.6 percent, to 1,111.44. The Dow Jones Industrial Average rose 52.76, or 0.5 percent, to 10,378.02.
“The consumer spending numbers were positive,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “We finished last week strongly and the momentum is still on the bullish side.”
European manufacturing accelerated at the fastest pace in more than two years in February as reviving global demand boosted export orders. A manufacturing index for the 16 member euro region increased to 54.2 from 52.4 in January, London based Markit Economics said today. That’s above an initial estimate of 54.1 published on Feb. 19 and the highest since August 2007.
“Since late last week we’ve been seeing some economic optimism creep back into the oil market,” Flynn said.
Brent crude for April settlement rose 47 cents, or 0.6 percent, to $78.06 a barrel on the London based ICE Futures Europe exchange.
To contact the reporters on this story you can email Mark Shenk in New York at mshenk1@bloomberg.net
Crude oil's break of 80.51 suggests that rise from 69.50 has resumed and intraday bias is on the upside for 83.95 high next. On the downside, however, below 77.05 support will argue that rebound from 69.50 is completed, possibly with bearish divergence conditions. In such case, focus will be shifted back to 69.50 support instead.
In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
Three weeks ago on February 5th, we saw an extremely high level of fear in the market with selling vs. buying volume at a 9:1 ratio. We note that in 2009 this extreme level of fear occurred at the bottom of each significant pullback.
Since this panic selling low in February 2010 we have seen stocks and commodities work their way higher, which we expected. Overall the broad market looks as though it’s trying to make a move higher.
Below are some ETF charts of gold, silver, oil and the indexes.
Gold lead the market higher in 2009 and also lead the market lower in December of 2009. It looks as though gold could be starting a new trend higher.
You can see the clean breakout of the down channel and then a test of the channel at support. This type of price action also forms an inverse head and shoulders pattern for those who like trading patterns. This is very bullish price action.
SLV Silver ETF – Daily Trading Chart Silver has much of the same chart features as gold, but is slightly skewed. This is not particularly surprising though, as silver virtually always behaves with less defined chart patterns due to its characteristically funky price action.
USO Oil Fund – Daily Trading Chart
As with gold and silver, oil’s trading chart has formed a pivot low also, but the trend line is much steeper than what I am looking for. I prefer a flatter trend line as price growth is more sustainable.
As you can see in on the USO chart, back in December price rallied at almost the same angle as is currently the case, and then notice what happened. Once the momentum died out the price dropped straight back down. I call steep trends like this a Parabolic Rally.
Scroll up and look at the first chart (GLD) and observe the parabolic rally going into December. It too suffered a sharp drop straight back down when momentum died out.
Stock Indexes – SP500, Dow Jones, Russell 2000
Last week the market sold down the first half of the week, then bounced back up forming a possible pivot low. The daily chart for these indexes look virtually the same as the GLD, SLV and USO charts above for the past 5 trading sessions.
But, one little thing has me concerned…. When looking at the 5 minute intraday charts (posted below) you can see at the very last minute before the market closed HUGE selling volume flooded the ETFs. The market ended up losing all of its gain for the day.
With any luck this was just end of the month hedge, mutual fund, etc. portfolio rebalancing. But I am somewhat concerned that more of this selling could step back into the market Monday or Tuesday.
Weekend Trading Conclusion:
Overall, last week started on a negative note but ended strong after forming a reversal pattern.
It looks as though stocks and commodities have formed an ABC retrace pattern and are now ready to move higher.
How much higher you ask?
Well, I believe 2010 is going to be a traders market. I envision an 8-12 month sideways consolidation (large bull flag) forming. If this materializes then buying on over sold dips, as we did on Feb 5th, and scaling out on strength at resistance levels will be our goal in the coming months.
A bunch of 4-8% trades is what I’m figuring, but with leveraged etfs we can double and triple those type of returns. Now that is something to anticipate with delighted optimism!
Crude oil turned into consolidation after edging high to 80.51 initially last week and turned and dipped to as low as 77.05. Nevertheless, with 75.69 resistance turned support intact, rise from 69.05 should still be in progress. Indeed, Friday's strong rebound indicates that consolidation from 80.51 might have completed already. Initial bias is cautiously on the upside this week. Break of 80.51 will confirm rise resumption and should target a retest on 83.95 high next. On the downside, in case of another fall, outlook will remain bullish as long as 75.69 support holds. However, break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.
In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.
In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27..... Nymex Crude Oil Continuous Contract 4 Hours Chart.
Crude oil closed higher due to short covering on Friday as it consolidates some of Thursday's decline. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top is in or is near.
Closes below the 20 day moving average crossing at 77.06 would confirm that a short term top has been posted. If May resumes this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target.
First resistance is Monday's high crossing at 81.15 Second resistance is the 75% retracement level of the January-February decline crossing at 81.63
First support is Thursday's low crossing at 77.44 Second support is the 20 day moving average crossing at 77.06
Natural gas closed higher due to short covering on Friday as it consolidates above the 87% retracement level of the December-January rally crossing at 4.819. The high range close sets 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 May extends this week's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.257 are needed to confirm that a low has been posted.
First resistance is the 10 day moving average crossing at 5.110 Second resistance is the 20 day moving average crossing at 5.257
First support is today's low crossing at 4.803 Second support is December's low crossing at 4.656
The U.S. Dollar closed lower on Friday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 80.27 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.
First resistance is last Friday's high crossing at 81.43 Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92
First support is the 20 day moving average crossing at 80.27 Second support is Tuesday's low crossing at 80.15
The Obama administration failed to meet a deadline for submitting a court-ordered analysis of the environmental effects of offering new leases to drill in Alaskan coastal waters, the oil industry said Thursday.
A federal appeals court last year had invalidated the Interior Department's current five year plan for offering oil and gas leases, saying that the government hadn't conducted an adequate review of the environmental impact in the Beaufort, Bering and Chukchi seas off the Alaskan coast. The Interior Department's Minerals Management Service has been conducting such a review and is supposed to respond to the court.
"We are disappointed MMS has again missed a deadline to provide the court with the analysis it ordered last April," Jack Gerard, the chief executive of the American Petroleum Institute, said in a statement. "This will delay investment decisions, delay the production of much-needed oil and natural gas and delay the creation of much-needed jobs."
An Interior Department spokeswoman said that the federal government was working on an approach to drilling in the Outer Continental Shelf soon.
"The secretary expects to be making an announcement about a comprehensive approach on the OCS in the coming weeks," spokeswoman Kendra Barkoff said.
Crude oil rose after a report showed the U.S. economy grew at a 5.9 percent annual rate in the fourth quarter, signaling that fuel demand may climb in the world’s biggest energy consuming country. Oil increased as much as 2.3 percent after the Commerce Department said gross domestic product gained by the most in six years. The growth rate was higher than the government reported last month. Federal Reserve Chairman Ben S. Bernanke said this week that the U.S. economy is in a “nascent” recovery.
“The positive GDP number is putting upward pressure on prices,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “We are going to be focused on anything that gives an indication of where the economy is going.” Crude oil for April delivery rose $1.70, or 2.2 percent, to $79.87 a barrel at 10:41 a.m. on the New York Mercantile Exchange. The April contract is down 0.2 percent this week.
Gasoline for March delivery climbed 4.3 cents, or 2.1 percent, to $2.08 a gallon in New York. The increase in prices accelerated as the dollar dropped against the euro. A weaker U.S. currency bolsters the appeal of raw materials as an alternative investment. The greenback traded at $1.3627 per euro, down 0.6 percent from $1.3548 yesterday. Oil fell 2.3 percent yesterday after the number of Americans filing first time claims for unemployment benefits unexpectedly gained in the week ended Feb. 20, and durable goods orders excluding transportation dropped in January.....Read the entire article.
Crude oil's consolidation from 80.51 continues today and intraday bias remains neutral. While deeper retreat cannot be ruled out, note that rise from 69.50 is in favor to continue as long as 75.69 support holds. Above 80.51 will target a retest on 83.95 high. However, break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.
In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
Crude oil closed lower on Thursday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top is in or is near.
Closes below the 20 day moving average crossing at 76.80 would confirm that a short term top has been posted. If May resumes this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target.
Thursday evenings pivot point, our line in the sand is 78.58
First resistance is Monday's high crossing at 81.15 Second resistance is the 75% retracement level of the January-February decline crossing at 81.63
First support is today's low crossing at 77.44 Second support is the 20 day moving average crossing at 76.80
Natural gas closed lower on Thursday and tested the 87% retracement level of the December-January rally crossing at 4.819. The low range close sets the stage for a steady to lower 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 May extends this week's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.272 are needed to confirm that a low has been posted.
Natural gas pivot point for Thursday evening is 4.811
First resistance is the 10 day moving average crossing at 5.167 Second resistance is the 20 day moving average crossing at 5.272
First support is today's low crossing at 4.808 Second support is December's low crossing at 4.656
The U.S. Dollar closed lower due to profit taking on Thursday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are diverging but are neutral signaling that sideways to higher prices are possible near term.
If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 80.23 are needed to confirm that a short term top has been posted.
First resistance is last Friday's high crossing at 81.43 Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92
First support is the 20 day moving average crossing at 80.23 Second support is Tuesday's low crossing at 80.15
Gold, the SPDR Gold Shares (NYSE: GLD) and the Market Vectors Gold Miners ETF (NYSE: GDX, have turned positive this morning, in the aftermath of intense selling pressure earlier in the session. This is a sign of meaningful relative strength in the sector, but the day is young yet. Looking at the GDX chart, today's spike low at 41.35 followed by a powerful upmove to 42.50, where it continues to sustain since the opening few minutes, has the look and the feel of the completion of the correction from the 2/18 high at 45.56. With that in mind, I am looking for confirmation of today's low upon an upside penetration of 43.05.
From Mike Paulenoff, author at MPTrader.com, a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions. Share
Is Ben Bernanke losing his influence over the Energy Market? Oh sure bleak Ben told the market yesterday that interest rates would stay low for infinity and that the economy was not ready for the training wheels you come off but his words seemed to lack the wallop that his words had in the past. Oh sure we got a break in the dollar the stock market and oil dutifully rallied yet at the end of the day it does not seem to be a market game changer like Ben has given us in the past. Perhaps the reason in part that the market realizes that despite the promise low interest rates until the second coming Bens words will have less impact on the value of oil because his words will have less impact on the value of the dollar.
Over the past year it is obvious that Fed Monetary policy of negative interest rates has been the major factor in the rebound in oil. That was in part because the dollar got smashed and the imaginary belive that somehow the EURO was a better currency. Yet does anyone belive that now? On one TV screen you have Ben saying that low interest rates and are here to stay and on the other screen that Greek strikers on the other protesting financial reforms? When you look at that and no matter when you think the Fed will really raise interest rates, will it really make the dollar look worse against the Euro?
We have been living in a world of negative interest rates since last March and to be honest with you the dollar has priced in that scenario to death, Yet now that scenario is changing. Low interest rate promises by the Fed are no longer an excuse to trash the dollar and prop up the euro or even the yen for that matter. Yes the dollar may see some ups and downs yet based on the problems in the rest of the world it appears that the dollar even with low interest rates and record budget deficits the dollar is still undervalued against other global currencies. The Dollar took the brunt of the credit crisis and secretly Ben embraced that. The weak dollar set the stage for the carry trade and helped bail out global banks. Yet now despite bens pronouncement and commitment to low rates the market is showing that rates cannot stay low forever. We see record and near record spreads in the yield curve sending a signal that the market won’t stand for this forever and Ben wants to temper expectations so he can keep the carry trade money machine chugging a little longer. But with the increase in the discount rate and decision within the Fed we all know that we are getting closer to an exit every day so oil bulls cannot on the Fed and this Ben Bernanke inspired rally to go on forever
Oil bulls also bought because we are getting a winter storm in the Northeast, others because we saw an increase in gas demand. But won’t one offset the other? The Energy Information Agency reported a surge in refinery runs to an unimpressive level of 81.2%. The EIA reported that crude inventories increased by 3.0 million barrels, gasoline inventories decreased by 0.9 million barrels and distillate fuel inventories decreased by 0.6 million barrels.
Long term Phil is still bearish on oil. You can contact Phil by emailing him at pflynn@pfgbest.com! Also you can see Phil online today on Fox Business network online and on TV. Check it out!
Crude oil fell the most in three weeks as U.S. jobless claims and manufacturing orders trailed forecasts, stirring concern that the global economic recovery may falter and crimp energy demand growth. Oil decreased as much as 3.7 percent to the lowest level in a week as the number of Americans filing first time claims for unemployment insurance unexpectedly increased last week, and durable goods excluding transportation declined in January.
“It’s going to take better jobs, better consumer confidence, better business confidence and getting everything going into a better direction before you can support crude oil in a $75 to $80 level,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington.
Crude oil for April delivery fell $2.71, or 3.4 percent, to $77.29 a barrel at 11:36 a.m. on the New York Mercantile Exchange, the biggest decline since Feb. 4. Earlier, it touched $80.32. Oil has dropped 2.6 percent this year.
Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and those receiving extended benefits decreased.
Orders for durable goods fell 0.6 percent, the biggest drop since August, figures from the Commerce Department showed today in Washington. Bookings for all goods meant to last several years rose 3 percent, more than anticipated and reflecting a jump in commercial aircraft.....Read the entire article.
It's been about eight days since we did a video on gold, and given the market action today we thought we would look at what is causing the downward pressure in this market.
If you did not watch our last video on gold, we strongly recommend that you watch the video titled "Five Reasons Why Gold Will Not Make a New High This Time" as it will give you a bigger picture of how we see this market playing out in the next 12 months.
In today's short video we look at an indicator that we have not talked about before in any of our videos. The indicator, which is an overlay on top of the chart, is called the Donchian Channel Indicator.
Richard Donchian, who has since passed away, came up with this indicator in the late '40s. The reason why we like this indicator is the fact that it has successfully stood the test of time. We think you'll really enjoy seeing how it can help you make money in the gold market.
Also in this video, we point out one very important cycle that is in play now and where I think the next tradable low is coming into this market.
As always our videos are free to watch and there are no registration requirements. We would really like to hear back from you, with regards to your thoughts on the gold market, so please feel free to leave a comment.
Crude oil continues to stay in tight range below 80.51 today and intraday bias remains neutral for the moment. Deeper retreat to 4 hours 55 EMA (now at 78.12) cannot be ruled out. But after all, rise from 69.50 is in favor to continue as long as 75.69 support holds. Above 80.51 will target a retest on 83.95 high. However, note that Break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.
In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish..... Nymex Crude Oil Continuous Contract 4 Hours Chart.
This week has been playing out as we expected. Last week we saw the market rally on light volume into a resistance zone on the daily chart. Light volume rallies are always a warning sign, much like the “Calm before a Storm”.
The way I look at bearish price action....
The First Heavy Selling Volume Day – I see this as large institution selling massive amounts of investments (stocks & commodities) because prices have risen enough for them to book profits OR they know something we don’t and they are getting out before the majority of traders find out.
Light Volume Rally/Drift Higher – After a heavy volume sell off we tend to see prices drift higher on light volume. This is when the institutions stop dumping investments and allow the retail investors (Un-educated Traders) to buy the market back up.
Bear Market Trend – In a down trend we see these two phases enter and exit the market. These patterns happen on every time frame from tick charts to yearly charts. Trends vary in length from 1-2 cycles and sometimes 10-20 cycles and more…
Current Market Conditions
So far this week we have seen the market sell down on increasing volume which is bearish and is pointing to lower prices. On Wednesday we saw prices move up on light volume with volatility rising into the close with a short wave of selling. This was indicating to me that sellers were starting to enter the market again.
The daily chart below clearly shows the heavy selling and drift higher on declining volume. The market is now trading deep into a resistance zone and looking ready to drop.
SP500 Intraday 2 Hour Candle Charts
You can see the same selling patterns repeat themselves. Since the Feb 5th bottom we have been forming a much larger bear flag which makes me think a BIG drop is only days away.
SP500 Trend Trading Conclusion:
Both stocks and precious metals are trading with the same chart patterns and volume levels. So if you are wondering about gold, silver and oil, I am seeing a similar scenario playing out for them also.
The reason I keep bringing these bearish patterns up in my reports is because once you master trading in a down market then you can make money during some of the fasted moving times in the market. I have always preferred shorting the market because prices drop much quicker then they rise. So profits are made quickly.
Also, if the broad market does eventually roll over later this year, and I am not saying it is, but “IF” it does, then you will feel somewhat comfortable with the positions we will be taking.
If you would like to receive these Free Bi-Weekly Trading Reports please visit Chris Vermeulen's The Gold And Oil Guy.
Crude oil closed higher on Wednesday and remains poised to extend the rally off this month's low. 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 May extends this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target. Closes below the 20 day moving average crossing at 76.60 would confirm that a short term top has been posted.
Crude oil pivot point, our line in the sand is 79.68
First resistance is Monday's high crossing at 81.15 Second resistance is the 75% retracement level of the January-February decline crossing at 81.63
First support is the 10 day moving average crossing at 78.32 Second support is the 20 day moving average crossing at 76.60
Natural gas closed higher due to short covering on Wednesday as it consolidated some of this week's decline. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.
If May extends this week's decline, the 87% retracement level of the December-January rally crossing at 4.819 is the next downside target. Closes above the 20 day moving average crossing at 5.293 are needed to confirm that a low has been posted.
Natural gas pivot point for Wednesday evening is 4.861
First resistance is the 10 day moving average crossing at 5.218 Second resistance is the 20 day moving average crossing at 5.293
First support is today's low crossing at 4.859 Second support is the 87% retracement level of the December-January rally crossing at 4.819
The U.S. Dollar closed lower due to light profit taking on Wednesday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are diverging but are neutral signaling that sideways to higher prices are possible near term.
If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 80.15 are needed to confirm that a short term top has been posted.
First resistance is last Friday's high crossing at 81.43 Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92
First support is Tuesday's low crossing at 80.15 Second support is the 20 day moving average crossing at 80.15
