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Crude oil fell the most in six weeks as the dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment. Oil dropped as much as 2.7 percent as speculation that Greece may fail to secure financial assistance from the European Union weakened the euro, which is heading for its biggest weekly decline against the dollar since January. Total U.S. fuel demand dropped the most since November in the week ended March 12, the Energy Department reported this week.
“The market looks like it’s tracking the dollar play,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “It’s also retreating from the $83 level because fuel demand dropped below the five year average.” Crude oil for April delivery fell $2.10, or 2.5 percent, to $80.19 a barrel at 11:11 a.m. on the New York Mercantile Exchange. Earlier, it touched $80.07, the biggest drop since Feb. 5. Futures are down 1.3 percent this week.
The dollar traded at $1.3511 against the euro, compared with $1.3608 yesterday. It’s poised to gain 1.9 percent this week, the biggest increase since the week ended Jan. 29. The Reuters/Jefferies CRB Index of 19 commodities declined 1 percent to 272.75, the steepest drop since March 4. Seventeen of the commodities traded lower. Total fuel demand dropped by 4.2 percent to 18.8 million barrels a day last week, 7.8 percent below the five year average for the second week in March. It was the biggest one-week decline since the week ended Nov. 6.....Your keyword.
With 4 hours MACD staying below signal line, intraday bias in crude oil remains neutral. Consolidations from 83.16 is possibly still in progress and another fall might be seen to 38.2% retracement of 69.50 to 83.16 at 77.94. But downside will likely be contained there and bring another rise. On the upside, decisive break will confirm rally resumption for 83.95 high next.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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 Thursday as it consolidates some of Wednesday's rally. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. Closes below Monday's low crossing at 79.41 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is the 20 day moving average crossing at 81.03. Second support is Monday's low crossing at 80.89.
Natural gas closed sharply lower on Thursday and below weekly support crossing at 4.157 as it extends this winter's decline. 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 winter's decline, weekly support crossing at 4.035 is the next downside target. Closes above the 20 day moving average crossing at 4.671 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.483. Second resistance is the 20 day moving average crossing at 4.671. First support is today's low crossing at 4.119. Second support is weekly support crossing at 4.035.
The U.S. Dollar closed higher on Thursday as it consolidates some of this week's decline while renewing the late winter trading range. The dollar rose sharply due to dealer talk that the Federal Reserve would raise the discount interest rate. Today's chatter among traders reflected fears that the Feb may raise interest rates sooner than later. Additional support came from renewed concerns over Greece's debt concerns. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, the 38% retracement level of the November-February rally crossing at 79.17 is the next downside target. Closes above the 20 day moving average crossing at 80.70 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 80.70. Second resistance is the reaction high crossing at 81.20. First support is Wednesday's low crossing at 79.73. Second support is the 38% retracement level of the November-February rally crossing at 79.17.
Oil fell for the first time in three days as a stronger dollar trimmed demand for commodities as an alternative investment and a report showed U.S. crude stockpiles increased. Oil fell as much as 1.5 percent as the dollar gained against the euro amid concern Greece will fail to secure financial assistance from the European Union. Crude oil inventories grew last week to the highest level since August, according to a U.S. government report yesterday.
“The strong dollar has been the major factor here,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “The dollar strength has got the risk takers or the risk buyers on the sidelines, but they’re only going to wait so long before getting back into the water.” Crude oil for April delivery fell 49 cents, or 0.6 percent, to $82.44 a barrel at 1:35 p.m. on the New York Mercantile Exchange. It settled at $82.93 yesterday, the highest close since Jan. 6. Oil has risen 71 percent in the past year.
The dollar gained 0.8 percent against the euro to $1.3629 from $1.3738 yesterday. Greek Prime Minister George Papandreou set a one week deadline for the EU to craft a financial aid mechanism. Greece needs to raise about 10 billion euros ($14 billion) to refinance bonds due on April 20 and May 19. The Reuters/Jefferies CRB Index of 19 commodities declined 0.4 percent to 275.30, the first drop in three days. Ten of the commodities traded lower.....Read the entire article.
Earlier this week I noticed a pattern in the market throughout an entire trading session that has inspired me to write a short piece on sector rotation.
On Tuesday March 16th, my quote screen was flashing green as sectors reached new intraday highs or 52 week highs. The interesting part was that every sector that was flashing green happened to be in sectors that strengthen at the end of a bull market cycle or strong rally. This would include basic materials, staples, services, utilities and financial.
Today I investigated the different sectors and came across some interesting numbers between the January market peak and this week’s price action as I show in the charts below.
JANUARY – ETF Sector Rotation Trading – 28 Day Cycle I may not explain this well but try to follow me here Just before the market rolled over and lost over 9% last January, all the proper bull market sectors were very strong during the previous 28 days. This is normal and a strong sign that market participants were bullish on the overall market.
But the market was overbought; trading volume was light indicating that not many people are willing to buy at these lofty prices. And the VIX (volatility index) had reached an extreme low (a level that has triggered large sell offs in the past). All this means one thing to me. And that is, trade with caution and tighten your protective stops.
General rule, if everyone is buying all the hot stocks at these over bought levels then you can’t help but think its time for the market to roll over and shake them all out.
MARCH – ETF Sector Rotation Trading –28 Day Cycle The chart of March shows where the sectors have finished over the past 28 days. Notice how similar the sectors have appreciated in price…
I have overlaid John Murphy’s sector rotation image to show which sectors are strongest in a bull market.
Now the interesting part is that it appears to be the setup as in January. My quote system is flashing new highs for the bear market cycle sectors which are the one which have not performed well (Stapes, Services & Utilities) and I have to think the market is about to take a breather or do a swan dive.
Don’t get me wrong, I am not saying we are on the verge of a bear market. I actually think the market is strong and will trade sideways in a large range for most of this year or just continue to trend up. What I am saying is that these sectors go in and out of favor during smaller market cycles and that can be very useful information.
Sector Rotation Explained You can learn more about sector rotation from this detailed course How to Profit From Sector Rotation Using ETFs. This course explains how different sectors are stronger during different points within the economic cycle. The chart above shows the relationships and which of the various sectors should strengthen from the economy. The financial Market Cycle leads the Economic Cycle because traders try to anticipate the economy.
Market Update & Trading Conclusion: Stock Indexes: The market in my opinion is way over bought on the daily chart and needs a breather. Volume is light, VIX is at the same level we saw in January just before the top and the bullish sectors are firing on all pistons. You won’t catch me buying up here. Any type of pullback will most likely be sharp and there is no need to put money to work right now.
Precious Metals: Gold and silver had a nice pop this week off of a support level. I did not have a low risk setup as momentum was not on my side at the time of the pop. Also the large gap up on GLD makes me nervous as gaps tend to get filled. I am just waiting for something to unfold which looks to be a few days away still.
Oil: It has popped higher also and is trading at resistance. As I mentioned in Sundays report, if the USD dollar completes this breakdown then we will see commodities and stocks surge to higher prices and most likely post a nice multi month rally.
Natural Gas: We are seeing natural gas prices dip below support, shaking out traders who had their protective stops set just beneath the previous low. Natural gas is a silent killer as it will shake even the best traders out of the market. I feel natural gas is over sold and ready for a bounce but until I get a low risk setup I remain on the side lines.
Crude oil is still staying below 83.16 resistance for the moment and hence, intraday bias remains neutral. Consolidations from 83.16 could still continue with another fall. But downside is expected to be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise. On the upside, however, decisive break will confirm rally resumption for 83.95 high next.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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 higher on Wednesday as it rebounded off Monday's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. Closes below Monday's low crossing at 79.41 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is the reaction low crossing at 77.44.
Natural gas closed lower on Wednesday as it extends this winter's decline. The low range close sets the stage for a steady to lower 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, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.724 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.531. Second resistance is the 20 day moving average crossing at 4.724. First support is today's low crossing at 4.352. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed lower on Wednesday and below the lower boundary of the trading range of the past six weeks, which crosses at 79.92. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, the 38% retracement level of the November-February rally crossing at 79.17 is the next downside target. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the 10 day moving average crossing at 80.50. Second resistance is the 20 day moving average crossing at 80.72. First support is today's low crossing at 79.73. Second support is the 38% retracement level of the November-February rally crossing at 79.17.
Crude oil rose above $82 a barrel after the Energy Department reported U.S. imports fell to a seasonal low and fuel inventories dropped. Crude imports slipped 0.8 percent last week to the smallest level for the second week in March since 2002. Supplies of gasoline and distillate fuels, which include heating oil and diesel, decreased more than forecast by analysts in a Bloomberg News survey. OPEC ministers meeting in Vienna today left production targets unchanged to support current price levels.
“Imports are down to a really, really small trickle,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We’re not able to bring in as much oil as we’d like to because the oil that is out there is going elsewhere. When the economy does start to grow and the refineries start to pick up runs, that crude isn’t going to be there.” Crude oil for April delivery gained $1.22, or 1.5 percent, to $82.92 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices have increased 69 percent in the past year. Oil traded at $82.50 a barrel before the release of the inventory report at 10:30 a.m. in Washington.
Oil imports decreased by 64,000 barrels a day last week to 8.43 million. The Organization of Petroleum Exporting Countries delivered 47 percent of its crude and refined products to the Asia Pacific region in 2008, up from 45 percent the year before, according to data on its Web site. That compares with a decline in the U.S. to 22 percent in 2008 from 26 percent in 2007.....Read the entire article.
Crude oil was higher overnight as it extends Tuesday's rally. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. Closes below Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. Wednesday's pivot point is 81.04. First resistance is the overnight high crossing at 82.78. Second resistance is last Friday's high crossing at 83.47. First support is Monday's low crossing at 79.41. Second support is the reaction low crossing at 77.44.
Natural gas was slightly lower overnight as it extends this winter's decline. 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 4.726 would confirm that a short term low has been posted. Wednesday's pivot point is 4.364. First resistance is the 10 day moving average crossing at 4.535. Second resistance is the 20 day moving average crossing at 4.726. First support is Tuesday's low crossing at 4.400. Second support is weekly support crossing at 4.157.
The U.S. Dollar was lower overnight and has broken out below the lower boundary of trading range of the past six weeks, which crosses at 79.92. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 would open the door for a larger degree decline during March. If June renews this winter's rally, the 50% retracement level of the 2009 decline on the weekly continuation chart crossing at 81.97 is the next upside target. First resistance is the 10 day moving average crossing at 80.50. Second resistance is the 20 day moving average crossing at 80.71. First support is the overnight low crossing at 79.74. Second support is the 38% retracement level of the November-February rally crossing at 79.17.
Crude oil closed higher due to short covering on Tuesday as it consolidated some of the decline off last Friday's high. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If May extends Monday's decline, the reaction low crossing at 77.44 is the next downside target. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is today's high crossing at 82.32. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is the reaction low crossing at 77.44.
Natural gas closed lower on Tuesday as it extends this winter's decline. The low range close sets the stage for a steady to lower 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, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.777 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.578. Second resistance is the 20 day moving average crossing at 4.777. First support is today's low crossing at 4.400. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed lower on Tuesday and is challenging the lower boundary of the trading range of the past six weeks, which crosses at 79.92. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is the reaction low crossing at 79.92. Second support is today's low crossing at 79.85.
Crude oil rose the most in four weeks as the dollar fell against the euro, buoying demand for most commodities as an alternative investment, and as OPEC ministers indicated they would refrain from increasing output. Oil gained as much as 2.7 percent as the dollar weakened against the euro after Standard & Poor’s Ratings Services affirmed its sovereign credit ratings on Greece. Saudi Arabia’s oil minister said yesterday oil prices are in the right range. The kingdom is OPEC’s biggest producer.
“It’s a pretty good move down for the dollar, and that’s definitely getting things perked up,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “The OPEC decision is baked in the cake.” Crude oil for April delivery rose $1.81, or 2.3 percent, to $81.61 a barrel at 10:59 a.m. on the New York Mercantile Exchange. Earlier, oil touched $81.99 a barrel in its biggest increase since Feb. 16. Oil has advanced 72 percent in the past year.
Most major currencies, including the dollar, weakened against the euro after European finance ministers worked out a strategy for emergency loans to Greece should the nation’s plan to reduce the region’s biggest budget deficit fall. S&P affirmed its BBB+ long term and A-2 short term credit ratings on Greece. The dollar weakened 0.6 percent against the euro to $1.3762 at 11:02 a.m. in New York from $1.3677 yesterday. Some investors buy commodities like oil, gold and copper as an alternative investment to the dollar.
The Reuters/Jefferies CRB Index of 19 commodities advanced for the first time in seven days, gaining 0.7 percent to 272.74. Twelve of the commodities increased, led by heating oil, crude and gasoline.....Read the entire article.
When your down and troubled and you need a helping hand and nothing oh nothing is going right. Just close your eyes and think of Ben and soon he will be there to brighten even your darkest night. You’ve got a friend! The Fed has been the oil bull best friend but is that friendship going to start to become a little strained. With a better than expected jobs report and dissension within the committee the possibility of laying the groundwork for change is in the language in the much debated Fed Statement is rising. Let’s face it oil has been dependant on Fed policy and for all intents and purposes it has been a one sided relationship.
Now with the Fed feeling pressure to change the language about rates staying low for an extended period oil bulls may have their dreams of $85 or $90 dollar barrel oil squashed despite the illusion of their peak oil fantasies. Oh yes there are some that are betting on a change in the language even though the majority think things will not change but any hint of a softening in Fed resolve will be a big blow to oil bulls.
Oil broke the sharp intermediate uptrend and despite the fact that the move on a short term bias makes us look oversold and on target for an attempt at a recovery rally at least on a day trade basis the truth is that without more help by the Fed the oil bulls have failed to break out of the wider trading range with the highs established earlier this year. With the cheaters in the OPEC cartel beginning to meet and the Chinese more than likely to raise reserve requirements on their banks (assuming their egos and politics do not get in the way) the bulls will need a friend in Ben if they are going they have the fortitude to take oil to the next level If not then repeated failures to take out the mid eighties we will then eventually go and test the lower end of the range. Does this sound familiar?
The other help to the bulls may come from the Chinese. Now that President Obama has politicized the Chinese’s currency peg to the dollar in the eyes of the Chinese it makes it less likely that they will let the Yuan float .The Chinese says in effect that the policy of devaluing our currency to improve our competitive advantage. Well they might have a point if it were not for the fact the china pegged their currency to the dollar when the dollar was strong as well. The AFP reports that China on Tuesday dismissed calls from US lawmakers for Beijing to be labeled a currency manipulator, saying the value of the Yuan was not to blame for global trade imbalances. The comments echoed those by Premier Wen Jiabao at the weekend, who said Beijing would not yield to foreign pressure to allow the Yuan to appreciate, and warned other countries to stop "finger-pointing".
The AFP says that on Monday, a group of 130 Democratic and Republican lawmakers called on US Treasury Secretary Timothy Geithner to single out China's Yuan policy in a report due next month, saying Beijing was in effect subsidizing exports. "The impact of China's currency manipulation on the US economy cannot be overstated," the lawmakers said in the letter submitted to Geithner and US Commerce Secretary Gary Locke."Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors." us Chinese commerce ministry spokesman Yao Jian said the strong Yuan, effectively pegged to the dollar since mid-2008, was not the reason for China's trade surplus.
Energy analyst Phil Flynn can reached at pflynn@pfgbest.com
Crude oil's break of 80.61 support indicates that a short term top is already formed at 83.16 on bearish divergence condition in 4 hours MACD. Deeper decline should be seen to 38.2% retracement of 69.50 to 83.16 at 77.94 next and break will target 6.18% retracement at 74.72. On the upside, in case of recovery, break of 83.16 is needed to confirm rally resumption. Otherwise, we'd expect another fall as correction from 83.16 extends.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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 could be shaping up to be an extraordinary week in the markets. I strongly recommend that traders everywhere take precautionary measure measures to protect capital.
Last week we gave you a Trade Triangle alert to exit the gold market on the long side. Since that alert was issued gold has dropped significantly.
In today's short video we bring you up to date with our thoughts on what we think is going to happen next to gold.
Just click here to watch "A Sneak Peek At Gold" and as always our videos are free to watch and there are no registration requirements. Please leave a comment to let us know your thoughts on this video and the direction of gold.
Crude oil closed lower on Monday and below the 20 day moving average crossing at 80.44 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. If May extends today's decline, the reaction low crossing at 77.44 is the next downside target. Closes above the 10 day moving average crossing at 81.44 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 81.44. Second resistance is last Friday's high crossing at 83.47. First support is today's low crossing at 80.89. Second support is the reaction low crossing at 77.44.
Natural gas closed higher due to short covering on Monday as it consolidates some of this winter's decline. The high range close sets the stage for a steady to higher 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, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.824 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.614. Second resistance is the 20 day moving average crossing at 4.824. First support is today's low crossing at 4.407. Second support is weekly support crossing at 4.157.
The U.S. Dollar closed higher on Monday as it rebounds off the lower boundary of the trading range of the past six weeks. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Friday's low crossing at 79.95. Second support is the reaction low crossing at 79.92.
