CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.
Thursday, April 1, 2010
Crude Oil Bulls Take Clear Near Term Advantage
Crude oil closed up $1.13 at $84.89 a barrel today. Prices closed nearer the session high today and hit another fresh 11 week high. Prices also closed at a bullish weekly high close today. Crude oil bulls have the solid overall near term technical advantage and have regained solid upside momentum this week.
Natural gas closed up 22.1 cents at $4.09 today. Prices closed nearer the session high today after hitting a fresh contract low early on. Prices also scored a bullish "outside day" up on the daily bar chart and closed at a bullish weekly high close. Short covering in a bear market was featured. However, if prices on Monday can show good follow through buying, then a bullish "key reversal" up on the daily bar chart would be confirmed, which would then be one early technical clue that a maket bottom is in place.
The U.S. dollar index closed down 36 points at 80.93 today. Prices closed near the session low again today and closed at a bearish weekly low close. No serious chart damage has occurred but the bulls have faded this week on profit taking pressure. The bulls do still have the overall near term technical advantage.
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Gold & Indexes Melt Up Into Earnings?
Gold and the stock market continue to trade within a tight range this week. While the long term trend for both stocks and metals are up, and the charts look bullish I am not buying at this level because the market is over bought.
Chasing prices higher especially after a run this large is not the right move in my opinion. I did mention last week that we could see stocks continue to grind higher going into earning season which is about 2 weeks away still. I think that could happen, and if the same thing happens which we saw last January with great earnings (which I think we will see again) then watch out for another drop.
In short, if earning are good which they have been and everyone is expecting the same this April, then the typical Buy on Rumor (pre-earnings rally) which is what we have now, and Sell on the Good News in April then all the suckers thinking the market should rally will provide some liquidity for the smart money to sell at a premium.
That being said, if the earning are not good, then people will sell on that news also because the market is just waiting for news to sell… It’s the exact same situation as last time, that’s how I am feeling about it.
Trading Bottoms in the Broad Market
The past few months I have been really focusing on buying dips in the broad market after I see a mini 3 wave correction. I use a mix between price patterns, volume, market sentiment, and market internals and of course years of watching how the market moves and evolves during times of economic expansion and contractions. This is represented on the chart below as the purple line.
This chart below shows one of my custom indicators which have successfully timed intermediate market bottoms 1-2 days before everything started to rally higher. This is one of the reasons we bought into the selling on Feb 5th and again on Feb 25th using ETF’s.
Because this is a new etf trading strategy and type of trading signal to be used in a bull market I still have to fin tune it a little more because I want to be sure we don’t get shaken out of positions to early which is what happened to a couple ETF’s we got into Feb 5th.
What happened was were buying when EVERYONE was bearish and panicking out of positions making it an extremely emotional time for traders and myself to buy into the market. This is not an easy task… I still have trouble pulling the trigger on these days and some times I just sit back in my chair and with one quick poke from my finger I hit the enter button to buy. My heart pounding just from that… but add few thousand followers on the pile relying on quality analysis and you start to understand what im going though. Not to mention the hundreds of emails with people telling me the market is about to crash, we should be shorting etc....Crazy times for sure.
Anyways, I will be provided these new signals for subscribers which is very exciting. Because my focus is on managing risk and keeping it as low as possible this will be a learning curve as I apply it to the service and set protective stops which is very difficult to do during a time of high volatility in the market. We can see the market move 2-4% in one day during these times so if we are trading the TNA 3x leveraged Russell2000 fund we could see our position drop 12% in one day. Bigger risk, bigger rewards as they say.
GLD Gold ETF – Daily Chart
Gold and silver are currently trading in limbo at the moment. It’s tough to say what’s going to happen here which is why I continue to wait for something with a high probability of winning before putting any money to work.
The daily chart clearly shows a multi month bull flag, ABC retrace, Reverse Head & Shoulders, and wedge. All of which are very bullish. It’s just a waiting game as I do not jump the gun on any move because the market has the tendency to catch everyone off guard and I don’t want to be one of them. Been there, done that to many times....
Mid-Week ETF Trading Signals Conclusion:
Keeping things short and simple, I think the stock market is in a major bull market. I am not buying anything until we get a pullback of some type. If the market unfolds properly we could have a great shorting opportunity (profit from a falling market) happening any day now, so that is my main focus at this time.
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Chasing prices higher especially after a run this large is not the right move in my opinion. I did mention last week that we could see stocks continue to grind higher going into earning season which is about 2 weeks away still. I think that could happen, and if the same thing happens which we saw last January with great earnings (which I think we will see again) then watch out for another drop.
In short, if earning are good which they have been and everyone is expecting the same this April, then the typical Buy on Rumor (pre-earnings rally) which is what we have now, and Sell on the Good News in April then all the suckers thinking the market should rally will provide some liquidity for the smart money to sell at a premium.
That being said, if the earning are not good, then people will sell on that news also because the market is just waiting for news to sell… It’s the exact same situation as last time, that’s how I am feeling about it.
Trading Bottoms in the Broad Market
The past few months I have been really focusing on buying dips in the broad market after I see a mini 3 wave correction. I use a mix between price patterns, volume, market sentiment, and market internals and of course years of watching how the market moves and evolves during times of economic expansion and contractions. This is represented on the chart below as the purple line.
This chart below shows one of my custom indicators which have successfully timed intermediate market bottoms 1-2 days before everything started to rally higher. This is one of the reasons we bought into the selling on Feb 5th and again on Feb 25th using ETF’s.
Because this is a new etf trading strategy and type of trading signal to be used in a bull market I still have to fin tune it a little more because I want to be sure we don’t get shaken out of positions to early which is what happened to a couple ETF’s we got into Feb 5th.
What happened was were buying when EVERYONE was bearish and panicking out of positions making it an extremely emotional time for traders and myself to buy into the market. This is not an easy task… I still have trouble pulling the trigger on these days and some times I just sit back in my chair and with one quick poke from my finger I hit the enter button to buy. My heart pounding just from that… but add few thousand followers on the pile relying on quality analysis and you start to understand what im going though. Not to mention the hundreds of emails with people telling me the market is about to crash, we should be shorting etc....Crazy times for sure.
Anyways, I will be provided these new signals for subscribers which is very exciting. Because my focus is on managing risk and keeping it as low as possible this will be a learning curve as I apply it to the service and set protective stops which is very difficult to do during a time of high volatility in the market. We can see the market move 2-4% in one day during these times so if we are trading the TNA 3x leveraged Russell2000 fund we could see our position drop 12% in one day. Bigger risk, bigger rewards as they say.
GLD Gold ETF – Daily Chart
Gold and silver are currently trading in limbo at the moment. It’s tough to say what’s going to happen here which is why I continue to wait for something with a high probability of winning before putting any money to work.
The daily chart clearly shows a multi month bull flag, ABC retrace, Reverse Head & Shoulders, and wedge. All of which are very bullish. It’s just a waiting game as I do not jump the gun on any move because the market has the tendency to catch everyone off guard and I don’t want to be one of them. Been there, done that to many times....
Mid-Week ETF Trading Signals Conclusion:
Keeping things short and simple, I think the stock market is in a major bull market. I am not buying anything until we get a pullback of some type. If the market unfolds properly we could have a great shorting opportunity (profit from a falling market) happening any day now, so that is my main focus at this time.
Just click here if you would like to receive Chris Vermeulen's ETF Trading Signals newsletter.
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Crude Oil Climbs to 17 Month High on Signs of Economic Growth
Crude oil surged to a 17- month high and gasoline rose on signs that global economic growth is accelerating, bolstering optimism that fuel consumption will increase this year. Oil advanced as much as 1.6 percent after reports showed U.S., Chinese and European manufacturing expanded, while pessimism decreased among Japan’s largest industrial companies. Government data tomorrow may show that U.S. employers added about 180,000 jobs in March, a Bloomberg News survey showed.
“The economic news recently has generally been good, which has changed the perception of the oil market,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “An economic recovery is always good for demand.”
Crude oil for May delivery rose 88 cents, or 1.1 percent, to $84.64 a barrel at 11:16 a.m. on the New York Mercantile Exchange. Futures touched $85.10, the highest level since Oct. 10, 2008. Prices climbed 5.5 percent last quarter and are 75 percent higher than a year ago.
Gasoline for May delivery increased 1.56 cents, or 0.7 percent, to $2.3228 a gallon in New York. The contract reached $2.3329, the highest level since Oct. 2, 2008. There will be no Nymex futures trading tomorrow because of the Good Friday holiday.....Read the entire article.
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Crude Oil Daily Technical Outlook For Thursday
Crude oil rises to as high as 84.70 so far today and the decisive break of 83.16 confirms that rise from 69.50 has resumed. Intraday bias remains on the upside and further rally should be seen to 61.8% projection of 69.50 to 83.16 from 78.56 at 86.92 next. On the downside, below 82.36 minor support will turn intraday bias neutral first. But after all, break of 78.56 support is needed to be the first sign of topping. Otherwise, outlook will remain bullish.
In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 is still in progress. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, 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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Wednesday, March 31, 2010
Rare Glimpse into MarketClub....Once a Year 2 Week Trial, Now Open!
I'll keep this short as I know you're busy, I just got word from my inside contact at MarketClub, that they're opening up the premium service for a no cost 2 week trial!
Just click here to get instant access here....
There are 4 powerful tools available to members that you, as a free trial member, will have access to. Smart Scan, Trade School, Chart Analysis, and Data Central will be opened up just for you.
The other major bonus about this trial is that their, customer support team will be providing UNLIMITED support! You can call or email for an instant response (I know because I've used it) to any question, comment or concern. They've added another support person (hired a month ago just to train her) to ensure that all calls and emails get answered as quickly as possible.
Again, here's that link and I'll get you more info a little bit later, but I'd recommend you jump on this now.
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Crude Oil Market Commentary For Wednesday Evening
Crude oil closed up $1.10 at $83.47 a barrel today. Prices closed near the session high today and hit a fresh 11 week high. Prices also closed at a bullish monthly high close. Crude oil bulls have the overall near term technical advantage and have regained solid upside momentum this week.
Natural gas closed down 10.6 cents at $3.867 today. Prices closed near the session low today and closed at a fresh contract low close. Prices also closed at a technically bearish monthly and quarterly low close today. Bears have the solid overall near term technical advantage. There are still no early technical clues that a market bottom is close at hand. Prices are in a three month old downtrend on the daily bar chart.
The U.S. dollar index closed down 44 points at 81.29 today. Prices closed nearer the session low today and scored a mildly bearish "outside day" down on the daily bar chart. The bulls still have the overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at last week's high of 82.52.
Just click here for your FREE trend analysis of crude oil ETF USO
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Crude Oil Rises to 11 Week High as U.S. Dollar Slips Against Euro
Crude oil surged to an 11 week high in New York as the dollar declined against the euro, bolstering investor demand for commodities. Oil rose as much as 1.7 percent after the greenback fell against the common currency for the third time in four days. Prices slipped from the day’s highs after an Energy Department report today showed that supplies of crude oil rose by a greater than forecast 2.93 million barrels last week and that gasoline inventories unexpectedly increased.
“The market is focused on the U.S. dollar today,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “If we were trading on the fundamentals, the crude oil and gasoline numbers would be sending prices lower.” Crude oil for May delivery rose $1.01, or 1.2 percent, to $83.38 a barrel at 1:35 p.m. on the New York Mercantile Exchange. Prices are up 5.1 percent this quarter. Oil traded at $83.45 a barrel before the release of the report at 10:30 a.m. in Washington.
Futures touched $83.76, the highest level since reaching $83.95 on Jan. 11. The May contract reached $85.43 a barrel on the same day. “The target du jour is $83.95, and if we are able to get through there, we will test $85.43,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. The dollar fell to $1.3534 versus the euro, down 0.9 percent from $1.3414 yesterday.....Read the entire article.
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Phil Flynn: Springtime in the Oil Market
Ah spring.
The birds are chirping, the trees are budding and of course the oil market is rallying. Strong data on spending and a lot of springtime optimism set oil up for a big time rally, in fact the biggest in about 6 weeks. It is very possible that the rally would not have been as strong if it were not for the fact that many traders were absent as they prepared for Passover and the joys of spring break and Easter. That is not to say that the oil market did not have compelling reasons to rally because it did.
The euro rallied as Greece sold a 5 billion euro 7 year bond issue. Good consumer data and stories out of China that PetroChina will spend at least $60 billion in the next decade on overseas acquisitions in a bid to control oil and gas fields. We also had geo-political concerns arising from the terrorist bombing in Moscow and stories in the paper about attack scenarios surrounding Iran and yes indeed the market had a lot of compelling bullish stories. There was even more to rally about out of Nigeria from rebels promising more chaos. The problem for the bulls is that despite all those reasons to rally, the market remains range bound as it has been for months.
At the same time today there is a lot of bearish news coming out of OPEC .The Wall Street Journal reports that, “On Monday, the Organization of Petroleum Exporting Countries indicated that it is moving to boost production, demonstrating again its commitment to trying to keep oil prices from rising too high. And the closely watched relationship between current and future crude prices is starting to shift in a manner that indicates investors may be betting on surplus supply in the future.” The Journal goes on to say, “Recently, however, a move to the top end of that range had some traders anticipating a breakout move to a higher price. That reflected a belief that the economy was improving and growth in developing markets would drain what had been plentiful supplies. But the breakout hasn't occurred.
And traders have become less willing to pay a high premium to lock in supplies months down the road. That can be best seen in the narrowing of the gap between the price of oil for immediate delivery and the price for future delivery a sign that buyers think supply may be more robust than demand in the future.” The Financial Times Carola Hoyos reports that OPEC, “has revived projects that they have put on hold when oil prices collapsed to close to $30 dollars a barrel last year. Abdalla El-Badri, OPEC secretary General said that all 35 projects that had been delayed or considered to be canceled are now backing on track.
The FT also reports that, “Oil prices could stay within the $70-$80 a barrel range for 10 years, the OPEC oil cartel said on Monday, arguing that lower prices would deter investment in new energy supply but higher prices would hamper economic growth. “For the next decade, nominal prices are assumed to stay in the $70-$80 a barrel range, while longer term they are assumed to remain in the $70-$100 a barrel range,” the cartel said in a paper for the International Energy Forum, the oil consumers and producers’ gathering that starts on Tuesday in Cancun, Mexico.”
For months we have been saying that oil is locked in a range. We also feel that oil is eventually going to break out to the downside. We feel that rising rates on the long end of the yield curve and the historic inverted 10 year swap trading under 10 year yields is sign allying a major shift in the global market place. The market place is signaling that we will have to soon start planning on a removal of economic stimulus or face the reality of problems in financing our debt. This is a long term negative for oil even as oil has its strongest seasonal upside tendencies in the beauty of spring.
You can contact Phil at pflynn@pfgbest.com and don't forget to catch him daily on the Fox Business Channel.
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The More Things Change, the More They Stay the Same
Last month, on February 10th to be exact, we shared with you the "52 Week Friday rule". We showed you that when a market is closing at a 52 week high on a Friday, you should go long. In case you missed this video, which you can watch here , we show you that when a market is closing at a 52 week high on a Friday, you should go long. The rest of the rules are in this video that you should watch as it has been working with amazing regularity. The rest of the rules are in this video that you should watch as it has been working with amazing regularity.
Apple fit the rules perfectly last Friday 3/26 at $230.97. This was an all time high close for Friday in this stock. The rules stated in the video say you should exit this market on the opening on Tuesday, the 30th of March. Having done so you have exited at $236.67 for gain of $5.70 before commissions. This represented a little over a 2% gain in just over 6 hours of market time with very little risk.
So when we hear people say that things have changed in the market and that they are completely different from what they used to be, we have to disagree. We think this is a good example why.
This trading secret came from a trader named Bill... I am keeping his last name private as Bill is a very low key guy and shuns any publicity. Using his special trading technique, Bill made millions and millions of dollars from his office. The best part is that this technique is still working more than 30 years after we learned about it. Now it's time for the next generation of traders to learn Bill's secret.
Bill didn't even have a name for this killer trading technique. So it was named "The 52 week new highs on Friday rule".
As always, our videos are free to watch and there are no registration requirements. Have you traded using the "52 Week Friday rule"? If so, let us know how it went, but regardless of whether you have or not, please leave a comment.
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Crude Oil Daily Technical Outlook Wednesday Morning
Crude oil climbs further to as high as 82.95 so far today and at this point, intraday bias is cautiously on the upside for 83.16 resistance. Break there will confirm that whole rally from 69.5 has resumed and should target a test on 83.95 high next. On the downside, below 81.77 minor support will turn intraday bias neutral again and argue that consolidations from 83.16 is still in progress. But after all, we'd still expect downside to be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise.
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.
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Tuesday, March 30, 2010
Where is Crude Oil Headed on Wednesday?
CNBC's Brian Shactman discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Crude Oil Market Commentary For Tuesday Evening
Crude oil closed up $0.21 at $82.38 a barrel today. Prices closed nearer the session high today. Crude oil bulls have the overall near term technical advantage and have regained upside momentum this week. The next upside price objective for the bulls is producing a close above solid technical resistance at the March high of $83.47 a barrel.
Natural gas closed up 6.7 cents at $3.983 today. Prices closed near the session high today on tepid short covering after hitting another fresh contract low early on. Bears have the solid overall near term technical advantage. There are still no early technical clues that a market bottom is close at hand. Prices are in a three month old downtrend on the daily bar chart.
The U.S. dollar index closed up 12 points at 81.74 today. Prices closed near the session high today. The bulls still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.00.
Why Gold Will Not Make New Highs or Lows This Year
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Crude Oil Daily Technical Outlook For Tuesday
Crude oil rebound's strongly overnight but after all it's still bounded in established range below 83.16. Intraday bias remains neutral and more consolidations could still be seen but downside is expected to be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise. Break of 83.16 will target 83.95 high. However, note that sustained trading below 77.94 fibo level will indicate that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support instead.
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 .
Just click here for your FREE trend analysis of crude oil ETF USO
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Monday, March 29, 2010
New Video: Why Gold Will Not Make New Highs or Lows This Year
Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.
While we recognize that gold is one of the few commodity markets that people are really passionate about, the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, we want to discuss our interpretation of the markets cycle.
After spot gold made an all time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.
Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:
Gold first started trading in the 80's and when gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros, the guys who made their living trading. As a result, gold hit an all time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. We don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.
So what is really happening in this market?
Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.
Based on the declining value of world currency against gold you might ask "why isn't gold trading at $2,000 or even $3,000 an ounce"? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.
So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.
Here is what we've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.
Before gold can move higher it needs to create what we call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80's mentioned earlier.The energy fields we have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.
With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.
To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.
On the on the upside we will also be looking for gold to make a natural cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy, however when we look at the cycles in gold this reads as a pretty good bet.
No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.
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As we always discuss, in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.
So just click here to watch today's new video and as always the video is free to watch. Please take a minute to leave a comment and let us know what you think about the direction of this gold market.
Also watch....The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
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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.
Crude Oil Market Commentary For Monday Evening
Crude oil closed up $2.26 at $82.26 a barrel today. Prices closed nearer the session high today amid a weaker U.S. dollar index and higher stock index prices. Crude oil bulls have the overall near term technical advantage and regained some upside momentum today. The next upside price objective for the bulls is producing a close above solid technical resistance at the March high of $83.47 a barrel.
Natural gas closed down 0.2 cents at $3.928 today. Prices closed nearer the session low today and set another fresh contract low. Bears have the solid overall near term technical advantage. There are still no early technical clues that a market bottom is close at hand. Prices are in a three month old downtrend on the daily bar chart.
The U.S. dollar index closed down 40 points at 81.57 today. Prices closed nearer the session low today on profit taking pressure from recent gains. The bulls still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.00.
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Phil Flynn: Range Bound
We can talk about upcoming data from China or relief that the Greece crisis seems resolved for the moment but the truth is oil is still locked in a range. This is a market where the bullish and bearish forces have been in a stale mate and a quagmire of epic proportions. For every bullish argument there is a bearish argument to counter it as crude oil waits to find a definitive direction.
Overnight oil seemed to be getting some support from geopolitical events as well as what some say is the expectations of strong economic data coming out of the US and China. A terror attack on a Moscow subway and a story about a Saudi ship firing on a ship from the United Arab Emirates are just as astonishing as the report on Friday that a North Korean Snipe supposedly sunk a South Korean ship that was later denied. Strong demand hopes have been tempered by rising yield in the long end of the treasury markets raising fears that interest rates will have to go higher. Oil has a lot on its plate and is keeping the market in lockdown.
OPEC put off its next meeting until October but at least one OPEC member seems to be optimistic about the future. Dow Jones reported that Shokri Ghanem, chairman of Libya's National Oil Co said that OPEC would raise production in October if the world economy picks up. Ghanem says that, "If the economy improves, demand picks up and prices go up; that will add pressure on the economy and OPEC will take action. In October the situation will be examined and action will be taken accordingly. Ghanem told Dow Jones that, “Change of OPEC production level is a more complex process--it follows the market but it looks at supply and demand, and whether the market is being driven by fundamentals, geopolitics or psychological factors as well as the plans for production from other member countries," he said.
Bloomberg News Margot Habiby reports that oil producers and consumers, trying to avoid a repeat of the $115 a barrel price swing in 2008, will seek a “broad agreement” on improving market transparency and curbing volatility, according to the International Energy Forum. Habiby says that, “The IEF wants greater sharing of information on supply, demand, production and futures market trading, and greater cooperation on forecasting by groups such as OPEC, the IEF and the International Energy Agency," he said ahead of the IEF meeting in Cancun. A must read on Bloomberg.
You can reach Phil at pflynn@pfgbest.com and be sure to watch him every day on The Fox Business Network.
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How to Find Market Tops for Gold & the Dow
Last week the general market continued to grind its way higher for yet another week. Overall I feel the market is very much over bought. We all know the market can stay in extreme overbought levels for extended periods of time making it very difficult to pick tops.
This is the reason I do not try to pick tops, but rather wait for a top to form before putting my money to work. While a bottom can be made in 1 day, tops tend to take days and some times months to complete.
A few things really stood out to me when looking back on last week’s price action.
1. Gold (GLD Fund) was only up 0.29% for the week while the gold mining stocks (GDX Fund) was down over 3.5%. This strong divergence really has me concerned about the price of gold in the near term. Gold stocks generally lead gold and if they are down 10x more than gold last week, we better watch out....
2. The US Dollar broke out and started to rally posting a gain of 1% for the week. It is definitely weird to see gold move higher when the US dollar is rising…
Gold GLD Daily Chart
Gold has been trading sideways/down since December. I see this large 5 month pullback as a bull flag and expect to see much higher prices for gold long term. But I don’t count my eggs before they hatch, so I continue to focus on the daily and intraday chart patterns for low risk trading opportunities.
Friday we saw gold close very strong for the day. It looks very much like a reversal candle but with the price trading under the mini head & shoulders neck line and with the US Dollar in rally mode again, I don’t think the stars are aligned enough for me to put money to work just yet.
Gold is currently trading in a major congestion zone. Until there is a breakout of this zone, I think setups will not be very accurate.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – JANUARY
This chart shows the January 2010 peak in the stock market. As you can see prices became choppy with strong up and down movements before we saw the sharp drop.
Also note the NYSE new highs line. As the market became choppy new highs began to drop quickly. This indicated the market internals were weakening and led to an 8% drop over the next couple weeks.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – MARCH
This chart in my opinion looks much the same as January. You can see the Reversal candle from the February lows and the strong rally to the current price, as of Friday.
Notice how the market is getting choppy. Also last Thursday the Dow gave us a reversal candle. But this time the reversal candle is to the down side.
Also note the NYSE New Highs line. It has dropped sharply indicating the market internals are weakening once again.
This is what trading is all about… finding things that are out of whack and waiting for a low risk setup in order to make a profit.
Weekend Trading Conclusion:
In short, the stock market is over bought and about to roll over. I do understand that this grind higher could last another week or so, which is why I am focusing on short/quick intraday movements like Friday’s SP500 Intraday Low Risk Setup, and not buying etf funds to hold for a few weeks. Most of you know I do not chase prices higher simply because down side risk increased when buying into an over extended rally.
I feel gold, silver and oil will move together and at this time, I don’t like their charts for trading. With any luck we could get some setups this week, but not counting anything just yet.
Just click here if you would like to receive Chris Vermeulen's Real Time Low Risk ETF Trading Signals.
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This is the reason I do not try to pick tops, but rather wait for a top to form before putting my money to work. While a bottom can be made in 1 day, tops tend to take days and some times months to complete.
A few things really stood out to me when looking back on last week’s price action.
1. Gold (GLD Fund) was only up 0.29% for the week while the gold mining stocks (GDX Fund) was down over 3.5%. This strong divergence really has me concerned about the price of gold in the near term. Gold stocks generally lead gold and if they are down 10x more than gold last week, we better watch out....
2. The US Dollar broke out and started to rally posting a gain of 1% for the week. It is definitely weird to see gold move higher when the US dollar is rising…
Gold GLD Daily Chart
Gold has been trading sideways/down since December. I see this large 5 month pullback as a bull flag and expect to see much higher prices for gold long term. But I don’t count my eggs before they hatch, so I continue to focus on the daily and intraday chart patterns for low risk trading opportunities.
Friday we saw gold close very strong for the day. It looks very much like a reversal candle but with the price trading under the mini head & shoulders neck line and with the US Dollar in rally mode again, I don’t think the stars are aligned enough for me to put money to work just yet.
Gold is currently trading in a major congestion zone. Until there is a breakout of this zone, I think setups will not be very accurate.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – JANUARY
This chart shows the January 2010 peak in the stock market. As you can see prices became choppy with strong up and down movements before we saw the sharp drop.
Also note the NYSE new highs line. As the market became choppy new highs began to drop quickly. This indicated the market internals were weakening and led to an 8% drop over the next couple weeks.
Dow Jones Industrial Average vs. NYSE New Highs Divergence – MARCH
This chart in my opinion looks much the same as January. You can see the Reversal candle from the February lows and the strong rally to the current price, as of Friday.
Notice how the market is getting choppy. Also last Thursday the Dow gave us a reversal candle. But this time the reversal candle is to the down side.
Also note the NYSE New Highs line. It has dropped sharply indicating the market internals are weakening once again.
This is what trading is all about… finding things that are out of whack and waiting for a low risk setup in order to make a profit.
Weekend Trading Conclusion:
In short, the stock market is over bought and about to roll over. I do understand that this grind higher could last another week or so, which is why I am focusing on short/quick intraday movements like Friday’s SP500 Intraday Low Risk Setup, and not buying etf funds to hold for a few weeks. Most of you know I do not chase prices higher simply because down side risk increased when buying into an over extended rally.
I feel gold, silver and oil will move together and at this time, I don’t like their charts for trading. With any luck we could get some setups this week, but not counting anything just yet.
Just click here if you would like to receive Chris Vermeulen's Real Time Low Risk ETF Trading Signals.
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Crude Oil Rises the Most in Five Weeks as Dollar Weakens Against Euro
Crude oil rose the most in more than five weeks as the dollar fell on European Union plans to help Greece and on signals that economic growth will accelerate. Oil topped $82 a barrel as the greenback dropped following an International Monetary Fund and European Union pledge to help finance Greece’s debt. A weaker U.S. currency bolsters the appeal for raw materials as an alternative investment. Consumer spending in the U.S., the world’s biggest energy consuming country, climbed in February for a fifth consecutive month.
“The resolution of the Greek crisis is giving oil a boost,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is weaker, which is helping all of the commodity markets today.” Crude oil for May delivery rose $2.13, or 2.7 percent, to $82.13 a barrel at 9:49 a.m. on the New York Mercantile Exchange. Futures are heading for the biggest gain since February 16. Futures touched $82.25, the highest since March 18.
Prices are up 3.5 percent in the first quarter, peaking at a 15 month high of $83.95 a barrel on Jan. 11. Leaders of the 16 nation euro region endorsed a Franco-German proposal for a mix of IMF and bilateral loans at market interest rates on March 26, while voicing confidence that Greece won’t need outside help to cut its deficit, the biggest in the 16 nation euro region. The dollar fell to $1.3457 to the euro, down 0.4 percent from $1.341 on March 26. The dollar index, measured against six major currencies, dropped 0.4 percent today to 81.364.....Read the entire article.
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