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Crude oil recovered modestly but remained hovering around 75 level as the market awaits the oil inventory report. Stock markets were mixed in Asian and European session so crude failed to benefit much despite its strong correlation with equities. Gold resumed the uptrend after profit taking sent price to 1274 yesterday. Currently trading at 1294, the benchmark contract for gold has gained in 5 out of the past 7 days due to macroeconomic uncertainty and the Fed’s move closer to additional easing.
Stocks gained in Asian session as driven by Australia and Hong Kong shares. Just 2 days after RBA governor Glenn Stevens saying that Australia’s economy will growth above trend in 2011, Westpac Leading Index unexpectedly rose +0.4% m/m in July, following a contraction of -0.1% in the prior month. Australia’s S&P/ASX Index added +0.21%. In Hong Kong, the Monetary Authority said the city will grow at a moderate rate through the end of the year. This lifted the Hang Send Index by +0.21%.
In Europe, equities were generally lower with benchmark indices losing 0.5-0.9%. Eurozone’s industrial new orders surprisingly fell -2.4% m/m in July from a downwardly revised +2.4% growth in June. The market had anticipated a milder drop of -1.4%. As stated in the minutes for BOE’s September meeting, economic data released in the past month has showed a ‘reduction in growth prospects’. The minutes also revealed.....Read the entire article.
Crude oil was higher overnight as it consolidates below the 20 day moving average crossing at 75.81. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.
If November extends last week's decline, the reaction low crossing at 73.08 is the next downside target. Closes above the 10 day moving average crossing at 76.33 would confirm that a short term low has been posted.
First resistance is the 20 day moving average crossing at 75.81
Second resistance is the 10 day moving average crossing at 76.33
Crude oil pivot point for Wednesday morning is 75.34
First support is last Friday's decline crossing at 74.10
Second support is the reaction low crossing at 73.08
Crude oil rose before a report forecast to show U.S. inventories dropped for a third week and as the dollar fell, spurring investor demand for commodities. The Energy Department will probably say that supplies slipped 1.75 million barrels, according to the median of 18 analyst responses in a Bloomberg News survey. The Dollar Index, a gauge of the currency versus six major trading partners, slid to the lowest level since March 17. “It makes sense that prices are heading higher this morning because today’s report is expected to show a sizable draw in crude oil stocks,” said Jason Schenker, the president of Prestige Economics LLC, an Austin, Texas-based energy consultant.
Crude oil for November delivery rose 94 cents, or 1.3 percent, to $75.91 a barrel at 9:02 a.m. on the New York Mercantile Exchange. Futures are up 6 percent from a year ago. Brent crude oil for November settlement gained 37 cents, or 0.5 percent, to $78.79 a barrel on the London based ICE Futures Europe exchange. The Dollar Index slipped 0.7 percent to 79.844. The U.S. currency traded at $1.3374 per euro, down 0.8 percent from yesterday, after touching $1.3418 per euro, the lowest level since April 17.....Read the entire article.
The S&P 500 index closed lower on Tuesday as it consolidated some of the rally off August's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional gains are possible near term. If December extends the aforementioned rally, the 75% retracement level of the April-July decline crossing at 1152.70 is the next upside target. Closes below the 20 day moving average crossing at 1089.49 would confirm that a short term top has been posted. First resistance is today's high crossing at 1143.70. Second resistance is the 75% retracement level of the April-July decline crossing at 1152.70. First support is the 10 day moving average crossing at 1116.75. Second support is the 20 day moving average crossing at 1089.49.
Crude oil closed lower on Tuesday as it extends last week's decline. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If October extends the decline off last week's high, August's low crossing at 70.76 is the next downside target. Closes above last week's high crossing at 78.04 are needed to renew the rally off August's low. First resistance is the 10 day moving average crossing at 75.19. Second resistance is last Monday's high crossing at 78.04. First support last Friday's low crossing at 72.75. Second support is August's low crossing at 70.76.
Natural gas closed higher due to short covering on Tuesday and above the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. If October extends last week's rally, the 38% retracement level of the June-August decline crossing at 4.321 is the next upside target. Closes below Monday's low crossing at 3.806 would temper the near-term friendly outlook. First resistance is last Friday's high crossing at 4.060. Second resistance is the 38% retracement level of the June-August decline crossing at 4.321. First support is Monday's low crossing at 3.806. Second support is August's low crossing at 3.697.
Gold closed higher on Tuesday posting another new all time high as it extends the rally off July's low. Stochastics and the RSI are overbought but are bullish signaling that sideways to higher prices is possible near term. If December extends the rally off July's low, upside targets will now be hard to project following yesterday's rally to a new contract high. Closes below the reaction low crossing at 1237.90 would confirm that a double top with June's high has been posted. First resistance is today's high crossing at 1290.40. First support is the 20 day moving average crossing at 1255.70. Second support is the reaction low crossing at 1237.90.
The U.S. Dollar closed lower on Tuesday extending the decline off August's high. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends the decline off August's high, March's low crossing at 80.18 is the next downside target. Closes above the 20 day moving average crossing at 82.53 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 81.96. Second resistance is the 20 day moving average crossing at 82.53. First support is today's low crossing at 80.42. Second support is March's low crossing at 80.18.
CEO Tom MacNeill likes to throw that line out to investors as he explains the opportunity at 49 North Resources Inc. (FNR-TSX). 49 North is a specialized venture capital company that is quickly morphing into a fast growing oil producer, with a twist. It’s focused solely on Saskatchewan. The map that illustrates his point shows a stark contrast between Alberta and Saskatchewan. In Alberta, the map has an abundance of oil and gas properties being developed. Moving east across the border in Saskatchewan is like falling off a cliff; there is a dramatic and immediate drop off in the amount of activity in oil and gas.
The productive oil and gas geology doesn’t stop on a dime like that, says MacNeill. He sees huge opportunity in that map. His theory is that 40 years of socialist governments in Saskatchewan have slowed the development of the province’s energy resources, but the new business friendly government of Premier Brad Wall has created a huge wealth of opportunity for energy entrepreneurs like himself. “This is early days (in resource development) in Saskatchewan. The only thing that’s held us up in Saskatchewan is politics. We are at Year 1 in a 50 year process. We have 50 years of upside,” he gushes.
“Use Alberta as an analogue,” he adds, noting that Saskatchewan already has more conventional oil production than Alberta. “We do 500,000 bopd of conventional production. Alberta production peaked in 1983, 40 years after (the original) Leduc #1 (well). We are 40-50 years away from Peak Oil (in Saskatchewan).” 49 North has a suite of mining and oil and gas assets, but has recently been increasing its energy weighting. As is typical of these public venture capital companies, it trades at a 40% discount to its Net Asset Value.
MacNeill has invested directly in several oil and gas land packages, and has production net to 49 North of 80 bopd now, but hopes to have an exit rate of 1000 bopd from its 10 net section land package that produces from the Viking formation “This is not exploration in the Viking. We can do 16 wells per section and we have 10 sections.” 49 North had 100% success on the five wells it drilled last quarter. MacNeill joint ventures or buys out many small operators, and helps them get big fast. “We have so many opportunities, we could make swiss cheese out of this province” he says. “We’ve done a lot of geophysical work in this province. We have a lot of proprietary information from mineral exploration work we’ve done in our mining assets, and there are great synergies there (for oil and gas).”
Independent energy companies (including oil and gas producers in addition to oilfield companies) reported a 77 percent increase in income in the second quarter of 2010 (Q210) to $3.4 billion.
Oil and gas producer revenues increased sharply along with crude and natural gas prices, and earnings rebounded from losses in Q209 to their highest second quarter level in the 2005-2010 period.
Oilfield company revenue and earnings increased modestly in Q209 but remained well below the Q2 average over 2005-2010.
Ethanol producer revenues increased and earnings crossed into the black after losses in Q209.
The recession is over! Now don’t you feel better? Well at least for a day the stock market sure did and oil and the products decided to go along for the ride as the market once again found a reason to believe. Still it appears that the joy that we are seeing in the market place is not all about the fact that the recession is over but a growing belief in the market place that the Federal Reserve is going to lay the ground work at todays FOMC meeting for another round of quantitative easing.
Oh sure, the expectations are not high that the Fed will do anything today but based on market action, if they do not drop any quantitative ease hints, the market will be a bit disappointed. Still the markets that seemed to be showing the most anticipation of Fed action such as gold and treasury bonds, seem to be a bit toppy after their recent spine tingling surge as they seem to be either getting ready to sell the fact after buying the rumor or perhaps they feel that the Fed may just disappoint them.
The oil market also has to look to the Fed as it is the Fed that is keeping the market from collapsing. While the petroleum market may see a big drop in supply this week due to transitory issues such as the Enbridge pipeline outage and the double trisect of tropical storms and hurricanes the truth is that we have more than ample supply. That is being reflected in an increasingly bearish outlook by crude option players. Oil may start to worry more about geo-political issues as we move forward.....Read the entire article.
Today we are going to be looking at gold and analyze the recent run up that has created a great deal of excitement and fear for many investors and traders.
We're also going to be looking at some upside measurements that we have for this market. Conversely, we are also looking at an area that should provide support should the gold market pull back from its current levels.
In this new video we are going to be focusing on our "Trade Triangle" technology and what it means for traders. We will explore short term, intermediate term, and long term trading in this precious metal. This will all be done using our "Trade Triangles."
As always our videos are free to watch and there is no need for registration. We hope that you enjoy the video and that you share your comments.
Crude oil was lower overnight and remains poised to renew last week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.
If October extends last week's decline, the reaction low crossing at 71.53 is the next downside target. Closes above the 10 day moving average crossing at 75.27 would confirm that a short term low has been posted.
First resistance is the 20 day moving average crossing at 74.48
Second resistance is the 10 day moving average crossing at 75.27
First support is last Friday's decline crossing at 72.75
Second support is the reaction low crossing at 71.53
The U.S. stock indexes closed higher, near the session highs and hit multi week highs today. Bulls have gained good upside near term technical momentum recently as the bulls have "climbed a wall of worry." While the months of September and October have been historically unkind to the stock market bulls, the indexes are getting through the month of September in good shape, so far. My bias is that if there were to be serious market stock market turbulence during the months of September and October, it would have most likely occurred in early September.
Crude oil closed up $1.10 at $74.76 a barrel today. Prices closed nearer the session high today and saw short covering. Bulls and bears are back on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at last week's high of $78.04 a barrel.
Natural gas closed down 19.1 cents at $3.833 today. Prices closed near the session low today. The bears still have the overall near term technical advantage and regained some downside momentum today. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.144.
Gold futures closed up $3.60 at $1,281.10 today. Prices closed near mid range today and did poke to another fresh contract and all time record high today. A weaker U.S. dollar index today helped to boost gold. The fact that volatility in the gold market has not increased significantly with prices now in uncharted territory is a bullish clue and suggests the modest uptrend in prices can continue. Gold 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.
The U.S. dollar index closed down 3 points at 81.60 today. Prices closed nearer the session high today. Bears still have the overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.31.
Whiting Petroleum Corp. said Monday it has launched a public offering of $350 million in senior subordinated notes to repay other outstanding debt. The notes will be due in 2018. Banc of America Securities, J.P. Morgan Securities and Wells Fargo Securities are the joint book-running managers.
Whiting explores for oil, and natural gas in several parts of the U.S. Its largest projects are in North Dakota, Oklahoma and Texas. The shares rose $3.50, or 3.8 percent, to $96.28 in regular trading before the announcement. In extended trading, they added 3.8 percent to $96.28.
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The BP Macondo Well has been officially declared dead over the weekend. The Financial Times says that US authorities pronounced BP’s blown out Macondo well in the Gulf of Mexico “effectively dead” on Sunday, 152 days after the explosion on the Deepwater Horizon drilling rig that caused the world’s largest accidental offshore. The announcement ends the 5m barrel leak, which sparked fury among the US public and politicians, but may eventually be seen to have had only a marginal effect on the global oil industry.” Marginal?
BP opponents of drilling will a rallying point. Yet at the same time the industry has learned a lot and will be better prepared to respond to this type of disaster in the future. So there will be some bad and good that will come from this disaster. Oil is rallying a bit on a weak dollar. Of course the main factor for oil and most other markets will be the impact from this week’s FOMC meeting. If I have said it once I think I have said it a thousand times that the Fed is one of the major driver of oil prices as well as other commodities.....Read the entire article.
I think it’s safe to say that everyone knows the markets are manipulated… but during options expiry week we tend to see prices move beyond key resistance and support levels during times of light volume which triggers/shakes traders out of their positions.
Trading during low volume sessions Pre/Post holidays for swing traders or between 11:30am – 3:00pm ET for day traders tends have increased volatility and false breakouts. This happens because the market markets for individual stocks can slowly walk the prices up and down beyond short term support and resistance levels simply because there is a lack of participation in the market.
SP500 4 Hour Candlestick Chart
That being said, the chart below of the SPY (SP500 ETF) shows that last Thursday, (the day before Friday options expiry) the put call ratio was showing extreme bullishness. I also mentioned that we should expect a pop of 0.5 -2% in the next 24 hours as big guys will try to shake everyone out of their short positions (put options).
The put/call ratio indicator at the bottom of this chart is a contrarian indicator. When it shows that everyone has jumped to the bullish side, the big money knows its about time to change the direction so they can cash in at premium price levels.
SP500 60 Minute OptionsX Chart of the Week
If you look at the volume at the bottom of the chart you will see there are times where this virtually zero volume trades. The yellow high lighted section shows the overnight price surge which is very easy for the big guys to push higher as everyone sleeps.
Here is what they are doing. The light volume makes it easy to manipulate so they push it higher until key resistance is broken, then everyone who was short and had a protective stop in place will have their order executed. As the price rises, more and more stops get triggered. Also, with the rising number of traders becoming bullish from the previous session have buy orders to go long if key resistance is broken. This causes a virtually automated rally to unfold, but once the orders/buying dries up, the big guys start selling their positions at premium prices, pushing the price all the way back down to where the market closed the previous day.
In short, the big guys shook the majority of traders out of their positions Thursday night and pocketed a ridiculous amount of money. Crazy part is 99% of the public don’t even know this type of thing is happening while they sleep.
SP500 OptionsX Intraday Price Action
I thought I would show this chart as it shows the selling pressure in the market. What I find interesting about this chart is the fact there was more selling volume during options expiry week, but the prices continued to move higher.
From watching the market internals I saw the majority of traders go from bearish to bullish by the end of the week, and this really gave the big guys a huge advantage in my opinion. Each session selling volume took control with the big guys unloading bu the low volume afternoons naturally brought prices up again as more and more traders became bullish each session. This happened all week and Thursday night it looks as though they let the price rise allowing the key resistance level to be broken which caused a surge of buying which they could selling into. So what’s next…
SP500 / Broad Market Trading Conclusion:
In short, the market looks toppy and if all goes well, last weeks overnight shakeout just may have been a top. This week will start off slow and most likely with light volume until Wednesday. During light volume times, keep trading positions smaller than normal and remember there is a neutral/upward bias associated with light volume.
You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 2-4 investments at a time, I’ll only be covering only one. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis per customer’s request, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of newsletter traders and they will receive direct personal responses regarding trade ideas and analysis going forward. Let the volatility and volume return!
Chris Vermeulen
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Crude oil was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.
If October extends last week's decline, the reaction low crossing at 71.53 is the next downside target. Closes above the 10 day moving average crossing at 75.15 would confirm that a short term low has been posted.
First resistance is the 20 day moving average crossing at 74.37
Second resistance is the 10 day moving average crossing at 75.15
First support is last Friday's decline crossing at 72.75
Second support is the reaction low crossing at 71.53
Crude oil traded near its lowest in almost three weeks after falling amid speculation the U.S. economic recovery is slowing, reducing fuel use in the world’s biggest crude consumer. Futures dropped 1.2 percent on Sept. 17 after the Thomson Reuters/University of Michigan preliminary September index of consumer sentiment declined to 66.6 from 68.9 a month earlier. Prices also decreased after the American Petroleum Institute said U.S. gasoline consumption in August averaged 9.23 million barrels a day, down from 9.3 million in August 2009.
The October contract traded at $73.70 a barrel, up 2 cents, in electronic trading on the New York Mercantile Exchange at 8:30 a.m. Sydney time. It lost 91 cents to $73.66 on Sept. 17, the lowest settlement since Aug. 31. Prices are down 7 percent this year. Oil also dropped after the dollar gained against the euro, reducing the appeal of commodities as an alternative investment. The U.S. currency traded at $1.3044 a euro after rising 0.2 percent on Sept. 17.
Brent crude oil for November settlement traded at $78.22 a barrel, up 1 cent, on the London based ICE Futures Europe exchange. It fell 27 cents, or 0.3 percent, to settle at $78.21 on Sept. 17.
Reporter Ben Sharples can be reached at bsharples@bloomberg.net
Crude oil edged high to 78.04 last week but was limited below mentioned 61.8% retracement of 82.97 to 70.76 at 78.31 and reversed. The break of 73.88 minor support indicates that whole recovery from 70.76 is likely completed. Initial bias is mildly on the downside this week for a retest on 70.76 support first. Sustained trading below 70.76/71.09 support zone will confirm our bearish view that whole rebound from 64.23 is finished at 82.97 already and target another low below 64.23. On the upside, above 75.25 minor resistance will turn intraday bias neutral and bring recovery. But we'll stay bearish as long as 78.31 fibo resistance holds.
In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Decisive break of 71.09 will confirm this bearish case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, break of 82.97 resistance is needed to invalidate this view. Otherwise, we'll stay bearish in crude oil.
In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.
Comedian George Gobel once asked, "Did you ever get the feeling that the world was a tuxedo and you were a pair of brown shoes?" Energy traders right now probably know exactly what he means. Are you not feeling a little left out of all the commodity excitement and feel like you are on the outside looking in? While oil prices fail at another attempt to take out $80 a barrel this week and stumbled back down into the mid seventies, it seems the rest of the commodity world has gone parabolic. I mean look at all the markets that have gone dong gone wild! Gold overnight hit another all time nominal high! Silver hit the highest level since the Hunt boys diversified from tomatoes or is it tomatoes to silver.
Sugar seems to be targeting doubling its price from the low it made last May. Corn is back above $5.00 a bushel as it appears that the crop and some of the ears are more than a few kernels short of the cob. Coffee has been percolating and is surging as Arabica supplies are tight and there are worries about the current crop. Yet petroleum these days have been very rangy. For oil it is hard to get over the hump when the demand outlook is sketchy and the supply is mounting. Oh sure, you can speculate that supply will tighten dramatically in the future.....Read the entire article.
