Crude Oil Bulls Maintain a Near Term Advantage, Here's Friday's Numbers

Crude oil was higher overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are overbought, diverging but are bullish signaling that sideways to higher prices are possible near term.

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. Closes below the 20 day moving average crossing at 78.17 would confirm that a short term top has been posted.

Friday's pivot point, our line in the sand is 80.33

First resistance is Wednesday's high crossing at 81.60
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 80.10
Second support is the 20 day moving average crossing at 78.17

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Natural gas was steady to lower overnight and posted a new contract low. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends the decline off January's high, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 5.090 would confirm that a short term low has been posted.

Natural gas pivot point for Friday is 4.639

First resistance is the 10 day moving average crossing at 4.811
Second resistance is the 20 day moving average crossing at 5.090

First support is the overnight low crossing at 4.612
Second support is weekly support crossing at 4.157

Just click here for your FREE trend analysis of natural gas ETF UNG

The U.S. Dollar was slightly lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

Closes below the reaction low crossing at 79.61 would open the door for a larger degree decline during March. 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 Wednesday's low crossing at 79.84
Second support is the reaction low crossing at 79.61


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Technical Analysis Video: The Line Is Drawn In the Sand In the Equity Markets?

To many technicians, it is very clear where the equity markets will reverse, and for those folks who don't follow the technicals, this is a key reversal area in the S&P 500, the NASDAQ, and the Dow.

In our new short video we show you the exact levels that we think will reverse this market, if in fact it's ever going to reverse to the downside.

Currently the major trend remains positive for all the indices and we would only become negative on the these markets should the key levels we show you today, are broken.

As always our videos are free to watch and there are no registration requirements. We would really like to hear your thoughts on this video and the markets, so please feel free to leave a comment.


Technical Analysis Video: The Line Is Drawn In the Sand In the Equity Markets?




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Crude Oil Falls From 7 Week High as Dollar's Gain Reduces Appeal of Commodities

Crude oil fell as the dollar climbed the most against the euro in two weeks, reducing the appeal of commodities as an alternative investment. Oil slipped as much as 1.4 percent on the greenback’s advance after European Central Bank President Jean-Claude Trichet kept its benchmark interest rate unchanged and extended some stimulus measures to cement the economic recovery. Prices also dropped as a report showed that the number of contracts to buy previously owned homes in the U.S. declined in January.

“The dollar has been gaining strength, which is having an impact on the energy markets,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “We had some bad home sales data, which seems to also be sending prices lower.” Crude oil for April delivery fell 74 cents, or 0.9 percent, to $80.13 a barrel at 10:30 a.m. on the New York Mercantile Exchange. The contract rose 1.5 percent to $80.87 yesterday, the highest settlement level since Jan. 11.

Brent crude oil for April delivery declined 83 cents, or 1.1 percent, to $78.42 a barrel on the London-based ICE Futures Europe exchange. The dollar traded at $1.3595 per euro, up 0.8 percent from $1.3697 yesterday. The greenback is heading for the biggest gain since Feb. 17. An index of home purchase agreements, or pending home sales, fell 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced today in Washington.....Read the entire article.


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Crude Oil Daily Technical Outlook For Thursday

Crude oil edges higher to 81.23 but upside momentum remains a bit unconvincing. Nevertheless, in any case, further rise is still in favor as long as 77.05 support holds. Current rise from 69.50 might continue for a retest on 83.95 high next. On the downside, though, break of 77.05 will argue that rebound from 69.50 is completed. 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.


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Crude Oil Market Commentary For Wednesday Evening

Crude oil closed higher on Wednesday renewing the rally off February's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought, diverging and are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends the rally off February's low, 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 77.53 would confirm that a short term top has been posted.

First resistance is today's high crossing at 81.60
Second resistance is the 87% retracement level of the January-February decline crossing at 83.53

First support is the 20 day moving average crossing at 77.53
Second support is last Thursday's low crossing at 77.44

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Natural gas closed higher due to short covering on Wednesday as it consolidates some of Monday's decline but remains below 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 Thursday.

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 5.171 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 4.917
Second resistance is the 20 day moving average crossing at 5.171

First support is Tuesday's low crossing at 4.725
Second support is December's low crossing at 4.656

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The U.S. Dollar closed lower on Wednesday and below the 20 day moving average crossing at 80.43. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

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 today's low crossing at 79.84
Second support is the reaction low crossing at 79.61


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Oil Rises to Seven Week High as Refinery Operating Rates Gain

Oil rose to a seven week high after a U.S. government report showed that refinery operating rates climbed to the highest level since October, bolstering demand. Refinery utilization increased 0.7 percentage point to 81.9 percent in the week ended Feb. 26, the Energy Department said. Analysts surveyed by Bloomberg News forecast that there would be no change. Inventories of crude oil climbed 4.03 million barrels, more than three times what was estimated.

“Refinery run rates increased strongly, which should whittle down the huge oversupply of crude oil,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “This market just wants to go higher, even when there is bearish news.” Crude oil for April delivery increased $1.31, or 1.6 percent, to $80.99 a barrel at 11:40 a.m. on the New York Mercantile Exchange. Futures reached $81.23, the highest level since Jan. 12. Oil traded at $80 a barrel before the release of the inventory report at 10:30 a.m. in Washington.

Total U.S. fuel demand, averaged over the past four weeks, was 19.3 million barrels, up 3 percent from a year earlier, the department said. “We’re seeing a little demand improvement, which gives impetus to higher prices,” said Chip Hodge, who oversees a $9 billion natural resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “There continues to be optimism that economic growth will accelerate, and with it demand.”

Nationwide stockpiles of crude oil rose 1.2 percent to 341.6 million, the highest level since August, the report showed. It was the biggest gain since the week ended July 24.....Read the entire article.


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Crude Oil Daily Technical Outlook Wednesday Morning

Crude oil had another attempt to resume rally but failed again and settled back into familiar range of 77.05 and 80. Intraday bias remains neutral and more sideway trading could stil be seen. But after all, outlook remains bullish as long as 77.05 support holds. Break of 80.95 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.


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Crude Oil Closes Higher, Bulls Still Have a Lot to Prove

Crude oil closed higher on Tuesday as it extends the trading range of the past two weeks. The mid range close sets the stage for a steady opening on Wednesday. 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 77.38 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 today's high crossing at 81.32
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 77.38

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Natural gas closed higher due to short covering on Tuesday as it consolidates some of Monday's decline but remains below 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 Wednesday. 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 5.203 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 4.978
Second resistance is the 20 day moving average crossing at 5.203

First support is Monday's low crossing at 4.740
Second support is December's low crossing at 4.656

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The U.S. Dollar closed lower on Tuesday while extending February's trading range 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 Wednesday. Stochastics and the RSI are bearish signaling that the March Dollar might continue to correct more in time than in price.

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 80.41
Second support is last Tuesday's low crossing at 80.15

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Phil Flynn: Trying to Keep Positive

You've got to accentuate the positive, eliminate the negative and latch on to the affirmative, don't mess with Mister In Between. Oil tried to rally. It really did. It tried to ignore that pesky Mr. In Between, a place where it seems the market is most comfortable. Oil rallied even as the dollar soared and the British pound plunged. It tried to soar with the stock market and tried to worry about one Iranian oil official saying he would cut off oil supply to Europe. It tried to focus on the positive economic news and ignore the negative. Yet at some point the negative came in and the market realized that the day’s events just were not that bullish for oil.

Take Iranian deputy commander of Iran’s Revolutionary Guards who threatened to cut off Europe’s oil supply. He was probably cranky because he got his bank account frozen. Well that would be great because if they did cut off oil supply to Europe, that would be the equivalent of Iran putting economic sanctions on themselves. That would save a lot of time and effort thank you very much. In a world awash in spare production capacity and excess supply, would anyone really care for too long? The sell off in oil seems to suggest the oil market is saying, “Go ahead, make my day”.
The oil market tried to be positive about the consumer spending number which had a 0.5 percent increase in purchases and was better than expected but with the ISM manufacturing number falling to 56.5 in February and shy of expectations, did anyone actually increase their oil demand expectations?

Now add to that expectations by the surveys that we will see supply increase this week it was getting harder to keep that blindly bullish optimism going. Bloomberg News says that crude inventories probably increased for a fifth week as imports climbed. The Bloomberg News survey showed stockpiles rose 1.6 million barrels last week from 337.5 million, according to the median of eight estimates before an Energy Department report this week. Seven of the respondents forecast an increase and one estimated a decline. It would be the longest stretch of consecutive advances since May. Imports of crude oil increased 6.3 percent to 9.08 million barrels a day in the week ended Feb. 19, the highest level since October, according to last week’s report.

Now I think that crude supply could fall due to an increase in refinery runs. Last week we saw that refineries operated at 81.2 percent of capacity. That increase in runs could be the start of a bit of a trend and could give us a surprise draw in oil. As for the rest of the survey, Bloomberg says that it expects stockpiles of distillate fuel, a category that includes heating oil and diesel, probably fell 500,000 barrels from 152.7 million the prior week. As for gasoline, Bloomberg says that analysts were split over whether gasoline supplies increased or declined. Inventories probably rose 50,000 barrels from 231.2 million, the survey showed.
Oil and products continue to trade in well defined ranges.

There have been great daily opportunities. Trend traders are frustrated as the bulls or bears cannot score a decisive knock out. We still are predicting an eventually big break to the downside and the market’s inability to gain traction above $80 a barrel is making it harder for the bulls to make their case. Use this strength to put on bearish option plays or perhaps some iron condors. In the mean time call for specific trade entries for day trades and position trades at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. And to get the best business news in the business make sure you are tuned into the Fox Business Network where you can see me every day.


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Crude Oil Rises to Seven Week High as Global Equity Markets Advance

Crude oil rose to a seven week high as equity markets advanced, increasing optimism that a growing global economy will bolster fuel demand. Oil climbed as much as 2.9 percent as the MSCI Emerging Markets Index climbed to its highest level in five weeks after India’s economy improved. The gain accelerated as the dollar weakened against the euro, raising demand for commodities as an alternative investment.

“We are seeing new fund money come into commodities,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Everyone is focused on growth and how best to profit from it. There are still a lot of jobless but the economy has begun to grow.” Crude oil for April delivery rose $1.93 or 2.5 percent, to $80.63 a barrel at 1:12 p.m. on the New York Mercantile Exchange. Futures touched $80.95, the highest level since Jan. 12. Prices have doubled from a year earlier.

Oil has traded between $69.50 and $83.95 a barrel this year. Futures have topped $80 every day since Feb. 19. “This is still a range-bound market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We are testing the top end of the range right now on some positive economic sentiment, but it’s questionable whether we can actually break through.”

“There’s no single news item behind today’s move,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “We’ve been trading between $77 and the $85.50 area for the last week and have finally poked through on the upside. It is questionable if it can continue to advance from here”.........Read the entire article.


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Crude Oil Daily Technical Outlook For Tuesday Morning

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.



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Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Monday Evening

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

Just click here for your FREE trend analysis of crude oil ETF USO

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

Just click here for your FREE trend analysis of natural gas ETF UNG

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


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Phil Flynn: In Like a Lion and Out Like a Lamb?

In like a lion and out like a lamb? Ok, I know it is a tired cliché about the month of March but probably apropos for the energy and stock markets. Last week’s blistering hot GDP at 5.9% coupled with some strong data out of the Euro zone this morning has the market charging, well, like a lion. But is this aggressive move sustainable when you see weaker than expected data out of China. And if the economic data is so darned good, then why is oil demand just so darned bad?

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!



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Crude Oil Rises to Six Week High After U.S. Consumer Spending Climbs

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



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Crude Oil Daily Technical Outlook For Monday Morning

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.


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Weekend Gold, Silver, Oil & Index Charts

From guest analyst Chris Vermeulen....

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!

If you would like to receive Chris Vermeulen's free weekly trading reports please visit The Gold And Oil Guy.


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Crude Oil Weekly Technical Outlook

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.


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Weak Dollar Gives Crude Oil Bulls New Life

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

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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

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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


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Obama Administration Misses Deadline for Offshore Drilling Study

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.

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