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Crude oil rose for a second day in New York after manufacturing in the U.S. increased at the fastest pace since August 2004, signaling that fuel use in the world’s biggest energy consuming country may gain.
Oil advanced the most in four weeks yesterday after the Institute for Supply Management’s factory index climbed to a higher than anticipated 58.4 in January, from December’s 54.9. European manufacturing also increased as companies raised output to meet reviving global demand, a separate report showed. Energy Department data tomorrow may show a drop in U.S. distillate fuel inventories.
“We can see that manufacturing is improving,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “We now want to see that number backed up with good fundamentals in the inventory data.”
Crude oil for March delivery gained as much as $1.01, or 1.4 percent, to $75.44 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.83 at 11:59 a.m. Singapore time. Yesterday, the contract rose 2.1 percent to settle at $74.43, the biggest one day increase since Jan. 4.
The U.S. manufacturing figure exceeded the median forecast of 55.5 from 67 economists surveyed by Bloomberg News. Readings higher than 50 signal an expansion. Manufacturing accounts for about 12 percent of the economy.
European companies raised production in January as a global economic recovery spurred exports. An index of manufacturing in the 16 nation euro region climbed to 52.4 from 51.6 in December, London based Markit Economics said yesterday. Asian shares climbed, driving the MSCI Asia Pacific Index up the most in more than two weeks.....Read the entire article.
Crude prices may have seen a short term bottom and keep an eye on indium as the metal has potential for sky high prices, says John Licata, chief investment strategist at Blue Phoenix. He speaks to Bill Evans of Westpac, Kumar Palghat of Kapstream Capital and CNBC's Karen Tso.
Crude oil closed higher due to short covering on Monday as it consolidated some of the decline off January's high. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signal that sideways to lower prices are possible near term.
If March extends the decline off January's high, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target. Closes above the 20 day moving average crossing at 78.47 are needed to confirm that a short term low has been posted.
Crude oil Pivot point for Monday evening is 74.16
First resistance is the 10 day moving average crossing at 75.23 Second resistance is the 20 day moving average crossing at 78.47
First support is last Friday's low crossing at 72.43 Second support is the 75% retracement level of the September-January rally crossing at 71.70
Natural gas closed higher on Monday as it rebounds off the 62% retracement level of the December-January rally crossing at 5.114. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a low might be in or is near.
Closes above the 20 day moving average crossing at 5.555 are needed to confirm that a low has been posted. If March extends the decline off January's high, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target.
Natural gas pivot point for Monday evening is 5.377
First resistance is the 10 day moving average crossing at 5.434 Second resistance is the 20 day moving average crossing at 5.555
First support is last Thursday's low crossing at 5.060 Second support is the 75% retracement level of the December-January rally crossing at 4.919
The U.S. Dollar closed lower due to profit taking on Monday after testing resistance marked by the 38% retracement level of the 2009-2010 decline crossing at 79.71. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways prices are possible near term.
If March extends this winter's rally, the 50% retracement level of the 2009-2010 decline crossing at 81.32 is the next upside target. Closes below the 20 day moving average crossing at 78.06 would confirm that a short-term top has been posted.
First resistance is today's high crossing at 79.76 Second resistance is the 50% retracement level of the 2009-2010 decline crossing at 81.32
First support is the 10 day moving average crossing at 78.71 Second support is the 20 day moving average crossing at 78.06
Stocks in the sector kick off the month with gains, based on higher oil prices and bullish economic data, as well as on Exxon Mobil's earnings. A joint venture in ethanol also is drawing attention. Steve Gelsi reports.
Crude oil rose after the dollar dropped against the euro and U.S. manufacturing increased at the fastest pace since August 2004, signaling that fuel use in the world’s biggest energy consuming country will gain.
Oil climbed as much as 1.8 percent as the weak dollar bolstered the appeal of commodities. The Institute for Supply Management’s factory index advanced to 58.4, higher than anticipated, from December’s 54.9, figures from the Tempe, Arizona-based group showed. A separate report showed that European manufacturing gained last month.
“The first factor at work is the weaker dollar,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The ISM number was very strong. The strength isn’t just here, European manufacturing is also expanding.”
Crude oil for March delivery rose 95 cents, or 1.3 percent, to $73.84 a barrel at 11:31 a.m. on the New York Mercantile Exchange. Futures fell to $72.89 on Jan. 29, the lowest settlement since Dec. 21.
The greenback slipped 0.4 percent versus the euro to $1.3911, from $1.3863 on Jan. 29.
The U.S. manufacturing figure exceeded economists’ median forecast of 55.5, according to 67 projections in a Bloomberg News survey. Readings higher than 50 signal an expansion. Manufacturing accounts for about 12 percent of the economy.
European manufacturing also accelerated more than estimated in January. An index of manufacturing in the 16-nation euro region increased to 52.4 from 51.6 in December, London-based Markit Economics said today.....Read the entire article.
The amount of oil held in tankers at sea has halved from its April 2009 peak of 90 million barrels according to ship broker ICAP. Given that much of this oil was held in order to arbitrage current vs. future oil prices, a reduction in floating storage implies a tightening of the oil market.
WSJ: ICAP said there were currently 21 trading VLCCs offshore with some 43 million barrels of crude. Seven of these are expected to discharge in February and one more in March. So far, it appeared those discharged cargoes wouldn't be replaced by new ones.
"I haven't seen any fixtures for VLCC storage in the last two weeks," said Simon Newman, ICAP's senior tanker analyst. "That would imply that storage looks set to fall in the short term."
Assuming there are no new fixtures, the amount of crude in storage could sink to 27 million barrels by March, the lowest level since the current contango play began in late 2008.
Crude oil was higher overnight due to short covering as it consolidates some of last week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends this year's decline, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target. Closes above the 10 day moving average crossing at 75.10 are needed to confirm that a short term low has been posted.
Crude oil pivot point for Monday, our line in the sand is 73.38
First resistance is the 10 day moving average crossing at 75.10 Second resistance is the 20 day moving average crossing at 78.41
First support is last Friday's low crossing at 72.43 Second support is the 75% retracement level of the September-January rally crossing at 71.70
Natural gas was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends last week's decline, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target. Closes above the 20 day moving average crossing at 5.547 would confirm that a short term low has been posted.
Monday's pivot point for natural gas is 5.170
First resistance is broken trading range support crossing at 5.327 Second resistance is the 10 day moving average crossing at 5.417
First support is last Thursday's low crossing at 5.060 Second support is the 75% retracement level of the December-January rally crossing at 4.919
The U.S. Dollar was slightly lower due to light profit taking overnight after testing resistance marked by the 38% retracement level of the 2009 decline crossing at 79.71. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.
If March extends this winter's rally, the 50% retracement level of the 2009 decline crossing at 81.32 is the next upside target. Closes below the 20 day moving average crossing at 78.07 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 79.76 Second resistance is the 50% retracement level of the 2009 decline crossing at 81.32
First support is the 10 day moving average crossing at 78.73 Second support is the 20 day moving average crossing at 78.07
A consortium grouping Russia's private oil giant Lukoil and Norway's Statoil ASA on Sunday signed a final deal to develop one of Iraq's biggest oil fields, capping an auction process key to the OPEC nation's plans to boost output and generate sorely needed reconstruction revenues. The deal on West Qurna Phase 2 field in southern Iraq is the last of the 10 fields that Iraq awarded last year during two international licensing rounds as it looked to revamp an oil sector battered by years of sanctions, neglect and, most recently, postwar violence and political bickering.
The signing Sunday also offers some much needed political capital for Iraqi officials as they head into elections in March determined to show that they are actively turning the country around following the turmoil and instability that has defined Iraqis' daily lives since the 2003 U.S. led invasion to topple Saddam Hussein. "These contracts will bring in cash to Iraq, and move ahead plans to develop the infrastructure," said Oil Minister Hussain al-Shahristani, adding that these deals afforded Iraqis the chance to "look toward a bright future."
Although it sits atop the world's third largest proven reserves of conventional crude, Iraq currently only produces about 2.5 million barrels per day, a level still far below its pre-2003 war output. Officials say international companies like Lukoi and Statoil, which together won West Qurna Phase 2 in the December licensing round, are key to raising that output to over 12 million barrels per day in about six years.
Such production, viewed by analysts as unrealistic in that timeframe, would rival Saudi Arabia's. The kingdom, seen as the de facto leader of the Organization of the Petroleum Exporting Countries, currently produces over 8 million barrels per day, but has an overall output capacity in excess of 12 million barrels per day.
For the 15 international firms that won development rights in the various fields, the 20 year contracts were their first chance at access to Iraq since Saddam expelled foreign firms and nationalized the sector in the 1970s. Despite the tempting spoils, the auction results were mixed, with only 10 deals struck out of the 21 oil and gas fields offered during the two licensing rounds.....Read the entire article.
Despite brief rebound to 74.82 after release of strong USD GDP, crude oil price dived to one month low at 72.43 amid rally in USD. The benchmark contract ended the week at 72.89, losing -2.2% on weekly basis and recorded the third consecutive weekly decline after surging to 83.95, the highest level in 15 months, in the beginning of January.
Fundamentals in the US energy market remain weak. The US Energy Department reported crude oil inventory dropped -3.89 mmb to 326.7 mmb in the week ended January 22. Cushing stocks also drew-0.69 mmb, the 5th consecutive weekly decline. We believe the main reason for the huge decline in crude stocks was the closure of the Houston Ship Channel, which serves the largest US petroleum port, shut for 2 days because of fog. It was reopened on January 21. Also, the oil-tanker spill in the Sabine Neches Waterway has led refiners to cut back production. We expect to see another draw next week as the oil spill is still impacting imports.
Both gasoline and distillate rose +1.99 mmb to 229.4 mmb and +0.36 mmb to 157.5 mmb respectively. Demand for gasoline edged slightly high on weekly basis but the level at 8.619M bpd remained below last year's level. Beware that last year's demand was very weak as it was in the midst of the worst of economic crisis. Distillate inventory built modestly compared with market exception or a draw. Imports surged +142%, on weekly basis, to 0.658M bpd, the highest level never seen since 2006. Demand dropped -2.6% to 3.725M bpd during the week. The level was still -12.5% below last year's level.
In coming few years, oil demand will be heavily relying on growth in Asian market. According to the International Energy Agency (IEA), preliminary data indicated that China's total oil demand soared +16.4% yoy in November, driven by both government spending and supply disruption due to cold weather. Demand is anticipated to have increase +7.2% to 8.5M bpd in 2009, followed by a +4.3% rise to 8.8M bpd in 2010. China takes up almost 10% of world oil demand and that's why market sentiment has deteriorated dramatically after China guided yields higher, increased required reserve ratio and limited bank lending. The market worried that the growth engine will lose momentum this year.
Other than China, India is another hot spot. Total oil demand probably rose +5.4% in 2009, followed by another +3% this year. Robust oil consumption in India was driven by gasoline demand which, in turn, was due to strong car sales.....Read the entire article.
Companies working with the state of Alaska to develop a major natural gas pipeline estimated Friday that the project would cost $20 billion to $41 billion, depending on the route. The Alaska Pipeline Project seeks to move natural gas from the harsh North Slope to market in Alaska, through Canada and to the Lower 48.
The high end of the estimate is at least a billion more than earlier thought, but project officials believe the pipeline is economically viable and could start carrying gas in about 2020. More details of the plan came in a filing Friday with federal regulators, the first step toward an "open season," when companies behind the project will court gas producers and try to secure commitments for shipping deals.
TransCanada Corp., based in Calgary, Alberta, is working with Irving, Texas based Exxon Mobil Corp. to advance the project. The state of Alaska has promised to reimburse up to $500 million of eligible costs. A rival project by Britain's BP PLC and Houston-based ConocoPhillips is also moving ahead, though its difficult for many, given the economics involved, to see more than one project going forward.
Tony Palmer, TransCanada vice president of Alaska Development, told reporters Friday that he believes the best and most effective way to bring the project forward is to form an alliance between the state, TransCanada and the North Slope's current major players, Exxon Mobil, BP and ConocoPhillips. It's during open season when shippers interested in moving gas to markets in Alaska and outside the state indicate which their preferred route.....Read the entire article.
Crude oil closed lower on Friday and spiked below support marked by December's low crossing at 72.45. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signal that sideways to lower prices are possible near term. If March extends today's decline, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target. Closes above the 20 day moving average crossing at 78.74 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 75.60. Second resistance is the 20 day moving average crossing at 78.74. First support is today's low crossing at 72.43. Second support is the 75% retracement level of the September-January rally crossing at 71.70.
Natural gas closed lower on Friday and tested the 62% retracement level of the December-January rally crossing at 5.114. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends this week's decline, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target. Closes above the 20 day moving average crossing at 5.560 are needed to confirm that a low has been posted. First resistance is broken trading range support crossing at 5.327. Second resistance is the 10 day moving average crossing at 5.456. First support is Thursday's low crossing at 5.060. Second support is the 75% retracement level of the December-January rally crossing at 4.919.
The U.S. Dollar closed higher on Friday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain neutral to bullish signaling that sideways prices are possible near term. If March extends this month's rally, the 38% retracement level of the 2009-2010 decline crossing at 79.71 is the next upside target. Closes below the 20 day moving average crossing at 77.98 would confirm that a short term top has been posted. First resistance is today's high crossing at 79.65. Second resistance is the 38% retracement level of the 2009-2010 decline crossing at 79.71. First support is the 10-day moving average crossing at 78.48. Second support is the 20 day moving average crossing at 77.98.
Crude oil rose for the first time in four days after a government report showed that the U.S. economy expanded at the fastest pace in six years, signaling demand may rise in the world’s biggest energy market. Oil climbed as much as 1.6 percent after the Commerce Department said U.S. gross domestic product grew by 5.7 percent in the fourth quarter, exceeding the median forecast of economists surveyed by Bloomberg News. It was the best performance since the third quarter of 2003. Oil has lost 6.9 percent in January, the first monthly decline since July.
“It’s a good GDP number, and frankly that’s what the market needed to see,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “If there are any doubters out there that the economy is not in recovery, this should quash that.” Crude oil for March delivery increased 71 cents, or 1 percent, to $74.35 a barrel at 10:10 a.m. on the New York Mercantile Exchange. Earlier, it touched $74.82.
Oil has fallen 12 percent since reaching a 15-month high of $83.95 a barrel on Jan. 11 amid concern the U.S. government will limit trading by banks and that China will take further steps to cool its economy. China is the fastest-growing energy market. “We might have gotten more of a bounce off this GDP number if the Chinese weren’t raising the reserve requirements for the banks and slowing lending,” said Phil Flynn, vice president of research at PFGBest in Chicago.....Read the entire article.
Sometimes is not about what you say, it's about what you do not say. In the big Fed statement yesterday, one lone rouge inflation hawk dared to stand up and say, Hey guys, it is our job to worry about inflation. The lack of a comment about the housing market left traders wondering whether it was a glaring omission or perhaps it was an admission to the fact that the Fed is under a lot of political pressure. The Fed also changed their wording on inflation prospects from inflation would remained subdued for some time to it "likely" would remained subdued.
Ah yes, the changing face of politics where everything remains the same. Obama tried to move to the right though overall, at times he seemed a bit contradictory. Obama tried to reach out to the energy sector by embracing drill, drill, drill, nuclear power and clean coal technology as long as we at same time have a lot of money for “big green”. Oh yes you have to take care of the "big green” lobby as they spent millions to put him in office and they expect billions of green dollars back in return. And don’t forget he also said he would repeal "tax breaks” for oil companies and give tax breaks to big green. The Robin Hood energy plan: take from the rich and then run the energy companies and then give their money to the poor inefficient green energy companies.
Chevron Corporation reported earnings of $3.07 billion ($1.53 per share-diluted) for the fourth quarter 2009, compared with $4.90 billion ($2.44 per share-diluted) in the fourth quarter 2008. Earnings in the 2008 quarter included a gain of approximately $600 million on an upstream asset exchange transaction. Foreign currency effects reduced earnings in the 2009 quarter by $67 million, compared with a benefit to income of $478 million a year earlier.
Full year 2009 earnings were $10.48 billion ($5.24 per share-diluted), down 56 percent from $23.93 billion ($11.67 per share-diluted) in 2008.
Sales and other operating revenues in the fourth quarter 2009 were $48 billion, compared with $43 billion in the year ago quarter. For the full year 2009, sales and other operating revenues were $167 billion, versus $265 billion in 2008. The decrease in the twelve month period was primarily due to lower prices for crude oil, natural gas and refined products.
"Earnings decreased in 2009 as a result of lower crude oil and natural gas prices and a decline in refined product sales margins, driven by a weak global economy," said Chevron’s Chairman and CEO, John Watson. "In this challenging environment, Chevron's successes in operational reliability and cost management made valuable contributions to our bottom line. Our financial strength enabled continued investment in our excellent portfolio of capital and exploratory projects and an increase in the annual dividend on our common shares for the 22nd consecutive year.....Read the entire article.
Crude oil was higher overnight due to short covering as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends this month's decline, December's low crossing at 72.45 is the next downside target. Closes above the 10 day moving average crossing at 75.73 are needed to confirm that a short term low has been posted.
Crude oil pivot point for Friday is 73.69
First resistance is the 10 day moving average crossing at 75.73 Second resistance is the 20 day moving average crossing at 78.80
First support is Wednesday's low crossing at 72.65 Second support is December's low crossing at 72.45
Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are becoming oversold but remain bearish signaling that sideways to lower prices are possible near term.
If March extends this week's decline, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target. Closes above the 20 day moving average crossing at 5.564 would confirm that a short term low has been posted.
Natural gas pivot point for Friday is 5.152
First resistance is broken trading range support crossing at 5.327 Second resistance is the 10 day moving average crossing at 5.465
First support is Thursday's low crossing at 5.060 Second support is the 75% retracement level of the December-January rally crossing at 4.919
The U.S. Dollar was slightly higher overnight as it extends this week's rally. Stochastics and the RSI are becoming overbought but remain bullish signaling that sideways to higher prices are possible near term.
If March extends this month's rally, the 38% retracement level of the 2009 decline crossing at 79.71 is the next upside target. Closes below the 20 day moving average crossing at 77.96 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 79.33 Second resistance is the 38% retracement level of the 2009 decline crossing at 79.71
First support is the 10 day moving average crossing at 78.44 Second support is the 20 day moving average crossing at 77.96
Commodities move with great volatility but ended up with little changes Thursday. The benchmark contract for crude oil plunged to as low as 72.93 before recovering to 73.64, compare with Wednesday's close at 73.67. While heating oil price also closed almost flat gasoline slid -1.1% to 19.174 as higher than expect jobless claims data implied weaker gasoline consumption.
Initial jobless claims reduced to 470K in the week ended January 23, compared with an expected drop to 452K, from 482K a week ago. The 4 week average increased +10K to 456K while continuing claims dipped -57K to 4602K, the lowest level in a year. We believe the overall trend continues to suggest improvement in the job market, though at a pace slower than previously anticipated.
Headline of durable goods orders disappointed the market by recording only +0.3% mom in December after dropping -0.4% a month ago. However, the reading with transportations excluded showed a +0.9% increase on monthly basis. November's reading was also revised up slightly to +2.1%.
Strength in USD and JPY indicated investors gave up higher-yield investment and sought safe assets yesterday. This was probably a major reason for the softness in commodity prices. The euro slumped against the dollar and the yen as investors doubted if Greece can reduce its huge deficit without the help from outside. The 16 nationed single currency fell to a 6 month low against USD on concerns that the Greek problem will spread to other high deficit economies in Europe.....Read the entire article.
Crude oil closed slightly higher due to short covering on Thursday but remains below the 87% retracement level of the December-January rally crossing at 73.95. The high range close sets the stage for a steady to higher opening on Friday.
Stochastics and the RSI are oversold but remain neutral to bearish signal that sideways to lower prices are possible near term. If March extends today's decline, December's low crossing at 72.45 is the next downside target. Closes above the 20 day moving average crossing at 79.11 are needed to confirm that a short term low has been posted.
Crude oil pivot point for Thursday evening is 73.77
First resistance is the 10 day moving average crossing at 76.33 Second resistance is the 20 day moving average crossing at 79.11
First support is Wednesday's low crossing at 72.65 Second support is December's low crossing at 72.45
Natural gas closed lower on Thursday and tested the 62% retracement level of the December-January rally crossing at 5.114. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.
If March extends this week's decline, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target. Closes above the 20 day moving average crossing at 5.589 are needed to confirm that a low has been posted.
Thursday evenings natural gas pivot point is 5.166
First resistance is broken trading range support crossing at 5.327 Second resistance is the 10 day moving average crossing at 5.504
First support is today's low crossing at 5.060 Second support is the 75% retracement level of the December-January rally crossing at 4.919
The March Dollar closed higher on Thursday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bullish signaling that sideways prices are possible near term.
If March extends this month's rally, the 38% retracement level of the 2009-2010 decline crossing at 79.71 is the next upside target. Closes below the 20 day moving average crossing at 77.91 would confirm that a short term top has been posted.
First resistance is today's high crossing at 79.27 Second resistance is the 38% retracement level of the 2009-2010 decline crossing at 79.71
First support is the 10 day moving average crossing at 78.27 Second support is the 20 day moving average crossing at 77.91
Oil may rise to $79.50 a barrel after holding above its 200 day moving average, according to a technical analysis by Lind-Waldock & Co. in Chicago.
Prices will probably “bounce” next week after March oil futures dropped for 10 of the past 12 sessions without sliding below support at the 200 day level, said Richard Ilczyszyn, a senior market strategist with Lind-Waldock, a division of MF Global Ltd. Oil dropped $1.04, or 1.4 percent, to $73.67 yesterday, the lowest settlement since Dec. 21.
“The 200 day moving average held, which is a sign that prices are headed back up,” Ilczyszyn said in a telephone interview.
The contract will next hit resistance at the 50 day and 21 day moving averages, which were $78.33 and $79.41, respectively, yesterday, Ilczyszyn said.
“If the market closes below $72, there is going to be a big flood,” Ilczyszyn said. “There would be repercussions across the board and we would see big drops in both gasoline and heating oil.”
A settlement below $72, which last occurred on Oct. 7 on the New York Mercantile Exchange, would be a signal for the contract to test $67.99, the price on Sept. 25, he said.
The stock indexes have been trading very choppy making it difficult for swing/trend traders. It’s during times like this when seasoned traders rise above the herd of average traders.
If you only trade one strategy like swing trading or trend trading then you are likely finding it difficult to make money right now. On the other hand, day traders are having a blast right now as they take advantage of the powerful intraday rallies and sell offs.
I personally like swing trading but during times like this, when I know it will not work, I have to switch my strategy to day trading and focus on the 60 minute and 5 minute charts.
SP500 Index Fund – Intraday Setup I posted this chart earlier this week and I want to be sure everyone takes something away from this chart as I believe it shows a perfect low risk setup for shorting the market, or you could buy a reverse fund which goes up as the market moves down.
At first glance this chart is noisy, but if you simply focus on the all the different color analysis separately you will notice how simple trading can be and what you should be looking for.
Red Analysis: 1. Overall market trend is down so we are looking for a short trade, signs of weakness. 2. First we see a light volume test of the previous high set earlier in the day. The low volume indicates there are not many participants in the move up and that is a weak sign. 3. Between 14:30- 15:30 we notice the price start to drift higher on very light volume. Also, the price moved up into a resistance level. This to me is a perfect setup. 4. You would sell short or buy a reverse index fund at this point hoping for the market to start selling. You could also wait until it started to drop before taking a position but when a chart looks this good I try to get in at the highest price possible.
Blue Analysis: 1. The price starts to drop forming several small bear flags going into 14:30 before bouncing. Also note the volume began to rise as more selling was happening. This tells us that trading activity is predominately selling and that we should also focus on shorting when the time is right. 2. Again, the price starts to drop forming several small bear flags going from 15:00 – 15:45 before bouncing. Also note the volume began to rise as more sellers took part in this short term trend.
Black Analysis: 1. This shows more or less the resistance level, area to short the index and the nice trend down.
Gold GLD ETF Trading Gold has been under selling pressure since early December. That powerful drop and the chart pattern it has formed will generally resolves itself after an ABC retrace pattern. I have drawn this on the chart which is what I think will happen in the near term. This daily chart of GLD ETF has a small 4 day bear flag and bearish reversal candle which is pointing to lower prices in the near term.
Silver SLV ETF Trading Silver has a funky looking chart. It has formed a large megaphone pattern and possible head & shoulders pattern. Both are bearish and if we use the Head & Shoulders to calculate where silver could end up trading if it continues to break down, then $14.00 would be a level to look for a bounce.
Natural Gas UNG Fund The natural gas fund UNG has been in a down trend for over a year and the recent drop looks to be the start of another sell off. This could possibly form a reverse head & shoulders pattern with this drop moving UNG down to the $8.75 – $9.00 area. We will have to wait and watch things unfold for now.
Crude Oil USO Fund USO looks to be trading at support. I am inclined to patiently wait another session before possibly taking a position.
Mid-Week Trading Conclusion: In short, I feel the overall market could bounce including stocks and possibly commodities, but the selling is not over yet in my opinion. The drop we have seen in the past week is the half way mark. So this bounce would be the starting of an ABC retrace for stock indexes. During choppy times I like to be sitting in cash and or day trading for short term profits.
Precious metals do look oversold and ready for a small bounce or sideways move; I do think they will head lower. Too many traders are still holding on to their gold positions and until a large number of them get scared out of their positions, we will not see gold rocket higher.
Natural gas looks like it’s about to head much lower this week while oil looks ready for a solid bounce off support.
We continue to wait for new low risk setups as different investment scenarios unfold.
Crude oil extended fall from 83.95 to as low as 72.65 before recovering. Downside momentum is a bit unconvincing with 4 hours MACD staying above signal line. Nevertheless, further decline is still in favor as long as 75.42 minor resistance holds. Next target will be a retest of 68.59 support. On the upside, above 75.42 will indicate that a short term bottom is possibly formed and should bring strong recovery then.
In the bigger picture, upside momentum is clearly diminishing as seen in bearish divergence condition in daily MACD. However, there is no confirmation that medium term rise has topped out yet as long as 68.59 support holds. Such medium term rise could still continue and above 83.95 will target 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. Nevertheless, even in such case, we'll continue to look for reversal signal and expect crude oil to top out finally as it approaches 90 level. On the downside, break of 68.59 support will confirm that a medium term top is in place and will turn outlook bearish for a retest on 33.2 low as correction from 147.27 resumes.....Nymex Crude Oil Continuous Contract 4 Hours Chart
