Where is Crude Oil Headed on Wednesday?

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




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Crude Oil Closes Lower as it Extends Last Week's Decline

Crude oil closed lower on Tuesday as it extends last week's decline. The low range close sets the stage for a steady to lower opening on Wednesday.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the reaction high crossing at 79.04 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 76.08
Second resistance is the 20 day moving average crossing at 77.37

First support is the reaction low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

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Natural gas closed higher on Tuesday as it extended Monday's rally 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 bullish signaling that sideways to higher prices are possible near term.

If January extends this week's rally, the reaction high crossing at 5.290 is the next upside target. If January renews this year's decline, weekly support crossing at 4.157 is the next downside target.

First resistance is today's high crossing at 5.152
Second resistance is the reaction high crossing at 5.290

First support is the 20-day moving average crossing at 4.827
Second support is last Thursday's low crossing at 4.432

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The March Dollar closed higher on Tuesday as it extended last Friday's rally but remains 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 remain bullish signaling that sideways to higher prices are possible near term.

If March extends its current rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.43 would temper the near term friendly outlook in the Dollar.

First resistance is today's high crossing at 76.61
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.55
Second support is the 10 day moving average crossing at 75.43

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Gold : A Minor Pullback or a Major Correction?

Wow....what a week it was in the world of Gold! After charging above $1,200 on the front month futures contract earlier in the week, Gold finally finished the week on a very weak note, closing below $1,150, which was right above the low established a week earlier in the wake of the Dubai debt debacle. Clearly, Gold is beginning a trend reversal on a daily based time frame, but the technical picture is less clear over the long term. Let’s examine a weekly chart for GLD (one of the financial instruments that holds actual Gold) to get a better fix on what might be expected in this volatile market over the next month or so.


Graphic credit: Metastock v.11

Before going any further, I must admit to being a Gold Bug, having been afflicted with this wonderful malady for many years, including the time period prior to the recent bull run in Gold from 2001-present. Long term, and given the abysmal long term outlook for the US Dollar (and all fiat currencies for that matter), declining mine production (most of the high quality, easier to mine deposits are used up already) and greater awareness among investors regarding the inclusion of Gold in their portfolios, I believe that Gold will easily make it to $2,500 to $3,000 at some point in the next five years, despite several massive sell offs along the way to the eventual summit. However, in the here and now, we need to also rely on our charts, technical indicators and COT futures market data (Commitment of Traders report, published weekly by the CFTC) in order to minimize losses and maximize gains by waiting for more opportune times to add to long term holdings of Gold and/or to capitalize on high probability, short term moves (up and down) that will likely commence from solid support/resistance (S/R) levels in the weeks ahead.
OK, now on to what the weekly chart of GLD is telegraphing to astute traders and investors here:

1. $1,200 was a key Fibonacci extension/Keltner Band resistance area on both a weekly and monthly time frame; major turbulence was expected well in advance, thus the recent tumble came as no surprise to experienced technical traders.

2. Note this week’s wide range weekly reversal candle, one that printed on extremely heavy volume (see circle at bottom of chart); this is a major reversal signal, especially for daily based traders, coming in the wake of such a high profile resistance barrier($1,200).

3. Look now at the short-term and long term money flows (lower portion of the chart); both of the Chaikin money flow indicators (CMF)(34) and (CMF)(144) are revealing pronounced negative divergences with the actual price trends of GLD, which means that the raw fuel (money flowing into GLD and Gold) needed to drive Gold higher is beginning to dry up, for the time being.

OK, so what? What’s a trader and/or investor to do now, given this information? Well, if you’re a long term Gold Bug, simply hold your core investment positions for the long haul; that $100+ trillion US national debt/unfunded liability problem ain’t paid off just yet (and likely will never be), so the future for Gold has never looked better, especially for those wishing to diversify out of the Greenback. Let this corrective move play out and trhen consider adding more at lower price levels, $1,050 might be one such a price zone, which happens to be the current 21 week exponential moving average (EMA) price for cash Gold. For those investing via shares in GLD, the area near $104 also coincides with its own 21 week EMA. More cautious investors might wait for a move lower toward the 50 week EMA, which comes in at about $96 for GLD and $975 for cash Gold. The 21 and 50 week EMA’s acts as strong S/R barriers in nearly every kind of market, and Gold is no exception, so you may wish to do further analysis to see if adding on at those particular price areas makes sense for your financial situation.

Traders can be a bit more aggressive; expect to see some sort of a reaction move higher once GLD/Gold hit their 21 week EMA (green box on the chart shows the likely time/price zone in which to anticipate a reversal higher) this will most likely be a high-probability swing trade play, one that also needs to have a logical stop loss and profit target as well. Daily based traders can do the same thing, plan on on the 21 day EMA offering some sort of a floor from which a short term tradable bounce will commence. But be very nimble, with firm stop-loss and profit targets in place before you enter the trade.

Yes, this is a real correction in Gold, but no one really knows how far the price might fall. Even the strongest bull markets need to pause and correct before moving higher, and perhaps this is the case with the Gold market right now. We should know more as the weeks ahead play out, as always, use common sense, be patient and learn to focus on what the charts and long term fundamental factors are saying, rather than giving in to fear, doubt or the opinions of those who may not have your best interests in mind.


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Do Oil prices Really have an Impact on Financial Markets? Yes and No

Stock market commentators like to draw parallels between the behavior of oil prices and stock prices on any given day. After all, who hasn’t seen a headline like this: “Oil Spike Pummels Stock Market”? But evidence shows that a change in oil prices does not necessarily affect the stock market in any predictable and meaningful way.

Before we explain why, let’s look at the traditional wisdom, which holds that when oil prices rise, stocks fall, and vice versa. When oil prices rise, gasoline prices follow. Higher gas prices hurt consumers, who then have less money to spend on other goods and services. A decline in consumer spending causes businesses to see decreasing sales. At the same time, businesses are also hurt by higher oil prices because they use oil for gas and other goods as well, and must pay higher prices for it. As a result, high oil prices can create a drag on corporate earnings and businesses often end up passing those costs onto already strapped consumers. It’s a vicious cycle, and it seems obvious that it would cause stocks to decline. The opposite is true when oil prices fall.

That seems reasonable enough. So why do we say the traditional wisdom isn’t always true? Because higher oil prices don’t always result in a drag on corporate earnings. There a number of reasons for this. For example, the U.S. economy is less dependent on oil than it used to be: Each dollar of U.S. gross domestic product produced today takes about half the oil it did 30 years ago. Additionally, much of the oil used by American businesses at any given time has been purchased under fixed prices contracts that were negotiated when oil prices were much lower.

So, we have two ways of looking at the same situation. The traditional wisdom holds that higher oil prices hurt stocks. But when we look a little deeper, we can see that isn’t always the case. That’s quite a muddle, and it piqued the interest of economists—two of whom set out to find out which is the case: Do higher oil prices hurt stocks, or don’t they?

These economists, based at the Federal Reserve Bank of Cleveland, looked at both oil prices and the S&P 500 Index, which is widely considered a broad indicator of stock market performance. The economists found, that over the past 10 years, oil prices and stock prices have mostly risen but there has been little correlation between them. That was the case even during periods of peak oil prices, when we might expect stocks to really suffer.

The economists did find, however, that certain segments of the stock market were correlated with oil prices. For example, the Dow Jones Transportation Index rose when oil process rose, and fell when oil prices fell—presumably because changes in oil prices have a significant effect on transportation companies. On the other hand, the Dow Jones Financials Index rose when oil prices fell, and fell when oil prices rose—presumably because the financial industry is not directly affected by oil prices.

That information may offer investors some insight when it comes to buying and selling stocks during periods of high and low oil prices. When oil prices are high, you might want to sell (or short) airline stocks. When oil prices are low, you might want to buy energy stocks. Savvy stock pickers could potentially benefit in this way.

Contributed By Oil Price .Com


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Transocean Rents Seen Sinking on Deepwater Rig Glut

Transocean Ltd. and Diamond Offshore Drilling Inc., [RIG] and [DO] the world’s biggest deepwater oil drillers, may face a drop in rig-rental revenue because of a glut of vessels that can operate in oceans two miles (3.2 kilometers) deep. The oversupply will develop in 2011 as rigs that drillers started building when oil prices surged to a record last year are completed, said Jud Bailey, an analyst at investment bank Jefferies & Co. in Houston. Rig rents are likely to drop 10 to 15 percent and stay down until new deepwater developments create enough demand to end the surplus in 2012 or 2013, he said.

“It was a classic case of panic on the part of operators when oil was over $100,” Bailey said. “A part of that panic was just the fact that they couldn’t get a rig. When that psychology reverses, it can be a pretty powerful dynamic.” Of the so called ultra deepwater rigs scheduled for completion between now and the end of 2011, 22 don’t have contracts to drill, according to researcher ODS-Petrodata Inc. in Houston. The most ultra-deepwater rigs to sit without a contract was three in April 2004, said Tom Kellock, head of consulting and research at ODS. Today there is just one......Read the entire article.

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Crude Oil Bears Appear to Have a Clear Near Term Advantage

Crude oil was lower overnight as it extends the decline off October's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the 20 day moving average crossing at 77.42 are needed to confirm that a short term low has been posted.

Tuesday's pivot point, our line in the sand is 74.58

First resistance is the 10 day moving average crossing at 76.18
Second resistance is the 20 day moving average crossing at 77.42

First support is the reaction low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

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Natural gas was higher overnight as it extends Monday's rally above the 20 day moving average. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

If January extends this week's rally, the reaction high crossing at 5.290 is the next upside target. Closes below the 20 day moving average crossing at 4.821 would temper the near term bullish outlook in the market.

Natural gas pivot for Tuesday is 4.875

First resistance is the overnight high crossing at 5.060.
Second resistance is the reaction high crossing at 5.290.

First support is the 20 day moving average crossing at 4.821.
Second support is last week's low crossing at 4.432.

What do all market wizards have in common?

The U.S. Dollar was higher overnight and is poised to extend last Friday's short covering rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If March extends last Friday's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.39 would temper the near term bullish outlook in the market.

First resistance is Monday's high crossing at 76.58
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.53
Second support is the 10 day moving average crossing at 75.39

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Crude Oil and Natural Gas Technical Outlook For Tuesday Morning

Nymex Crude Oil (CL)

Intraday bias in crude oil remains on the downside for the moment with 76.30 minor resistance intact and further fall is still in favor for 72.39 support. Break there will target trend line support at 71.16 next. On the upside, above 76.30 minor resistance will turn intraday bias neutral first. But note that choppy fall from 82.0 is still in favor to continue as long as 79.04 resistance holds.

In the bigger picture, question remains on whether crude oil's medium term rebound from 33.2 has completed at 82.0 already and the outlook is quite mixed so far. Nevertheless, now, as long as 79.04 resistance holds, fall from 82.0 will remain in favor to continue and we'd slightly prefer the bearish case that crude oil has topped out at 82.0 already. Sustained trading below the trend line support (now at 71.16) will add more credence to this case and target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.

On the upside, though, above 79.04 resistance will suggest that recent choppy price actions from 82.0 are merely consolidations in the medium term rise from 33.2. In such case, the rise from 33.2 might be ready to resume for another high above 82.0. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal in this case.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas' rebound from 4.432 extends further as expected the the break of 4.90 minor resistance confirms that prior fall has completed. Further rise should be seen to retest upper end of recent range at 5.318 first. As noted before, recent price actions are merely consolidations to the rebound from 2.409. Decisive break of 5.318 will indicate that whole rise from 2.409 has resumed for 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, below 4.65 will indicate that rebound from 4.432 has completed and will suggest that more sideway trading could be seen between 4.157 and 5.318 before an eventual upside breakout.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 should not be completed yet and we would continue to anticipate an upside break out of the recent range of 4.157/5.138 eventually. Above 5.318 will target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Rises for First Time in Five Days on Dollar Decline

Crude oil rose for the first time in five days as the dollar weakened and some investors took the view a decline below $75 made it an attractive investment. Oil snapped four days of losses as the dollar fell against the euro, increasing the appeal of commodities as an alternative investment. The contract has traded between $75 and $81 for almost eight weeks and yesterday settled below $75 for the first time since Oct. 13.

“Markets had for a while started to get used to the $75 to $80 a barrel range for oil, and the move to the lower part of that range is probably attracting some buying,” David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney, said by telephone. “The U.S. dollar eased back and that’s been another factor why the oil price has lifted.”

Crude oil for January delivery gained as much as 46 cents, or 0.6 percent, to $74.39 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.12 a barrel at 11:58 a.m. Singapore time. Yesterday, the contract fell $1.54, or 2 percent, to $73.93. Prices have climbed 67 percent this year.The dollar traded at $1.4841 per euro at 12:05 p.m. in Singapore, from $1.4827 yesterday.

Oil dropped yesterday as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will face a weak labor market and tight credit, signaling fuel demand will be slow to recover. Bernanke’s comments “gave markets a bit of a reality check and made people reassess how they thought the recovery is going to pan out,” Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne, said by phone. “As a result oil got sold off”.....Read the entire article.


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Where is Crude Oil Headed on Tuesday?

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




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Can it be....Crude Oil AND U.S. Dollar set for Lower Open on Tuesday

Crude oil closed lower on Monday as it extends last week's decline. The low range close sets the stage for a steady to lower opening on Tuesday. If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the reaction high crossing at 79.04 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 76.56
Second resistance is the 20 day moving average crossing at 77.74

First support is the reaction low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

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Natural gas closed higher due to short covering on Monday and above the 20 day moving average crossing at 4.822 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold and are turning bullish signaling that sideways to higher prices are possible near term.

If January extends today's rally, the reaction high crossing at 5.290 is the next upside target. If January renews this year's decline, weekly support crossing at 4.157 is the next downside target.

First resistance is today's high crossing at 5.009
Second resistance is the reaction high crossing at 5.290

First support is last Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

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The U.S. Dollar closed lower due to profit taking on Monday as it consolidated some of last Friday's rally but remains above the 20 day moving average crossing at 75.49. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If March extends last week's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.32 would temper the near term friendly outlook in the Dollar.

First resistance is today's high crossing at 76.57
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.49
Second support is the 10 day moving average crossing at 75.32

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Crude Oil Drops for a Fourth Day, Trades Below $75 as Dollar Strengthens

Crude oil dropped for a fourth day, trading below $75 a barrel as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates. Oil closed at its lowest level since Oct. 14 last week after a better than forecast U.S. jobless report bolstered the dollar. Commodities including gold and oil typically weaken when the dollar appreciates. Traders have raised their expectations that the Fed will lift interest rates early next year.

“We’re seeing continued follow-through from the jobs data, fueling talk that the Federal Reserve may need to consider raising interest rates, strengthening the dollar,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Crude oil for January delivery fell $1.02, or 1.4 percent, to $74.45 a barrel at 10:55 a.m. on the New York Mercantile Exchange, marking the first four day decline since August. Prices have climbed 67 percent this year.

The dollar increased to $1.4827 per euro from $1.4858 in New York at the end of last week. The dollar weakened this year as the Federal Reserve kept benchmark interest rates near zero since December 2008 to revive lending after the worst financial crisis since World War II.....Read the entire article.

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Crude Oil, Commodities Fall on Fed Rate Speculation

Crude oil was lower overnight as it extends the decline off October's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the 20 day moving average crossing at 77.78 are needed to confirm that a short term low has been posted.

Monday's pivot point, our line in the sand is 76.07

First resistance is the 10 day moving average crossing at 76.65.
Second resistance is the 20 day moving average crossing at 77.78.

First support is the reaction low crossing at 72.39.
Second support is the 75% retracement level of this fall's rally crossing at 70.23.

What do all market wizards have in common?

Natural gas was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are oversold and are turning neutral hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 4.810 would temper the near term bearish outlook in the market. If January extends this year's decline, weekly support crossing at 4.157 is the next downside target.

Natural gas pivot point for Monday is 4.569

First resistance is the 10 day moving average crossing at 4.782
Second resistance is the 20 day moving average crossing at 4.810

First support is last Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

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The U.S. Dollar was higher overnight as it extends last Friday's short covering rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If March extends last Friday's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.35 would temper the near term bullish outlook in the market.

First resistance is the overnight high crossing at 76.60
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.51
Second support is the 10 day moving average crossing at 75.35

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Crude Oil Weekly Technical Outlook

Crude oil's rebound from 72.39 was limited at 79.04 and well below mentioned 80.51 resistance. Crude oil then weakened again with a break of 75.18 minor support on Friday. The development firstly indicates that recovery from 72.39 has completed and thus flip the bias back to the downside for a retest on 72.39 initially this week. Secondly, there is no indication that choppy fall from 82.0 has finished and thus more downside will remain in favor in near term. Break of 72.39 will target trend line support at 71.16 next.

In the bigger picture, question remains on whether crude oil's medium term rebound from 33.2 has completed at 82.0 already and the outlook is quite mixed so far. Nevertheless, now, as long as 79.04 resistance holds, fall from 82.0 will remain in favor to continue and we'd slightly prefer the bearish case that crude oil has topped out at 82.0 already. Sustained trading below the trend line support (now at 71.16) will add more credence to this case and target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.

On the upside, though, above 79.04 resistance will suggest that recent choppy price actions from 82.0 are merely consolidations in the medium term rise from 33.2. In such case, the rise from 33.2 might be ready to resume for another high above 82.0. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal in this case.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27......Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Where is Crude Oil Headed This Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.




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Arctic Melts, But no Big "Cold Rush" for Oil

A retreat of Arctic ice in summers is changing indigenous peoples' livelihoods and will threaten the survival of polar bears, writes Alun Anderson in "After the Ice" (HarperCollins), packed with anecdotes about shifts already under way. "The Arctic is seeing a more dramatic change to its environment and ecosystems than any part of the planet has seen for many thousands of years," he writes in the book, subtitled "Life, Death and Geopolitics in the New Arctic". Oil companies are looking north but Anderson, a former editor of New Scientist magazine, shows huge problems of icebergs, waves, cold and currents that would complicate drilling as well as transport of any oil or gas to shore.

"My bet is that the oil and gas boom will be short lived and will not go far beyond the shallow seas of Russia and perhaps some of the regions close to the Alaskan shores," he writes. Anderson, a former research biologist who lives in London, quotes experts as agreeing that prospects of a "Cold Rush" for riches of the central Arctic lie far in the future. Still, Russia planted a flag in the waters deep beneath the North Pole in 2007 in a symbolic claim. And the U.S. Geological Survey estimated last year the Arctic could hold 90 billion barrels of oil, enough to meet world demand for three years. Among offshore fields closer to land, Gazprom's (GAZP.MM) is planning to tap the big Shtokman gas deposit.....Read the entire article.

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Low Range Close in Oil Sets The Stage For Weak Open on Monday

Crude oil closed lower on Friday as it extends this week's decline. The low range close sets the stage for a steady to lower opening on Monday. If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the reaction high crossing at 79.92 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 76.95
Second resistance is the 20 day moving average crossing at 77.96

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

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Natural gas closed higher due to short covering on Friday as it consolidated some of this fall's decline. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI remains bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.821 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 4.785
Second resistance is the 20 day moving average crossing at 4.821

First support is Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

What do Super Traders have in common?

The U.S. Dollar closed sharply higher on Friday and above the reaction high crossing at 76.03 thereby confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends this week's rally, the reaction high crossing at 76.50 is the next upside target. If March renews this year's decline, weekly support crossing at 73.39 is the next downside target.

First resistance is today's high crossing at 76.33
Second resistance is the reaction high crossing at 76.50

First support is the 20 day moving average crossing at 75.46
Second support is last Wednesday's low crossing at 74.21

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Oldest Oil Fund in the U.S. Targets Solar Stocks as Crude Outlook Dims

Petroleum & Resources Corp., the oldest U.S. oil fund, plans to invest in solar and wind power production for the first time since its founding in 1929 as governments crack down on fuels linked to greenhouse gases. The $555 million closed end fund, whose biggest holdings are Exxon Mobil Corp. and Chevron Corp., is analyzing wind power, biofuels, solar and hybrid car battery makers with an eye to making investments as soon as the second quarter of 2010, Chief Executive Officer Douglas Ober said.

Aside from an investment in an ethanol producer two years ago and a wind turbine manufacturer in the 1990s, the Baltimore based fund never before ventured into so called green energy, Ober said. That’s changing now because of legislative efforts to discourage use of oil based fuels and concern that global crude supplies are getting harder to find. “Climate legislation looks like it may become a reality in Washington, and that’s going to usher in significant changes for the oil companies,” Ober said yesterday in a telephone interview. “We realize there isn’t going to be oil forever, so we need to look for other types of stocks and find the right place to be”.....Read the entire article.

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New Video: Let’s Take a Fresh Look at Crude Oil

Today we are looking at a January crude oil contract, but this can be any of the other contract months.

We’ve looked at this market before and were expecting it to go higher. It did not, however, fulfill that promise and with a red weekly “triangle” in place, it appears as though this market is heading down, but is it?

Just click here to watch today’s short video and discover an interesting cycle that we want to share with you. This cycle along with our MACD indicator, daily and weekly “triangles” are beginning to look extremely interesting.

We strongly recommend taking a few minutes out of your day to watch this educational and informative video on crude oil.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Crude Oil Bears Appear to Have The Upper Hand

Crude oil was lower overnight as it extends this week's decline. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the 20 day moving average crossing at 77.96 are needed to confirm that a short term low has been posted.

Friday's pivot point, our line in the sand is 76.50

First resistance is the 10 day moving average crossing at 76.95
Second resistance is the 20 day moving average crossing at 77.96

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

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Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.819 would temper the near term bearish outlook in the market.

Nat gas pivot point for Friday is 4.499

First resistance is the 10 day moving average crossing at 4.781
Second resistance is the 20 day moving average crossing at 4.819

First support is Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

What do all market wizards have in common?

The U.S. Dollar was higher due to short covering overnight as it consolidated some of this week's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

If March extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 75.40 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 75.14
Second resistance is the 20 day moving average crossing at 75.40

First support is last week's low crossing at 74.55
Second support is monthly support crossing at 73.39

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Crude Oil and Natural Gas Technical Outlook For Friday Morning

Nymex Crude Oil (CL)

Intraday bias in Crude oil remains neutral for the moment. Note that a break of 75.18 minor support will suggests that recovery from 72.39 has completed. Also, in such case, the choppy fall fro 82.0 could be resuming for 72.39 and below. On the upside, however, a break of 80.51 will indicate that choppy consolidations from 82.0 has completed already and the medium term rally could be resuming for 82.0 and beyond.

In the bigger picture, the lack of follow through selling and the choppy price actions from 82.0 so far dampen our bearish view. Instead, the corrective natural of the fall from 82.0 to 72.39 suggests that it's merely consolidation in the medium term rise. That is, rally from 33.2 is possibly not completed yet and a break of 80.51 will affirm this bullish case. Nevertheless, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.

Meanwhile, on the downside, a break of 72.39 low will firstly indicate that fall from 82.0 has resumed. Further break of trend line support at 71.10 will revive the case that crude oil has already completed the medium term rebound from 33.2 and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart .

Nymex Natural Gas (NG)

Natural gas' fall is still in progress and might head lower to lower end of the range at 4.157. But after all, as recent price actions are treated as consolidations to rise from 2.409 only, downside of the current fall is expected to be contained by 4.157 support. Also, we'd anticipate an upside breakout sooner or later after completing the consolidation. Above 5.318 will confirm that whole rebound from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. Further will now remain in favor as long as 4.157 support holds, towards 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart

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Phil Flynn: Not So Demanding

Things are just not that demanding. A lot of times in recent months we can get carried away in a sea of macro economic mania and lose focus on good old fashion supply and demand. And if you believe the report put out by the Energy Information Agency, demand just isn’t that good. Oh sure there is always a macro economic back drop when you price a barrel. Yet for oil, for years it was noise in the background as opposed to the mellow drama up front. When the economy was rocking and supplies were squeezed any headline or rumor or OPEC comment could lift the oil market in the blink of an eye. Or back in the nineties when supplies were plentiful, we would live and die by any slight change in inventory to try to catch whatever small move might be made in a world of maddening stability. Yesterday oil seemed to try to go back to its roots of reacting to supply of course the slightest strength in the US dollar probably helped to add some pressure.

The builds across to board seem to suggest demand is bad and taking a turn for the worse and while all the numbers didn’t seem to quite add up, the overall report tells a cautionary tale about the current strength of our economic recovery. Let’s start with the numbers, the EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.1 million barrels from the previous week. That put supply at 339.9 million barrels which is still well above the average range for this time of year. What was more shocking to some was the 4.0 million barrels increase in gasoline supplies which shows that drivers are cutting back as economic times are tough. The EIA says demand averaged 9.0 million barrels per day while up by 0.7 percent from the same period last year, we have to remember that last year at this time the economy was really starting to unravel.....Read the entire article.

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Where is Crude Oil and Gold Headed on Friday?

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




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Crude Oil Market Commentary For Thursday Evening

Crude oil closed lower on Thursday as it consolidates some of its earlier gains this week. A short covering rally tempered early session losses and the mid range close sets the stage for a steady to higher opening on Friday.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the reaction high crossing at 79.92 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 77.16
Second resistance is the 20 day moving average crossing at 78.18

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

Today’s Stock Market Club Trading Triangles

Natural gas closed lower on Thursday as it extends this fall's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.848 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 4.798
Second resistance is the 20 day moving average crossing at 4.848

First support is today's low crossing at 4.432
Second support is weekly support crossing at 4.157

How to Use Money Management Stops Effectively

The U.S. Dollar closed lower on Thursday due to profit taking. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that additional weakness is possible near term.

If March extends this year's decline, weekly support crossing at 73.39 is the next downside target. Closes above the reaction high crossing at 76.50 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 75.24
Second resistance is last Friday's high crossing at 76.50

First support is last Wednesday's low crossing at 74.21
Second support is weekly support crossing at 73.39

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Bloomberg Analysis: Crude Oil Buyers Risk ‘Bull Trap’ Near $80

Crude oil buyers may misinterpret the market’s climb this week as a signal for further gains, exposing themselves to a potential price reversal, according to Cameron Hanover Inc. Oil, rising for a third week in four, will face stronger resistance the closer it gets to $82 a barrel, a one year high reached on Oct. 21, said Peter Beutel, president of the trading adviser in New Canaan, Connecticut. Buyers should watch for the market to settle higher each day before stepping in, rather than take their cues from intraday price swings, he said.

“We need to be careful of bull traps,” Beutel said in an email. “We should probably look for two closes with a second day higher than the first breakout day to confirm that a real breakout has occurred.” Crude oil touched a one week high above $79 a barrel on Dec. 1 as the dollar’s decline against the euro bolstered the investment appeal of commodities including gold.....Read the entire article.

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Crude Oil Bulls Maintain Their Near Term Advantage

Crude oil was higher due to short covering overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 78.22 are needed to confirm that a short term low has been posted. If January renews the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target.

Thursday's pivot point, our line in the sand is 77.14

First resistance is the 20 day moving average crossing at 78.22
Second resistance is the reaction high crossing at 80.88

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

Check out the new "Trend TV"

Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If January extends this week's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.853 would temper the near term bearish outlook in the market.

Nat gas pivot point for Thursday is 4.611

First resistance is the 10 day moving average crossing at 4.807
Second resistance is the 20 day moving average crossing at 4.853

First support is Wednesday's low crossing at 4.511
Second support is weekly support crossing at 4.157

What do Super Traders have in common?

The U.S. Dollar was lower overnight as it extends this week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If March extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 75.45 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 75.22
Second resistance is the 20 day moving average crossing at 75.45

First support is last week's low crossing at 74.55
Second support is monthly support crossing at 73.39

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Crude Oil and Natural Gas Technical Outlook For Thursday Morning

Nymex Crude Oil (CL)

With 4 hours MACD crossed below signal line, intraday bias is turned neutral for the moment. With 80.51 resistance intact, the choppy fall from 82.0 is possibly still in progress. Below 75.18 minor support will will flip intraday bias back to the downside for trend line support at 70.97. Nevertheless, note that a break of 80.51 will indicate that choppy consolidations from 82.0 has completed already and the medium term rally could be resuming for 82.0 and beyond.

In the bigger picture, the lack of follow through selling and the choppy price actions from 82.0 so far dampen our bearish view. Instead, the corrective natural of the fall from 82.0 to 72.39 suggests that it's merely consolidation in the medium term rise. That is, rally from 33.2 is possibly not completed yet and a break of 80.51 will affirm this bullish case. Nevertheless, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.

Meanwhile, on the downside, a break of 72.39 low will firstly indicate that fall from 82.0 has resumed. Further break of trend line support at 70.97 will revive the case that crude oil has already completed the medium term rebound from 33.2 and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Outlook in natural gas remains unchanged. Recent price actions should be consolidations to rise from 2.409 only and hence, downside of the current fall is expected to be contained by 4.157 support. Also, we'd anticipate an upside breakout sooner or later after completing the consolidation. Above 5.318 will confirm that whole rebound from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. Further will now remain in favor as long as 4.157 support holds, towards 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart

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Tis the Season to Trade the Seasonal Charts, Dow, Gold, Silver, Oil and Gas

The market has had a fantastic week so far for stocks and precious metals. The financial and energy sector are under performing which is a concern, but we continue to hold our positions and will wait until a reversal to lock in our gains.

Things seem to be lining up for stocks and precious metals to take a breather, which is in line with the Dow Jones Seasonal chart below.

Let’s take a look…

Dow Jones ETF
You can see from looking at the chart the repeated pattern of price rallies, leading to exhaustion and a test of support, followed by another repeat of the pattern. It looks as if the broad market is setup for a test of support which could happen within 2-4 days. Then as we near the holiday prices will start to drift higher. This pattern occurs more often than not as seen on the Dow Jones Seasonal chart below.



Dow Jones Seasonal Trends
This chart clearly shows weakness in the first half of December and continued strength moving forward. This has not really happened in the past two years which means we are overdue for continued strength. 

That being said, the previous two years were bear markets and we are now in a bull market. So the tendency is for buying to continue into year end.



GLD ETF Fund
Gold continues to push higher surprising many of us. It seems as though money is rushing into metals and buyers are not particularly concern about price. While this is great for short term traders and those of us in the trade, we must remember that the faster things go up, the quicker they correct.

Don’t get me wrong, I don’t think gold is going to crash, I just think we could get a 10% correction before moving much higher. Gold is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market before pushing much higher.



SLV Exchange Traded Fund
Silver has been underperforming yellow gold but is still a solid investment. It is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market.



USO & UNG Funds
Oil continues to flag from its breakout back in October. This is a bullish pattern. Last Friday we saw oil open much lower then rally back into the trend channel. This is called an outside day and many times this happens to stocks and commodities as it shakes out the weak traders before starting another rally higher. We will keep a close eye for any low risk entry point.

Natural Gas had a nice rally last week which I mentioned looks a lot like a short covering rally. The price action this week suggests it was and has now made a new low. Today on CNBC it was reported that a new source of natural gas has been discovered. This resource is 20 times larger than the biggest source in the US. Enough gas to last the US over 100 years. This added to the selling on both natural gas and oil today.



Trading Conclusion:
Precious metals continue to perform well and it’s important to note that PM stocks are now moving higher with gold. They have been lagging for some time but are on fire again. Great to see!

The Dow Jones index and several others look ready for a breather. The timing of these overbought charts bodes well for the seasonal December pause before the holiday rally. Time will tell.

Energy and financials are both underperforming the market and without their participation we will not see the indexes move much higher.

Continue to hold precious metals positions but be ready to lock in profits if we see the market reverse sharply. I am watching energy for a play but no setups at this time.

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As a regular visitor to The Crude Oil Trader, you have been chosen to receive complimentary access to four educational trading videos that focus on Technical Analysis and Trend Trading:

VIDEO 1.) Basic Indicators to Analyze Markets

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VIDEO 4.) Using "Differences" to Spot Shifts in Momentum

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Crude Oil and Natural Gas Commentary For Wednesday Evening

Crude oil closed down $1.65 at $76.72 a barrel today. Prices closed nearer the session low today, amid a firmer U.S. dollar and weaker U.S. stock indexes. Crude prices have been trending lower from the mid-October high. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $72.39.

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Natural gas closed down 22.6 cents at $4.536 today. Prices closed near the session low and set another fresh contract low today. Bulls have faded badly after showing some power recently. Bears have the solid overall near term technical advantage and have regained downside momentum this week. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $5.29.

Candlestick Formations You Need To Learn

The U.S. dollar index closed up 29 points at 75.05 today. Prices closed near the session high on tepid short covering in a bear market. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 76.50.

How to Use Money Management Stops Effectively

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Crude Oil, Gasoline Tumble After U.S. Supplies Climb, Demand Drops

Crude oil and gasoline tumbled after a government report showed that inventories climbed last week as consumption declined. Supplies of crude oil rose 2.09 million barrels to 339.9 million, the highest level since August, the Energy Department said today. Gasoline supplies surged 4 million barrels to 214.1 million. Fuel demand slipped 2.6 percent as refineries reduced operating rates for the fourth time in five weeks.

“Prices should be much lower given how high inventories are,” said Chip Hodge, who oversees a $9 billion natural resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “There’s certainly no lack of oil. If I were an oil producer, I would be very happy because the fundamentals don’t justify these prices.” Crude oil for January delivery fell $1.69, or 2.2 percent, to $76.68 a barrel at 11:54 a.m. on the New York Mercantile Exchange. Oil traded at $77.70 before the release of the report at 10:30 a.m. in Washington.

Gasoline for January delivery declined 4.71 cents, or 2.3 percent, to $1.9952 a gallon in New York. Heating oil for January delivery slipped 3.25 cents, or 1.6 percent, to $2.0455 a gallon.....Read the entire article.

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Oil N' Gold: Crude Oil and Natural Technical Outlook

Nymex Crude Oil (CL)

At this point, intraday bias in crude oil remains on the upside with 75.18 minor support intact. Rise from 72.23 is still in favor to continue. Break of 80.51 resistance will indicate that choppy consolidations from 82.0 has completed already and the medium term rally could be resuming for 82.0 and beyond. On the downside, below 75.18 will flip intraday bias back to the downside for trend line support at 70.97.

In the bigger picture, the lack of follow through selling and the choppy price actions from 82.0 so far dampen our bearish view. Instead, the corrective natural of the fall from 82.0 to 72.39 suggests that it's merely consolidation in the medium term rise. That is, rally from 33.2 is possibly not completed yet and a break of 80.51 will affirm this bullish case. Nevertheless, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Outlook in natural gas remains unchanged. Recent price actions should be consolidations to rise from 2.409 only and hence, we'd continue to anticipate an upside break out sooner or later. Above 5.318 will confirm that whole rebound from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. Further will now remain in favor as long as 4.157 support holds, towards 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart .

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Crude Oil and Natural Gas Market Commentary For Wednesday Morning

Crude oil was lower due to profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 78.47 are needed to confirm that a short term low has been posted.

If January renews the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target.

Wednesday's pivot point, our line in the sand is 78.14

First resistance is the 20 day moving average crossing at 78.60
Second resistance is the reaction high crossing at 80.88

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

What do all market wizards have in common?

Natural gas was lower overnight as it extends this week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If January extends this week's decline, November's low crossing at 4.560 is the next downside target.

If January renews the rally off November's low, the 50% retracement level of the October-November decline crossing at 5.413 is the next upside target.

Natural gas pivot point for Wednesday is 4.771

First resistance is the 10 day moving average crossing at 4.833
Second resistance is last Friday's high crossing at 5.290

First support is Tuesday's low crossing at 4.659
Second support is November's low crossing at 4.560

How to Use Money Management Stops Effectively

The U.S. Dollar was higher overnight as it consolidates some of Tuesday's decline but remains below the 10 day moving average crossing at 75.29. Stochastics and the RSI are neutral signaling that sideways trading is possible near term.

Closes above the 20 day moving average crossing at 75.52 would temper the near term bearish outlook in the market. If March extends this year's decline, monthly support crossing at 73.39 is the next downside target.

First resistance is the 10 day moving average crossing at 75.29
Second resistance is the 20 day moving average crossing at 75.52

First support is last week's low crossing at 74.55
Second support is monthly support crossing at 73.39

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Where is Crude Oil and Commodities Headed on Wednesday?

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




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Crude Oil Market Commentary For Tuesday Evening

Crude oil closed up $1.09 at $78.37 a barrel today. Prices closed nearer the session high again today, amid a weaker U.S. dollar and higher U.S. stock indexes. While serious chart damage was inflicted in January crude oil on Friday, prices this week have made a solid rebound to repair most of that damage. Still, prices have been trending lower from the mid-October high.

Natural gas closed down 10.5 cents at $4.745 today. Prices closed near mid-range. Bulls have faded badly after showing some power recently. Bears have the overall near term technical advantage and have regained downside momentum this week.

The U.S. dollar index closed down 49 points at 74.79 today. Prices closed near the session low today and are right back down near the contract low. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 76.50.

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MarketClub Members ALERT: Daily Trade Triangle Now Positive On Gold

Here is a freebie for all non members....

Attention all MarketClub Members:

A daily Trade Triangle flashed a short term entry signal on spot gold this morning at $1,185.70. Please use money management stops and be aware of the risks involved.



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