Mid-Week Gold, Crude Oil, U.S. Dollar and SP500 Report

It has been an interesting week in the market as stocks and commodities push to extreme support levels. Below I have posted some charts showing where the market is currently trading at and what I think is likely to unfold.

Gold Futures – 4 Hour Candle Stick Chart
The price of Gold is testing a key support level. I figure we will see gold try to stabilize over the next week or so as it digests the recent drop in value then start to head back up.

US Dollar Index – 60 Minute Candle Stick Chart
The US Dollar and gold have been moving together the past few weeks as more countries pop up on the radar for serious financial issues. This is helping to boost both the US Dollar and gold as investors around the world starting buying what seems to be safety. The dollar has had a sizable pullback and is now testing a key support level.

This could be the start of a possible Head & Shoulders pattern forming which means the dollar rally could be nearing maturity in the next couple weeks.

Crude Oil Futures – Daily Trading Chart
Oil has been under serious selling pressure because of the rising USD. It has now dropped to a key support level and is starting to look very interesting. If the US Dollar bounces in the next week or two it will keep downward pressure on oil. I think this bottom is going to be a process not a one day event.

SP500 – Daily Trading Chart
Stocks have been under dropping like flies the past few weeks and shorting the SP500 last week at 1170 has played out very nicely for members. The broad market is giving me mixed signals and when I am unsure of a trade I stand on the sidelines. It’s always better to sit in cash and watch things stabilize than it is to watch your hard earned money evaporate. We could see a wave of panic selling in the stock indexes testing the previous lows so be cautious.

Mid-Week Stock & Commodity Trading Report Conclusion:
In short, I feel gold and the dollar will bounce in the coming days from their support levels. This will keep pressure on oil & the SP500 holding them down near support. Once the US Dollar forms a possible right shoulder we will most likely see them pop and rally.

We are still 7 trading days away from a cycle low on the broad market making this scenario very likely to play out. At the moment I am getting a lot of mixed signals and during times like this I prefer to stay in cash because volatility will rise and it is easy to get shaken out of trades.

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Where is Crude Oil and Gold Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the oil and gold markets, and offers perspective on where the two commodities may be headed tomorrow.




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Crude Oil, Natural Gas, Gold and Dollar Commentary For Wednesday Evening

Crude oil posted an upside reversal due to short covering on Wednesday as it consolidated some of this month's decline. 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 June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 78.80 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 73.71. Second resistance is the 20 day moving average crossing at 78.80. First support is today's low crossing at 67.90. Second support is last July's low crossing at 65.66.

Natural gas closed lower on Wednesday and below the 20 day moving average crossing at 4.177 tempering the near term friendly outlook. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that sideways to lower prices are possible near term. If June renews this month's rally, the 38% retracement level of the October-April decline crossing at 4.715 is the next upside target. First resistance is Tuesday's high crossing at 4.494. Second resistance is the 38% retracement level of the October-April decline crossing at 4.715. First support is today's low crossing at 4.131. Second support is this month's low crossing at 3.855.

The U.S. Dollar posted a downside reversal due to profit taking on Wednesday as it consolidated some of this year's rally. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.96 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 85.53. Second support is the 20 day moving average crossing at 83.96.

Gold closed sharply lower due to profit taking on Wednesday as it extended the decline off last week's high. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1191.30 would confirm that a short term top has been posted. If June renews this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 20 day moving average crossing at 1191.30. Second support is today's low crossing at 1186.60.

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Crude Oil Increases as the Euro Climbs From a Four Year Low

Crude oil rose in New York after the euro rebounded from a four year low against the dollar on speculation the European Central Bank will announce further steps to halt the region’s debt crisis. Oil rebounded as the common currency gained after Axel Weber, an ECB Governing Council member, said the euro region must “urgently” tighten its fiscal rules. Prices dropped earlier today after Germany’s prohibition on short selling sparked concern that regulation will increase. A government report showed that U.S. oil supplies climbed for a 16th week.

“Oil is reacting to the strong rally in the euro,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There’s a fear that there will be further government intervention in the markets.” Crude oil for June delivery rose 49 cents, or 0.7 percent, to $69.90 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $67.90, the lowest intraday price since Sept. 30.

Brent crude oil for July settlement declined 88 cents, or 1.2 percent, to $73.55 a barrel on the London based ICE Futures Europe exchange. The contract reached $72.72, the lowest level since Feb. 16. German Chancellor Angela Merkel laid out proposals to gain control over “destructive” financial markets after she imposed a unilateral ban on naked short selling that sent stocks and the euro sliding.

Short sellers borrow assets and sell them, betting the price will fall and they’ll be able to buy them later, return them to the lender and pocket the difference. In naked short selling, traders never borrow the assets so betting is unlimited.....Read the entire article.


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Phil Flynn: Here We Go Again

Ok, now let's get this straight. They write a big check to Greece to try to restore confidence in the EU and then Germany decides to shake that confidence a bit by banning “naked short selling” in stocks. Once again just when the market tried to put this EU crisis behind us, here we go again. Producer prices came in at a negative as deflation pressures are mounting and the last shred of confidence the market held on to was dashed by the terrible timing of Germany’s BaFin financial services regulator saying that it will introduce a temporary ban on naked short-selling and naked credit default swaps of euro area government bonds starting at the midnight hour.

As in last night! It had appeared that the market was starting to stabilize but now what! Way to go guys. Way to go to not instilling confidence. The BaFin Financial service head Jochen Sanio is the same one that said that speculators were, "waging a war of aggression against the euro zone." He is now taking steps to make sure speculators stay away and make them less likely to buy euro zone toxic debt from countries like Greece who fraudulently hid the magnitude of their real debt in the first place. No wonder the euro is in trouble as.....Read the entire article.

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Crude Oil Daily Technical Outlook Wednesday Morning

Yesterday's consolidation was brief and was limited at 72.52. Recent decline resumed and drops to as low as 67.90 so far today. Intraday bias is back to the downside and further fall should be seen to 38.2% retracement of 33.2 to 87.15 at 66.54 next. on the upside, though, note that break of 72.52 resistance will indicate that a short term bottom is formed, possibly with convergence condition in 4 hours MACD, and bring stronger rebound.

In the bigger picture, the break of 68.59/69.50 support zone affirms our view that whole medium term rebound from 33.2 has completed at 87.15 already, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. Further decline should be seen to 50% retracement of 33.2 to 87.15 at 60.18 at least. Also, as rebound from 33.2 is viewed as as a correction to the whole correction that started at 2008 at 147.27, we'd anticipate a break of 33.2 low in the longer term. on the upside, break of resistance at 78 level is needed to be indicate that fall fro 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Crude Oil Futures Drop Below $68 on Tuesday Evenings Globex Session

Crude oil futures fell below $68 a barrel in electronic trading Wednesday afternoon in Asia, extending their losses after closing at a seven month low in New York, as broad weakness in Asia's stock markets helped rob investors of confidence in energy demand. "The European fiscal crisis and the generalization of budget adjustment programs seem to have acted as an eye-opener," Christophe Barret, global oil analyst at Credit Agricole, said in a report this week, pointing out that since the start of April, West Texas Intermediate crude had lost $15 a barrel.


New fears over spread of Gulf oil spill
There are new new fears that the massive Gulf of Mexico oil spill is spreading through ocean currents, after tarballs were found on Florida's Key West. "This evolution is more or less in line with what would have been dictated by still weak fundamentals, and appears as a healthy correction to inflated prices," he said. Crude oil for June delivery was down 80 cents, or 1.2%, at $68.61 per barrel on Globex in Asia's afternoon trading. It touched an intraday low of $67.90.

The contract lost 67 cents, or 1%, to $69.41 a barrel on the New York Mercantile Exchange Tuesday, ending in the red for the sixth consecutive session. That was the lowest settlement for a most active contract since Sept. 29, when oil ended at $66.71 a barrel, according to FactSet Research. See Tuesday's Futures Movers column. "Germany's ban on 'naked short selling' caused a spike in the [U.S.] dollar, and WTI ultimately closed below $70," Stephen Schork, editor of The Schork Report, said in his latest report. Traders are also looking ahead to weekly data on petroleum supplies due from the Energy Department's Energy Information Administration at 10:30 a.m. Wednesday in Washington.

Analysts polled by Platts expect a rise of 950,000 barrels in crude supplies. The market will be looking specifically at inventories at the Cushing hub, said Schork. Oil futures have been under pressure because of rising inventories at Cushing, Okla., the delivery point for futures traded on the New York Mercantile Exchange. Overall, analysts at Credit Suisse said they "remain cautious on the near term prospects of crude oil, but think that medium term fundamentals remain supportive."

Reporter Myra P. Saefong is MarketWatch's assistant global markets editor in Tokyo.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Crude Oil Drops for a Seventh Day on Build in U.S. Gasoline Stocks and Europe Debt

Crude oil dropped for a seventh day in New York, its longest losing streak in five months, on concern that gasoline demand shows signs of slowing in the U.S. and as investors delayed buying commodities on speculation that the European debt crisis will worsen. Oil slumped to its weakest level in seven months after the euro touched a four year low earlier today as European nations struggle to meet austerity requirements. Crude prices also fell after an American Petroleum Institute report showed gasoline inventories in the world’s biggest energy consumer rose 981,000 barrels last week.

“Sometimes people are focusing a little too much on the good aspects of Asia, we need to remember that the north Atlantic economies are really important for oil,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in a Bloomberg Television interview from Melbourne. “And both the U.S. and Europe are very weak fundamentally.” Crude oil for June delivery dropped as much as $1.51, or 2.2 percent, to $67.90 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since Sept. 30. It was at $68.72 at 11:48 a.m. in Singapore. Yesterday, the contract fell 67 cents to $69.41 a barrel, the lowest settlement since Sept. 29.

The U.S. Dollar traded at $1.2211 per euro at 11:50 a.m. Singapore time, from $1.2202 in New York yesterday. The euro fell yesterday after Germany said it will ban naked short selling and naked credit default swaps of euro area sovereign debt and the Bank of Italy allowed lenders to exclude losses on government bonds.....Read the entire article.

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Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Bertha Coombs discusses the day's activity in the oil and gold markets, and looks ahead to where the commodities are headed tomorrow.




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Crude Oil, Natural Gas, Gold and Dollar Commentary For Tuesday Evening

Crude oil closed lower on Tuesday and below last September's low crossing at 69.40. 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 June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 79.44 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 74.62. Second resistance is the 20 day moving average crossing at 79.44. First support is today's low crossing at 68.91. Second support is last July's low crossing at 65.66.

Natural gas closed lower due to profit taking on Tuesday as it consolidated some of last week's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, the 38% retracement level of the October-April decline crossing at 4.715 is the next upside target. Closes below the 20 day moving average crossing at 4.171 would temper the near term friendly outlook. First resistance is today's high crossing at 4.494. Second resistance is the 38% retracement level of the October-April decline crossing at 4.715. First support is the 10 day moving average crossing at 4.191. Second support is the 20 day moving average crossing at 4.171.

The U.S. Dollar closed higher on Tuesday as it extends this year's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.70 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.30. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 85.30. Second support is the 20 day moving average crossing at 83.70.

Gold closed lower due to profit taking on Tuesday as it consolidated some of the rally off February's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1189.40 would confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is today's low crossing at 1206.60. Second support is the 20 day moving average crossing at 1189.40.


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Phil Flynn: Silver Linings

Europe is in turmoil and global stock markets looked like they were getting ready to collapse. But look at the bright side, at least gasoline prices are coming down. Leave it to The Energy Report to find that silver lining in that dark cloud (of course even silver fell yesterday in this deflationary downside route). According to The Energy Information Agency, gas prices fell 4.1 cents last week to 286.4 cents a gallon. AAA said that the price of gas fell to $2.867 a gallon, the lowest since April 26. See, who says that this Greece crisis is all bad.Deflation fears are now the main concern along with whether or not the EURO can be saved. Overnight Dow Jones said that, “slightly more positive tone returned to foreign exchange markets in European trading hours with the euro stabilizing, while safe haven currencies like the yen edged lower.” This of course brought the oil bulls out of hiding, the same ones that were pretty boisterous when oil was at $87 but have been hiding under a rock ever since.

The reason for the stabilization may be the fact that Greece got its first installment of funds to avoid a default. According to the AP, Greece is to receive euro14.5 billion in bailout loans from other European Union countries, thus helping to stave off default on approximately euro 9 billion of debt due in a day or 2. The problem with the crude oil bulls is that they have been trying to shine a light on positive economic data as the reason to be blindly bullish on oil. What they have failed to realize is that the data is in part dependent on continued deficit spending and the printing of more paper money. Oil supplies may fall in Cushing, Oklahoma but they are still at a record and we have not seen the evidence that demand can over take the amount of massive oversupply. The price of oil is a product of dollar strength or dollar weakness.

Its relationship to just supply and demand was changed and we will live and die with the dollar.Is the Iran nuclear Issue solved? Bloomberg News reported that, "Iran agreed to hand to Turkey about half of its enriched uranium in exchange for fuel to run a medical reactor, possibly thwarting U.S. efforts to step up international sanctions over the Iranian atomic program.” Bloomberg says that, “Iran is ready to ship the low-enriched uranium for safekeeping in Turkey within a month of the U.S. and other powers agreeing to the swap, Foreign Minister Manouchehr Mottaki said on state television today. Within a year, Iran expects to get a shipment of reactor-grade fuel for use in the research reactor in Tehran, he said. “There is no opportunity or excuse for sanctions now.”Oh yeah.

The Voice of America reports that, "The United States is skeptical of the nuclear fuel swap agreement announced on Monday in which Iran says it will ship enriched uranium to Turkey. President Barack Obama's spokesman says the agreement will not slow the drive for a new U.N. Security Council sanctions resolution. The White House and State Department issued similar responses to the deal in which Tehran agrees to send about 1,200 kilograms of enriched uranium to Turkey. In return, Iran would receive medium enriched uranium for use in a medical research reactor. White House spokesman Robert Gibbs acknowledged efforts by Turkey and Brazil, saying it would be a positive step for Iran to transfer low enriched uranium as it agreed to do in October of last year.

But noting Iran's announcement that it will continue its 20 percent enrichment program, Gibbs said there is no change in the administration's position on Iran's nuclear program or Obama's determination to achieve new U.N. Security Council sanctions resolution. "It does not change the steps that we are taking to hold Iran responsible for its obligations, including sanctions," he said. Supply disruption concerns are secondary to global economic concerns.Short term we still feel the best way to play it is to play the ranges. Long term we are still bearish.

Phil can be reached at pflynn@pfgbest.com And watch him everyday on the Fox Business Network!


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OPEC Scrambling To Jaw Bone Prices

From guest blogger Vincent Fernando.....

Light sweet crude broke $72 just recently, then bounced off of $70 a few times. It has rebounded back a bit, but could easily head lower.European economic growth is looking fragile, and more importantly China's economic growth is starting to look like it peaked based on leading indicators. Thus while we can potentially bailout the European periphery nations, and it could stabilize the world economy, it's not so clear if it will save commodities. Especially as the China growth engine slows.

OPEC's scrambling to jawbone oil prices as a result of price softness:

Forex Yard:
Investment in new energy capacity worldwide must be maintained to avoid a supply crunch in the future, Attiyah told an industry event, but deep water drilling and other high-cost operations would be unprofitable at a price of less than $70.

OPEC member Qatar supported Saudi Arabia's price aspirations for oil, Attiyah said. Saudi King Abdullah, ruler of the world's top oil exporter, said in December that a price of around $75 to $80 was fair. The kingdom has pegged that level as fair for both consumers and producers.

"I support fully what King Abdullah says," Attiyah said.

We can envision a potential 'new normal' boring growth scenario where China slows, Europe stagnates into a bailout coma, and the U.S. grows but underwhelms. Industrial commodities will be anemic to such a situation and we'll be unsurprised to see oil go below $70 in the near future given the China/Europe situation.


Vincent Fernando writes for The Business Insider


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Crude Oil Daily Technical Outlook For Tuesday Morning

With 4 hours MACD crossed above signal line, a temporary low should be in place at 69.27 after crude oil hit 69.50 key support. Intraday bias is turned neutral and stronger recovery might be seen towards 4 hours 55 EMA (now at 75.17). But upside should be limited below 61.8% retracement of 87.15 to 69.27 at 80.32 and bring fall resumption. Below 69.27 will target 38.2% retracement of 33.2 to 87.15 at 66.54 next.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 68.59/69.50 key support zone support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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New Video: Where to Place Your Stops in Gold?

Gold is gaining in popularity with the online trading community, and whenever we write about it, or produce a video featuring this precious metal, unsurprisingly, it also tends to generate the most passion of any market that we cover. With gold making new highs recently, we thought it would be timely to put together a video showing you where we are placing our short term stops. The video is about 90 seconds long and shows you in a very visual way, what we're looking at in this market.

As always the video is available for viewing now and there is no charge or registration requirement. Please feel free to comment on this video and let us know what you think about the direction of this gold market.

Watch: Where to Place Your Stops in Gold?


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Crude Oil Snaps Five Days of Declines After Tumbling Below $70 a Barrel

Crude oil rose, snapping five days of declines, as some investors took the view a drop below $70 a barrel made the commodity attractive to buy. Oil pared yesterday’s 2.1 percent drop as the euro’s rebound from a four year low bolstered optimism the shared European currency will weather the region’s debt crisis. A U.S. Energy Department report tomorrow will probably show that refinery operating rates increased and gasoline inventories dropped, according to a Bloomberg News survey.

“We’ve come from having oil at $87 a barrel to around $70 per barrel,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Those who have already factored in a weak outlook for the euro zone, or don’t think that there’s the risk of another financial crisis happening, seem to think this is not such a bad time to buy.” Crude oil for June delivery gained as much as 64 cents, or 0.9 percent, to $70.72 a barrel in electronic trading on the New York Mercantile Exchange, and was at $70.38 at 9:02 a.m. Singapore time. Yesterday, the contract fell $1.53 to $70.08 a barrel, the lowest settlement since Dec. 14. Prices had tumbled to $69.27 yesterday.

The dollar was at $1.2357 per euro from $1.2395 in New York. The euro weakened before a report forecast German investor confidence fell in May, after rising yesterday. Refineries probably operated at 88.6 percent of capacity last week, up 0.2 percentage point from the previous week, according to the median of analyst responses before the Energy Department report. “Refinery operations have been reasonably good,” National Australia Bank’s Westmore said.

Gasoline supplies declined 1 million barrels from 222.1 million the prior week, according to the Bloomberg survey. U.S. crude oil stockpiles probably increased by 625,000 barrels, the 15th time in 16 weeks as imports climbed. Brent crude oil for July delivery increased as much as 80 cents, or 1.1 percent, to $75.90 a barrel, on the London-based ICE Futures Europe exchange, and was at $75.71 at 8:31 a.m. Singapore time. Yesterday, the contract slipped $2.83, or 3.6 percent, to $75.10.

Reporter Ben Sharples can be contacted at bsharples@bloomberg.net

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New Video: Crude Oil Breaks $70 a Barrel, is it Time to be Short?

The crude oil market broke through an important support zone and appears to be very much on the defensive. In this new short video on crude oil, we point out some of the levels that we still think are important in this market and illustrate just how important it is to use both stops and our "Trade Triangle" technology.

As always there is no charge or registration requirement in order to view this new video, and we encourage you to leave a comment and let us know what you think about the video and the direction of this crude oil market.


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Where is Gold and Crude Oil Headed on Tuesday?

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



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Crude Oil Signals Remain Oversold, Lower Prices Still Likely

Crude oil closed lower on Monday and spiked below last September's low crossing at 69.40. A short covering bounce tempered early losses and the mid range close sets the stage for a steady 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 June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 80.19 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 76.01. Second resistance is the 20 day moving average crossing at 80.19. First support is today's low crossing at 69.27. Second support is last July's low crossing at 65.66.

Natural gas closed higher on Monday as it extended last week's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends today's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. Closes below the 20 day moving average crossing at 4.157 would temper the near term friendly outlook. First resistance is last Thursday's high crossing at 4.414. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 10 day moving average crossing at 4.158. Second support is the 20 day moving average crossing at 4.157.

The U.S. Dollar closed higher on Monday as it extends this year's rally. However, profit taking tempered much of today's gains and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.39 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.21. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 84.92. Second support is the 20 day moving average crossing at 83.39.

Gold closed lower due to profit taking on Monday as it consolidated some of the rally off February's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1185.10 would confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 10 day moving average crossing at 1209.60. Second support is the 20 day moving average crossing at 1185.10.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Phil Flynn: Euro Melt

Asia plays catch up with last Fridays Euro Meltdown driving oil to a new 3 month low. Strength comes in numbers but at the same time, the numbers can bring you down as the small members of the EU are raising concerns that the Euro will be split. Those fears gained momentum when German Chancellor Angela Merkel said that Europe is in a “very, very serious situation” .Those concerns started a global aversion to risk going into the weekend as we saw the Euro move to a four year low. Today we want to find out if the market gains a sense of confidence as the market hopes that we will see bargain hunters step in. Yet whether they do or they do not, the one thing we do know is that the Euro problems have not gone away.

For oil and the products the market is living and dying with the fallout from the crisis. Oil has been propped up on the backs of a weak dollar and then a strong dollar and without that going for it, the focus falls back on the supply side facts for crude oil. Last week the Energy Information Agency reported that supplies of oil is at a record high at Cushing, Oklahoma which is the Nymex delivery point. The refiners have a lot of incentive to make gasoline with the crack spread this wide. The EIA says that the high crack spread is due in part to the switch to summer time grades of gas. The EIA says that May 1 marks the date for most of the country when more costly summer-grade gasoline is required (April 1 in southern California). The maximum allowable vapor pressure, which is measured as Reid vapor pressure (Rvp), is the primary distinction between winter- and summer-grade gasolines.

When the weather turns warm, a high vapor pressure increases the evaporation of the gasoline into the atmosphere. The volatile organic compounds that are released from gasoline into the air not only contribute directly to health problems, but also indirectly through the formation of ground-level ozone and smog. Gasoline vapor pressure is also important for an automobile engine to operate efficiently. Vapor pressure must be high enough to allow an engine to start easily, but it must not be so high as to lead to vapor lock, which stalls the engine when gasoline in the engine’s fuel delivery system prematurely turns from liquid to vapor.

Reducing gasoline vapor pressure to lessen harmful emissions and maintain car drive ability during the summer adds to refiners’ operating costs in the second and third quarters. Because of these higher costs, the rise in the crack spread during the summer months overstates the actual increase in the profitability of gasoline sales.The low for the year in oil of 6950 is the first big, long term target for oil yet with the stock market rebounding, we may not make it on this run. We think that longer term oil is headed much lower yet we still think the best way to play it is by the range. Make sure you call for our entry and exit points on every major market.

Phil can be reached at at pflynn@pfgbest.com and don't forget to watch him everyday on the Fox Business Channel

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