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

Crude oil closed higher on Thursday as it extends the rebound off May's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 74.60 are needed to confirm that a short term low has been posted. If July renews the decline off May's high, last July's low crossing at 66.11 is the next downside target. First resistance is the 20 day moving average crossing at 74.60. Second resistance is last Friday's high crossing at 75.72. First support is the 10 day moving average crossing at 71.97. Second support is last Tuesday's low crossing at 67.15.

Natural gas closed higher on Thursday and closed above the upper boundary of the April-May trading range crossing at 4.433. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If July extends this week's rally, the 38% retracement level of the November-May decline crossing at 4.872 is the next upside target. Closes below the 10 day moving average crossing at 4.264 would confirm that a short term top has been posted. First resistance is today's high crossing at 4.703. Second resistance is the 38% retracement level of the November-May decline crossing at 4.872. First support is Wednesday's low crossing at 4.217. Second support is the reaction low crossing at 3.971.

The U.S. Dollar closed higher on Thursday as it extends the consolidation pattern of the past two weeks. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that sideways to higher prices possible near term. If June renews 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 reaction low crossing at 85.33 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is the 20 day moving average crossing at 86.12. Second support is the reaction low crossing at 85.33.

Gold closed lower due to profit taking on Thursday. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If August extends this week's rally, May's high crossing at 1251.40 is the next upside target. First resistance is Tuesday's high crossing at 1230.60. Second resistance is May's high crossing at 1251.40. First support is the 10 day moving average crossing at 1206.70. Second support is the reaction low crossing at 1168.00.

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Phil Flynn: Oil Prices Rise On Leaked Information

That is right! The jobs report was leaked causing a rally in the stock market! Who got their hands on this valuable inside information and leaked it to the marketplace at large? Well believe it or not it was Obama himself. What!? I know! Yet that is exactly what he did. Speaking at Carnegie Mellon University in Pittsburgh, the President said, “After losing an average of 750,000 jobs a month during the winter of last year, we have now added jobs for five of the last six months, and we expect to see strong job growth in Friday's report.” Ah ha!!!

Do you think he knows something? Now that is just one day after the Vice President Joe Biden said that the upcoming May employment report would show a much larger number of jobs created than in the previous month, when 290,000 jobs were added. Do you think he knows something? Ok, silly question. But of course the market took the President seriously anyway helping to drive stocks and the oil market higher.Why oil? Well based on improving US demand expectations on better US jobs outlook we might actually consume more oil.

That thought was enforced by some pretty strong auto sales data. It seems that in the Month of May while the stock market was tanking auto sales were soaring! Maybe some people were taking their stock profits to buy new cars. Ford, GM and Chrysler all saw double digit sales gains over May of a year ago according to the AP. The AP reported, “May marked the seventh straight month of year-over-year sales increases for the auto industry. Ford Motor Co., General Motors Co., and Chrysler Group L.L.C. saw double digit sales gains over the same month last year, when GM was headed into bankruptcy, joining Chrysler”.....Read the entire article.

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Are Gulf Oil Disaster Stocks Way Oversold?

Goldman Sachs Daniel Boyd feels the market sell down for offshore drillers is overdone.

Goldman:
Investor fears related to the six month moratorium on deepwater drilling in the US Gulf are overdone from a fundamental perspective, in our view as this represents just 3%-5% of annual revenues for the major companies. We ultimately expect the financial impact to be minimal (3%-7% of EPS in 2010 and we are slightly lowering our estimates to reflect this) and temporary given not only the importance of DW to US oil supply but that many of the rigs will move to international locations where there are current shortages.

They're approaching the trough valuations they hit when the world was ending in early 2009:

Here's a stock-by-stock breakdown of the price to book valuations:

Look for 2Q earnings as a positive catalyst:

With P/B and EV/GCI at “reasonable” trough levels, we recommend longer-term investors buy the group now though recognize that short-term investors might prefer to wait until either the oil spill is contained, which will give more confidence that the DW drilling ban will be lifted in six months, or 2Q results which we expect to confirm our view that global fundamentals will remain strong.

Mr. Boyd is also particularly bullish on another gulf disaster stock, outside of the drillers, Halliburton

(HAL)

We maintain our Buy rating on Halliburton. We think that the shares are now discounting trough assumptions given that it is trading at just an average historical multiple of the actual 1Q2010 trough in earnings.

Perhaps these are the smarter BP-disaster plays, the stocks which have fallen hard along with BP due to the gulf disaster, but aren't nearly as exposed to the ballooning potential liabilities.

From Vincent Fernando at The Business Insider

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The World’s Biggest LNG Producer Holding Onto it’s Gas

On paper, it should be a perfect match. Qatar has huge amounts of gas to export and its neighbours are desperately prowling for reliable energy supplies to power their emerging economies. But Qatar’s recent decision to rule out significant gas exports to its allies in the Gulf Cooperation Council from a huge gas project inaugurated earlier this month illustrates just how acute the gas needs are among some of the globe’s biggest oil producers.

The new Qatari jewel is the second phase of Al-Khaleej Gas, which is now producing about 1.25 billion cubic feet a day, equivalent to about 17% of the country’s production. Combined with AKG-1, the two projects account for more than a quarter of the country’s overall output. (Most of the remainder is liquefied and exported around the world.)

Qatar’s deputy prime minister and energy minister, Abdullah al-Attiyah, recently said that all of the gas production from AKG-2 would be used to meet domestic demand, especially for electricity generation, and to continue feeding the relentless double-digit economic growth of the past few years.

Qatar is already the world’s biggest LNG producer. It’s also a growing player in gas to liquids. But over the next decades, the country’s domestic gas demand is expected to double. And that increased gas demand can be seen throughout the region as oil rich countries work to grow their economies, especially for petrochemical and industrial sectors, as well as domestic desalination and electricity demand.

Regional electricity demand is expected to increase annually by more than 6% and it is already competing with gas demand from petrochemical plants, with countries like Kuwait forced to prioritize power over industrial output.....Read the entire article.

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Crude Oil Daily Technical Outlook For Thursday Morning

Intraday bias in crude oil remains neutral as sideway trading continues between 71.23 and 75.72. Break of 71.23 minor support will indicate that rebound from 64.23 is finished and will flip intraday bias back to the downside for retesting this low first. On the upside, above 75.72 will bring another rise, but after all, upside should be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption.

In the bigger picture, prior 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 from 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil Rises a Second Day on U.S. Home Sales Growth, Crude Stockpile Decline

Oil gained for a second day in New York after U.S. home sales rose and an industry funded report showed a decline in the country’s gasoline inventories, bolstering optimism that the economic recovery will accelerate. Oil advanced as the Standard & Poor’s 500 Index climbed after pending sales of existing homes rose to the highest level since October.

The American Petroleum Institute said last week’s gasoline supplies fell to the lowest this year. “The flow of data from the U.S. is still on the positive side, suggesting recovery,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “If we start to see inventories decline in line with their seasonal pattern then that should offer support to the market.”

Crude oil for July delivery increased as much as $1.03, or 1.4 percent, to $73.89 a barrel in electronic trading on the New York Mercantile Exchange, and was at $73.77 at 1:36 p.m. Singapore time. Yesterday, the contract rose 28 cents, or 0.4 percent, to settle at $72.86. The S&P 500 increased 2.6 percent yesterday. That has pushed Asia stocks higher today with the MSCI Asia Pacific Index climbing the most since February. The index of pending U.S. home sales gained 6 percent after they were projected to rise 5 percent in April, according to the median of 40 forecasts in the Bloomberg survey.

“The economic numbers out of the U.S. have been improving gradually this month,” said Serene Lim, an energy commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Yesterday’s API data was quite encouraging. We’ll have to see if the Department of Energy numbers match that, especially if the Cushing inventories fall”....Read the entire article.

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Crude Oil Bulls Gain Momentum on High Range Close

Crude oil closed higher due to short covering on Wednesday ending a two day correction off last Friday's high. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 75.05 are needed to confirm that a short term low has been posted. If July renews the decline off May's high, last July's low crossing at 66.11 is the next downside target. First resistance is the 20 day moving average crossing at 75.05. Second resistance is last Friday's high crossing at 75.72. First support is the 10 day moving average crossing at 71.82. Second support is last Tuesday's low crossing at 67.15.

Natural gas closed higher on Wednesday as it extends the rally off last week's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If July extends this week's rally, May's high crossing at 4.587 is the next upside target. If July renews the decline off May's high, the reaction low crossing at 3.971 is the next downside target. First resistance is today's high crossing at 4.440. Second resistance is May's high crossing at 4.587. First support is last Tuesday's low crossing at 4.036. Second support is the reaction low crossing at 3.971.

The U.S. Dollar closed higher on Wednesday but the mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are diverging but are neutral to bearish signaling that sideways trading is possible near term. If June renews 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 reaction low crossing at 85.33 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 87.63. Second resistance is weekly resistance crossing at 87.79. First support is the 20 day moving average crossing at 86.01. Second support is the reaction low crossing at 85.33.

Gold closed lower due to profit taking on Wednesday. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If August extends this week's rally, May's high crossing at 1251.40 is the next upside target. First resistance is Tuesday's high crossing at 1230.60. Second resistance is May's high crossing at 1251.40. First support is the 20 day moving average crossing at 1210.80. Second support is the 10 day moving average crossing at 1205.40.



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Crude Oil Prices Climb as Monthly Jobs Report Looms

Oil prices rose on Wednesday as investors began to place bets ahead of Friday's monthly jobs report that figures to provide fresh clues about the strength of the rebounding economy and demand for oil. At the same time, gasoline pump prices across the country continued their slow slide toward levels not seen since a year ago. Benchmark crude for July delivery climbed 90 cents at $73.48 a barrel on the New York Mercantile Exchange. The contract fell $1.39 to settle at $72.58 on Tuesday.

Retail gasoline prices fell for the 27th straight day, dropping 0.4 cent overnight to a national average of $2.723 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices have dropped 4.8 cents in the past week and 17.2 cents in the past month. Prices remain 19.8 cents over year ago levels. Oil prices have been supported by recent economic data that have come in better than expected, including a report Wednesday that showed pending home sales at their highest level in April since October. Demand for crude products also has been increasing.

The latest read on how the U.S. economy is doing comes Friday when the unemployment report for May is released. "If this market is disappointed, it could be a new leg down for gas prices," said Phil Flynn of PFGBest. Rising stock markets helped oil prices on Wednesday. The Dow Jones Industrial Average was up about 120 points at midday. The NASDAQ and the S&P 500 posted gains as well. Oil and gasoline prices have fallen about 16 percent in the past month, even as the spill in the Gulf of Mexico worsens. Tankers bringing imported oil to Gulf ports and taking refined product out continue to work around the huge slick at the mouth of the Mississippi River.

In other Nymex trading in July contracts, heating oil rose 3.99 cents to $2.0103 a gallon, and gasoline added 4.67 cents to $2.292 a gallon. Natural gas was up 14.3 cents at $4.391 per 1,000 cubic feet. In London, the Brent crude July contact was up $1.50 at $74.21 on the ICE futures exchange.....Here's more AP business news!

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Dan Dicker: BP Stock Is Bad News

Dan Dicker, TSC senior contributor, says he got the BP stock call wrong and is looking for a micro rally to sell his shares. Follow Dan on Twitter at Dan_Dicker.



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Crude Oil Daily Technical Outlook Wednesday Morning

Intraday bias in crude oil remains neutral for the moment. Break of 71.23 minor support will indicate that rebound from 64.23 is finished and will flip intraday bias back to the downside for retesting this low first. On the upside, above 75.72 will bring another rise, but after all, upside should be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption.

In the bigger picture, prior 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 from 87.15 is completed. Otherwise, we'll stay bearish......Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil Falls for Third Day on Concern Slower Growth to Cut Fuel Demand

Oil fell for a third day as Chinese equities dropped, highlighting concerns about flagging fuel demand in the world’s second largest crude user, and as the euro fell against the dollar, limiting the appeal of commodities. Oil gave up earlier gains as China’s Shanghai Composite Exchange slumped to a 13 month low on concerns about banks’ abilities to raise funds. The country’s manufacturing index yesterday showed less than expected growth. The euro declined for a second day following reports yesterday European unemployment reached a 12 year high in April.

“The market is very sensitive to any news right now,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “The dollar and euro exchange has been very volatile so that translates to the oil price. The soft euro will impact the dollar and that will hurt China’s export sector.” Crude oil for July delivery dropped 50 cents, or 0.7 percent, to $72.08 a barrel at 12:38 p.m. Singapore time on the New York Mercantile Exchange. Prices have swung between gains of 0.5 percent and losses of as much as 1.1 percent today.

Yesterday, the contract lost $1.39, or 1.9 percent, to $72.58. Futures fell 14 percent in May. The euro retreated as much as 0.3 percent today after hitting a four year low of $1.2111 yesterday. It was at $1.2191 at 12:39 p.m. Singapore time.
China’s purchasing manager’s index declined to 53.9 in May from 55.7 in the previous month. It fell short of a median 54.5 estimate from 18 economists surveyed by Bloomberg News. A gauge of manufacturing in the 16 member euro region declined to 55.8 from 57.6 the previous month, London based Markit Economics said.....Read the entire article.

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Where is Crude Oil and Gold Headed on Wednesday?

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, Natural Gas, Gold and Dollar Commentary For Monday Evening

Crude oil closed down $1.51 at $72.46 a barrel today. Prices closed nearer the session low today and saw a corrective pullback from strong gains scored last week. Recent price action does suggest a market low is in place, or close to it, and that prices will now chop in a sideways trading range between last week's low of $67.15 and strong psychological resistance at $80.00.

Natural gas closed down 10.6 cents at $4.234 today. Prices closed near the session low today and scored a bearish "outside day" down on the daily bar chart. The bears still have the overall near term technical advantage.

The U.S. dollar index closed up 20 points at 87.21 today. Prices closed near mid-range today. European Union sovereign debt troubles will continue to support the dollar index. The bulls still have the solid overall near term technical advantage. There are still no early technical clues to suggest a market top is close at hand.

Gold futures closed up $12.00 at $1,227.00 today. Prices closed nearer the session high today and hit a fresh two week high. Safe haven buying today boosted gold. The gold bulls have the solid overall near term technical advantage and gained some fresh upside momentum today. There are no early technical clues to suggest a market top is close at hand.



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European Crude Oil Supply Competition for Russia

Russia has been traditionally positioning itself as the prime source of hydrocarbon raw materials for Western Europe. However, European countries also have crude reserves, although they are not enough to cover the current level of oil consumption on the continent. Europe receives most of its oil from the North Sea, where Norway and Britain set their rules. The oil extracted in the North Sea - 100 million tons a year - is only enough for Norway (world’s third largest oil exporter) and Britain, which buys that oil. The level of oil extraction in the region has been decreasing recently, but oil companies continue to discover new small deposits of black gold in the North Sea.

Norway’s oil company Det norske has recently found one, The Norway Post wrote. The deposit has from seven to twelve million barrels. Nothing has been reported about the profitability of extraction in the new deposit. The North Sea still remains the territory of good perspectives, not to mention the Arctic region, which has not been explored yet. The largest oil wells on the British continental shelf in the Northern Sea are Leman-Bank, Brent, Markham and Buzzard. The proven reserves are evaluated at 3481 million tons. As for continental fields, the largest one is Wytch Farm – about 60 million tons of oil, Neftegaz.ru website said.

Britain ’s long time adversary in the field of oil mining, France, is no competition. However, France was the first nation to have applied the method of oil mining at Pechelbronn. France was also the first to start the industrial extraction of this fuel. Nowadays, France mines only 20,000 barrels of oil daily. This number pales in comparison with the nation’s needs of nearly 2 million barrels a day. The explored oil reserves in France are not that large either, 122 million tons.....Read the entire article.

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Phil Flynn: The Rain In Spain Helps Oil Go Down The Drain

Last week a downgrade in Spain’s credit rating helped sink oil. Overnight it was a report on Chinese manufacturing that did the deed. Last Friday, ahead of the holiday, Fitch downgraded Spain’s credit causing stocks and oil to tumble. That was only temporary because at the end of the day we all know that Europe doesn’t matter, it is all about China and China has decoupled from the rest of the globe. Well, not so fast. Overnight the China Federation of Logistics and Purchasing reported that China's Purchasing Managers Index fell to 53.9 in May from 55.7 in April. That dip in Chinese manufacturing seems to suggest that perhaps China is getting impacted by the economic turmoil in Europe. China exporters count on Europe to buy their goods but it is possible that because of the turmoil it's happening at a slower pace.

Adding to the cracks in China’s unbreakable reputation is concerns rising surrounding their housing market. The Financial Times reports, “The problems in China's housing market are more severe that those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent", according to Li Daokui, a professor and an adviser to the Chinese central bank. “The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis," said Li Daokui, a member of the bank's monetary policy committee. "It is more than (just) a bubble problem”.....Read the entire article.

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Crude Oil Daily Technical Outlook For Tuesday Morning

With 4 hours MACD crossed below signal line, intraday bias in Crude oil is turned neutral. Break of 71.23 minor support will indicate that rebound from 64.23 is finished and will flip intraday bias back to the downside for retesting this low first. On the upside, above 75.72 will bring another rise, but after all, upside should be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption.

In the bigger picture, prior 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 from 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil Rises on Outlook U.S. Economic Recovery Will Boost Fuel Demand

Crude oil rose above $75 a barrel in New York on speculation that economic growth in the U.S., the world’s biggest energy consumer, will sustain a global recovery in fuel demand. Oil climbed after Federal Reserve Bank of Chicago President Charles Evans said yesterday the U.S. economic recovery will continue amid uncertainties prompted by Europe’s debt crisis. About 28 million people were expected to be on road trips in the U.S. during the three-day Memorial Day weekend, a jump of 5.8 percent from a year earlier and the first increase since 2005, according to AAA, the country’s biggest motoring organization.

“There is more of an optimistic feel toward the economy starting to creep in, particularly in the U.S.,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “People are starting to buy up, or looking to buy, because some of these commodities are cheap. Summer drive time is always a key.”

Crude oil for July delivery gained as much as $1.20, or 1.6 percent, to $75.17 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $74.44 at 11:29 a.m. Sydney time. The contract declined 58 cents, or 0.8 percent, to settle at $73.97 on May 28. Futures dropped 13.6 percent in May, the biggest monthly drop since December 2008. Floor trading was closed Monday for the Memorial Day holiday in the U.S. and electronic trades will be booked with today’s for settlement purposes.....Read the entire article.

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Trend Trading Gold, Silver, Crude Oil and the SP500

Last week looked and felt like a pivotal week for both stocks and commodities. The past two weeks have had investors and traders in a panic as they try to find safe investments for their money. After watching and reviewing the panic selling in the market it looks as though the majority decided to sell everything and be in cash for the time being. This is bullish for the stock market.

I will admit it has been tougher to trade recently because of increased risk levels due to the large 2-4% sell offs and rallies happening within minutes… While this is amazing for disciplined and experienced traders who are able to pull the trigger getting in and out with quick profit in the matter of minutes, this same price action can blow up trading accounts of those who do not have a trading strategy, money management and the discipline to take profits and cut losses very quickly. The speed of the rallies and sell offs is the matter of being up or down thousand of dollars in the matter of 5-10 minutes… That is one of the reasons I have stepped back from being aggressive and into more of an observation mode playing with small amounts of money and focusing on the larger trends at.

My #1 goal is to make subscribers money with the least amount of risk and watching the market swing 2-4% in minutes makes it extremely difficult to get everyone in and out positions with a profit before the market changes directions. As much as I love trading, some times the best position is to have small ones or be in cash.

GLD – Gold ETF Trading

Here is my weekly updated chart of gold as it works its way through the correction from last year. The daily chart looks to be forming a larger Cup & Handle pattern which is extremely bullish. If this pattern does a text book move then we could see GLD reach $140 and spot gold would reach the $1400 area.

That being said this pattern still has to complete the handle portion which could easily last another 4 weeks, so I am not in a panic to add more to our position.

SLV – Silver ETF Trading

Silver is in much of the same situation. Because of the added volatility in silver the charts do not look quite the same but they are similar in many ways… Silver is used a lot for industrial purposes and because the economy which is very weak still (though it is getting better) we are not seeing silver demand rise much. If silver can break this large resistance level then we could see silver surge to $25 (25%) this year.

USO – Oil Fund Trading

USO (Oil) has held up really well in the past 12 months but the recent sell off has seriously damaged the bullish outlook I had not long ago. While it is oversold and looks to have started a bounce last week the chart is pointing to lower prices over the longer term… This USO fund does have contago which makes this fund under perform the actual price of oil. The current prices of oil are still trading at a key support level and could post nice bounce if not trigger a new rally. The problem with following some ETF’s which have contago is that you do not see the real price action of the commodity. But that is were I come in as I track the underlying commodity and relate it to ETFs for you.

SPY – SP500 ETF Trading

The Stock Market (SP500) sure has been a roller coaster. The chart below shows you what happened in January for the last correction and where we stand currently in comparison. If a setup is obvious in the financial market there is a very high chance it will not work out as planned and by knowing this it allows us to be cautious and take profits at key short term support and resistance levels.

Trend Trading Conclusion:

In short, I feel gold and silver will drift around to digest the recent move up and to form the handle portion. Oil looks to have put in a short term bottom and if we get a small pullback in the coming days to test the intraday chart breakout level and touch the support trend line we could look to take a position.

We tend to see the most price appreciation during the final stages of a trend and we could have seen that on the US Dollar over the past 6 weeks. It looks as though the dollar could have put in a double top. If the dollar rolls over it would help boost precious metals, oil and stocks… But we will not know it’s a top until there is a clear trend reversal which in any case will be weeks before that type of price action can unfold.

As for the SP500, we have seen the same level of selling as we did in Feb-March 2009. High volume panic selling has ruled the market since late April. There are equal arguments for saying the market has bottomed with all the panic selling and that we should start another large rally lasting 8-12 months or one could argue this is capitulation volume signaling massive distribution of shares and now every rally/bounce will be sold… Personally I am torn between the two… but lean more towards higher prices with a multi month grind up at slow rate…

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Natural Gas Weekly Technical Outlook

Natural gas's rebound last week suggests that consolidation from 3.81 is still in progress. Further rise might be seen initially this week but we'd expect strong resistance at 4.494 to limit up side. Below 4.154 minor support will indicate that recovery from 3.986 is completed and will flip intraday bias back to the downside for 3.81/884 support zone. Decisive break there will confirm down trend resumption and should target 3.0 psychological level next.

In the bigger picture, medium term rebound from 2.409 has completed at 6.108 and the three wave corrective structure of the rebound argues that it's merely a correction, or part of the consolidation in the larger down trend. Current fall from 6.108 might extend further for a retest on 2.409 low next after sustaining below 61.8% retracement of 2.409 to 6.108 at 3.822. However, note that decisive break of 38.2% retracement of 5.68 to 3.81 at 4.524 will argue that whole fall from 6.108 has completed and will turn outlook bullish for a possible test on 6.108 high.

In the longer term picture, while the bounce from 2.409 was strong, it's been limited below 55 months EMA (now at 6.047) and reversed. The failure to sustain above 55 weeks EMA (now at 4.679) also argue that 2.409 might not be the bottom yet. We'll stay bearish as long as this year's high of 6.108 holds and favor a new low below 2.409 going forward.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Here Are 20 Signs That China Is Cornering The Global Oil Market

In response to the BP's Deepwater Horizon disaster, President Obama has launched a 6 month moratorium on new deepwater exploration contracts and other oil drilling restrictions.

But China isn't stopping. Just this month, state-owned Chinese companies have signed contracts worth over $50 billion in Canada, Brazil, Argentina, Iraq, Venezuela, and Nigeria.

Most deal include an export clause, locking down energy supplies for the growing Chinese economy. If America's demand ever increases, these deals would present a serious problem.

And Beijing has no qualms about offshore drilling.

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