Discussing the probability of an oil shortage in 2015, with John Kilduff, Round Earth Capital, and Dr. Robert Hirsch, Management
Monday, February 8, 2010
Crude Oil Market Commentary For Monday Evening
Crude oil closed higher due to short covering on Monday as it rebounded off the 87% retracement level of the September-January rally crossing at 69.58. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bearish again signaling that sideways to lower prices are possible near term.
If March extends the decline off January's high, September's low crossing at 67.46 is the next downside target. Closes above the 20 day moving average crossing at 76.25 are needed to confirm that a short term low has been posted.
Crude oil pivot point for Monday evening is 71.62
First resistance is the 10 day moving average crossing at 73.97
Second resistance is the 20 day moving average crossing at 76.25
First support is last Friday's low crossing at 69.50
Second support is September's low crossing at 67.46
Today’s Stock Market Club Trading Triangles
Natural gas posted a downside reversal on Monday and closed below the 20 day moving average crossing at 5.474. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
If March extends the rally off January's low, the reaction high crossing at 5.804 is the next upside target. Closes below last Thursday's low crossing at 5.227 would temper the near term friendly outlook.
Natural gas pivot point for Monday evening is 5.499
First resistance is today's high crossing at 5.680
Second resistance is the reaction high crossing at 5.804
First support is last Thursday's low crossing at 5.227
Second support is January's low crossing at 5.060
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The U.S. Dollar closed lower due to profit taking on Monday as it consolidated some of last week's rally but remains above 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 78.62 are needed to confirm that a short term top has been posted.
First resistance is last Friday's high crossing at 80.82
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 79.54
Second support is the 20 day moving average crossing at 78.62
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
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Where is the Oil Price Going....One Chart to Consider
From guest blogger Brian Hoffman....
Oil prices have staged a remarkable rally since a year ago, retracing almost 50 per cent of the drop from the US $147 high of 2008. The price chart for oil has formed a rising wedge during the last six months (see black converging trend lines in the chart below), which is potentially quite bearish since this type of chart formation normally resolves itself sharply to the downside.
Wedge formations are continuation patterns such that a rising wedge is a temporary pause in a falling price trend, whereas a falling wedge is a temporary pause in a rising price trend. During the formation of a rising wedge the selling pressure on prices has started to overwhelm the buying pressure resulting in the slope of the top trend line (resistance) tilting towards the bottom trend line (support). If the support provided by the bottom trend line fails to hold prices and a downward breakout occurs there may be a sharp and significant price drop.
Oil prices are facing resistance at about US$85 and they have really good support should they drop as low as US$60, which they may if there is a downward breakout from the rising wedge. This downward breakout may happen if/when the 50-day moving average crosses below the 200-day moving average. The last time the 50-day MA crossed below the 200-day MA the price then dropped from US$110 to US$32 (see October 2008 cross-over in the chart above).
A drop in oil prices from US$85 to US$60 would retrace about 50 per cent of the increase from the US$32 low of early 2009, which would likely exhaust the selling pressure as there is excellent price support at US$60.
If oil prices were to drop as low as US$60 and find support at that level the stage could be set for the next rally in oil prices. On the upside, oil prices would need to break through US$100 and find support at that level in order to gain momentum to possibly overtake the US$147 high of 2008. A move of that magnitude is unlikely in 2010 unless there is some fairly significant political unrest.
On the downside, should oil prices drop as low as US$60 and fail to find support at that level, then prices could continue lower with several support levels at lower prices. Oil prices have excellent support at US$40 dating back to 2003 should they drop that low.
Conclusion: Oil prices may drop to US$60 in the short-term if there is downward breakout from the rising wedge, which will impact oil-related investments. If prices drop to US$60 then wait for support to establish at level. If there is an upward breakout from the rising wedge, prices should find support at US$85 as resistance would then become support.
The United States Oil Fund, LP (USO-NYSE, US$35.64), an ETF that tracks the performance of oil prices, has a similar price chart to oil prices (see chart below) with a similar steep price decrease subsequent to a 50-day MA cross-over of the 200-day MA in October 2008 along with the recent rising wedge formation. USO faces resistance at US$40 and has support at US$32. Should the price of USO fail to hold at US$32 there is excellent support at US$26 dating back to 2000.
Brian Hoffman is an affiliate of the Market Technicians Assoc. and a member of the Canadian Society of Technical Analysts
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Oil prices have staged a remarkable rally since a year ago, retracing almost 50 per cent of the drop from the US $147 high of 2008. The price chart for oil has formed a rising wedge during the last six months (see black converging trend lines in the chart below), which is potentially quite bearish since this type of chart formation normally resolves itself sharply to the downside.
Wedge formations are continuation patterns such that a rising wedge is a temporary pause in a falling price trend, whereas a falling wedge is a temporary pause in a rising price trend. During the formation of a rising wedge the selling pressure on prices has started to overwhelm the buying pressure resulting in the slope of the top trend line (resistance) tilting towards the bottom trend line (support). If the support provided by the bottom trend line fails to hold prices and a downward breakout occurs there may be a sharp and significant price drop.
Oil prices are facing resistance at about US$85 and they have really good support should they drop as low as US$60, which they may if there is a downward breakout from the rising wedge. This downward breakout may happen if/when the 50-day moving average crosses below the 200-day moving average. The last time the 50-day MA crossed below the 200-day MA the price then dropped from US$110 to US$32 (see October 2008 cross-over in the chart above).
A drop in oil prices from US$85 to US$60 would retrace about 50 per cent of the increase from the US$32 low of early 2009, which would likely exhaust the selling pressure as there is excellent price support at US$60.
If oil prices were to drop as low as US$60 and find support at that level the stage could be set for the next rally in oil prices. On the upside, oil prices would need to break through US$100 and find support at that level in order to gain momentum to possibly overtake the US$147 high of 2008. A move of that magnitude is unlikely in 2010 unless there is some fairly significant political unrest.
On the downside, should oil prices drop as low as US$60 and fail to find support at that level, then prices could continue lower with several support levels at lower prices. Oil prices have excellent support at US$40 dating back to 2003 should they drop that low.
Conclusion: Oil prices may drop to US$60 in the short-term if there is downward breakout from the rising wedge, which will impact oil-related investments. If prices drop to US$60 then wait for support to establish at level. If there is an upward breakout from the rising wedge, prices should find support at US$85 as resistance would then become support.
The United States Oil Fund, LP (USO-NYSE, US$35.64), an ETF that tracks the performance of oil prices, has a similar price chart to oil prices (see chart below) with a similar steep price decrease subsequent to a 50-day MA cross-over of the 200-day MA in October 2008 along with the recent rising wedge formation. USO faces resistance at US$40 and has support at US$32. Should the price of USO fail to hold at US$32 there is excellent support at US$26 dating back to 2000.
Brian Hoffman is an affiliate of the Market Technicians Assoc. and a member of the Canadian Society of Technical Analysts
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Oil Rises From Seven Week Low on Forecast for More U.S. Storms
Oil rose for the first time in four days as the U.S. mid-Atlantic region braced for a new winter storm in coming days and dug out from a weekend blizzard. Oil rebounded from a seven week low after the National Weather Service issued storm warnings from Utah to New Jersey and advisories for below-normal temperatures in the East that would increase demand for heating fuel. The weekend storm left almost 40 inches of snow in some places and shut government offices today in Washington.
“The cold weather is persisting here, and it’s not relenting,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. Oil prices also advanced amid technical support at the 200 day moving average of $70.72, he said. Crude oil for March delivery rose 85 cents, or 1.2 percent, to $72.04 a barrel at 11:02 a.m. on the New York Mercantile Exchange. Oil settled at $71.19 on Feb. 5, the lowest price since Dec. 15. Futures have gained 79 percent in the past year.
The National Weather Service is forecasting temperatures will be below normal for the next six to 10 days along the Eastern Coast, from Florida to Maine. “A very wintry and unseasonably cold week remains on tap from the southern plains and Midwest to the Northeast and mid-Atlantic,” said Jim Rouiller, a senior energy meteorologist at private forecaster Planalytics Inc., in Wayne, Pennsylvania. The new storm may reach “crippling proportions from Washington and Philadelphia to New York City and possibly Boston by Wednesday”....Read the entire article.
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Crude Oil Market Commentary For Monday Evening
Crude oil was steady to slightly higher overnight as it consolidates some of last Friday's decline. Stochastics and the RSI are diverging and have turned bearish again signaling that sideways to lower prices are possible near term.
If March extends last week's decline, last September's low crossing at 67.46 is the next downside target. Closes above the 20 day moving average crossing at 76.22 would confirm that a short term low has been posted.
Monday's pivot point, our line in the sand is 71.54
First resistance is the 10 day moving average crossing at 73.90
Second resistance is the 20 day moving average crossing at 76.22
First support is last Friday's low crossing at 69.50
Second support is last September's low crossing at 67.46
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Natural gas was higher overnight as it extends last Friday's close above the 20 day moving average crossing at 5.484. Stochastics and the RSI remain bullish signaling that additional strength is possible near term.
If March extends the overnight rally, the reaction high crossing at 5.804 is the next upside target. Closes below the 10 day moving average crossing at 5.278 are needed to confirm that a short term top has been posted.
Natural gas pivot point for Monday is 5.499
First resistance is the overnight high crossing at 5.680
Second resistance is the reaction high crossing at 5.804
First support is the 20 day moving average crossing at 5.484
Second support is the 10 day moving average crossing at 5.378
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The U.S. Dollar was lower due to profit taking overnight as it consolidates some of last week's rally but remains above the 38% retracement level of the 2009 decline crossing at 79.71. Stochastics and the RSI are overbought but are 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 78.63 would confirm that a short term top has been posted.
First resistance is last Friday's high crossing at 80.82
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 79.55
Second support is the 20 day moving average crossing at 78.63
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Crude Oil Technical Outlook For Monday Morning
Crude oil continues to stay in tight range above 69.50 low made last week but after all, intraday bias remains on the downside with 73.94 minor resistance intact. Deeper decline is still expected to 100% projection of 83.95 to 72.43 from 78.04 at 66.52 next. On the upside, above 73.94 minor resistance will turn intraday bias neutral and bring more consolidations. But upside should be limited below 78.04 resistance and bring fall resumption.
In the bigger picture, the strong break of medium term trend line support added much credence to the case of reversal. Medium term rise from 33.2, which is treated as a correction to fall from 147.27, should have completed at 83.95 already, on bearish divergence condition in daily MACD. Current fall from 83.95 should extend through 68.59 support towards next key cluster level at 58.32 (50% retracement of 33.2 to 83.95 at 58.58). Decisive break there will strongly suggest that whole decline from 147.27 is resuming for a new low below 33.2. On the upside, break of 78.04 resistance is needed to indicate that fall from 83.95 has completed. Otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
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Sunday, February 7, 2010
Gold & SP500 Psychology: They Bail, We Buy
From guest blogger Chris Vermeulen....
Understanding market psychology is crucial for a trader’s success. But so many people get caught up in the daily market volatility, media coverage and “noise” of the trading environment, it’s almost impossible to not think and trade in agreement with the majority of traders.
However, effective technical analysis allows us to use trends, patterns and other indicators to evaluate the market’s current psychological state. Fortunately, this analysis can both enable us to independently forecast whether the market is heading in an upward or downward trend and do so against the grain of the majority.
It takes a disciplined trader to be able to watch and listen to the market doing one thing, filter out the noise, then do the opposite – all in a controlled manor. To this day I still find myself fighting the herd mentality at times and that is when I step away from the computer and regroup.
I have a simple rule that has saved me thousands over the years. I would rather miss a trade and learn what caused me to get confused, then to take a loss.
Rule # 1 – When in Doubt, Stay Out!
There are two types of traders:
1. Herd Mentality Trader – Someone who trades off fear and greed buying near tops and panic selling out at the bottom with the masses.
2. Black Sheep Trader – A trader who stand out from the masses and trades opposite to the “herd” during extreme levels.
Last weeks market action really allowed us to see which way the masses were moving. The extremely high selling volume and sharp price decline notified us that the market was trading off FEAR. And, last Thursday we actually saw PANIC which tells us the balance of the market (retail investors, John Doe’s, The “Herd”) were exiting their positions.
When we see this happen, it’s generally a good time to start scaling into long positions, as most of the down side has already happened.
I have been talking about an ABC retrace pattern for the indexes and gold for some time and last week we got just that. An ABC retrace is when we have 3 waves which are, down, small up, then another leg down.
In short this wave breaks the uptrend of higher highs and lows, as it forms a lower low telling novice traders to sell and go short. This is what causes the high volume and sharp sell offs.
Below are a few charts showing the 2009 July lows and where we are now, February 2010:
SP500 – Daily Trading Chart
Gold – Daily Trading Chart
Silver – Daily Trading Chart
Oil – Daily Trading Chart
Intraday Price Action – Just click here if you want to see some of my exciting intraday trading charts check out the setups last week.
Market Psychology Trading Conclusion:
Most get involved with the stock market because it looks like something they can quickly learn and start making money from home. But it doesn’t take long before they quickly realize there is more to trading than meets the eye.
While trading looks easy from a glance, in actuality I think its one of the toughest jobs out there.
Why? Well, this is what you are up against:
1. You are trying to predict something that is unpredictable
2. You are trading against millions of other highly skilled traders
3. You are trading against automated computers with complex algorithms
4. You are trading with your hard earned money which causes fear and greed
5. You must accept losing trades as that is part of the business
6. You must trade with a proven trading strategy and follow the system
7. You must understand money management and apply it to every trade
8. You must truly love the market cause it will break you down mentally
I don’t want to say you must be a contrarian, but in reality you must do the opposite of the masses during times of extreme price behavior.
These extremes happen on a daily basis when trading intraday charts and every 4-6 weeks when looking at daily charts. The toughest part is to pull the trigger when emotions are flying high in the market and you are looking to do the opposite. It takes several trades before you even start to get comfortable doing this.
I hope this helps shed some light on market psychology.
Just click here if you would like to Receive Chris Vermeulen's Gold Trading Newsletter and Analysis.
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Understanding market psychology is crucial for a trader’s success. But so many people get caught up in the daily market volatility, media coverage and “noise” of the trading environment, it’s almost impossible to not think and trade in agreement with the majority of traders.
However, effective technical analysis allows us to use trends, patterns and other indicators to evaluate the market’s current psychological state. Fortunately, this analysis can both enable us to independently forecast whether the market is heading in an upward or downward trend and do so against the grain of the majority.
It takes a disciplined trader to be able to watch and listen to the market doing one thing, filter out the noise, then do the opposite – all in a controlled manor. To this day I still find myself fighting the herd mentality at times and that is when I step away from the computer and regroup.
I have a simple rule that has saved me thousands over the years. I would rather miss a trade and learn what caused me to get confused, then to take a loss.
Rule # 1 – When in Doubt, Stay Out!
There are two types of traders:
1. Herd Mentality Trader – Someone who trades off fear and greed buying near tops and panic selling out at the bottom with the masses.
2. Black Sheep Trader – A trader who stand out from the masses and trades opposite to the “herd” during extreme levels.
Last weeks market action really allowed us to see which way the masses were moving. The extremely high selling volume and sharp price decline notified us that the market was trading off FEAR. And, last Thursday we actually saw PANIC which tells us the balance of the market (retail investors, John Doe’s, The “Herd”) were exiting their positions.
When we see this happen, it’s generally a good time to start scaling into long positions, as most of the down side has already happened.
I have been talking about an ABC retrace pattern for the indexes and gold for some time and last week we got just that. An ABC retrace is when we have 3 waves which are, down, small up, then another leg down.
In short this wave breaks the uptrend of higher highs and lows, as it forms a lower low telling novice traders to sell and go short. This is what causes the high volume and sharp sell offs.
Below are a few charts showing the 2009 July lows and where we are now, February 2010:
SP500 – Daily Trading Chart
Gold – Daily Trading Chart
Silver – Daily Trading Chart
Oil – Daily Trading Chart
Intraday Price Action – Just click here if you want to see some of my exciting intraday trading charts check out the setups last week.
Market Psychology Trading Conclusion:
Most get involved with the stock market because it looks like something they can quickly learn and start making money from home. But it doesn’t take long before they quickly realize there is more to trading than meets the eye.
While trading looks easy from a glance, in actuality I think its one of the toughest jobs out there.
Why? Well, this is what you are up against:
1. You are trying to predict something that is unpredictable
2. You are trading against millions of other highly skilled traders
3. You are trading against automated computers with complex algorithms
4. You are trading with your hard earned money which causes fear and greed
5. You must accept losing trades as that is part of the business
6. You must trade with a proven trading strategy and follow the system
7. You must understand money management and apply it to every trade
8. You must truly love the market cause it will break you down mentally
I don’t want to say you must be a contrarian, but in reality you must do the opposite of the masses during times of extreme price behavior.
These extremes happen on a daily basis when trading intraday charts and every 4-6 weeks when looking at daily charts. The toughest part is to pull the trigger when emotions are flying high in the market and you are looking to do the opposite. It takes several trades before you even start to get comfortable doing this.
I hope this helps shed some light on market psychology.
Just click here if you would like to Receive Chris Vermeulen's Gold Trading Newsletter and Analysis.
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Saturday, February 6, 2010
Crude Oil Weekly Technical Outlook
Crude oil's rebound from 72.43 was limited at 78.04 last week and fall from 83.95 then resumed by diving to as low as 69.50 before closing at 71.19. Initial bias remains on the downside this week and deeper decline should now be seen to 100% projection of 83.95 to 72.43 from 78.04 at 66.52 next. On the upside, above 73.94 minor resistance will turn intraday bias neutral and bring consolidations. But upside should be limited below 78.04 resistance and bring fall resumption.
In the bigger picture, the strong break of medium term trend line support added much credence to the case of reversal. Medium term rise from 33.2, which is treated as a correction to fall from 147.27, should have completed at 83.95 already, on bearish divergence condition in daily MACD. Current fall from 83.95 should extend through 68.59 support towards next key cluster level at 58.32 (50% retracement of 33.2 to 83.95 at 58.58). Decisive break there will strongly suggest that whole decline from 147.27 is resuming for a new low below 33.2. On the upside, break of 78.04 resistance is needed to indicate that fall from 83.95 has completed. Otherwise, outlook will remain bearish.
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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Phil Flynn: PIGS in Space
When I go down on the trading floor and talk about pigs, normally I am referring to hogs or pork bellies. But this week is something different. We'll focus our attention on Portugal, Ireland, Greece and Spain. Or you can exchange or add another I if you want to throw in Italy. In this case PIGS - or PIIGS - is not the other white meat, but a cause of great concern on the global economic scene.
Portugal now seems to be the main epicenter of the constantly shifting risk factors in the ongoing global economic crisis. Even casual observers of the global market place have been aware of the recent problems growing in the Eurozone particularly with Greece. The massive debt in Greece has roiled the global market for most of the year and now there are fears that their problems may be spreading throughout the region. Oh sure, the other countries within the designation PIGS or PIIGS if you prefer, did not want to be coupled together with Greece perhaps because they did not want to be part of something called PIGS or because they were fearful that the association with Greece and their problems could spread to them faster than a winter cold. Spain’s Finance Minister Elena Salgado was one of the first to speak out and said that Spain's situation is not like that of Greece. Yet earlier this week it seems that when one of these little PIGS’s went to the market and found that things were not that good.
The market really got fearful after Portugal basically had a failed bond auction. The Portuguese treasury and Government Debt Agency tried to sell €500 million in 12 month bills but was only able to sell €300 million. This raised concern that buyers of debt are getting tired of getting low rates of return when sovereign countries credit worthiness is not what should be. Last year Portugal’s debt was 9% of its GDP and with a potential softening in the EURO zone, bond buyers think that their chances to be paid back might not be that good. Obviously that means that bond buyers will demand a higher rate of return to take on more risk thus ultimately driving up interest rates in Portugal and throughout the region as debt strapped nations vie for capital to fund their out of control spending.....Read the entire article.
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
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Friday, February 5, 2010
Oil Futures Plunge, Bond Markets Vote America
Statsweeper registered alerts across the entire WTI oil futures complex yesterday.
Prices fell dramatically, with all six of the nearest contracts down over 5%. Four-month futures took the biggest percentage dive, dropping 5.6% from $78.60 to $74.21 per barrel.
Front month futures fell 5.1%, from $77 to $73.06.
As widely reported, the fall in WTI was part of a larger sell off in commodities. Triggered by strengthening of the U.S. dollar.
With all the focus on yesterday's selling, there was less press on the things being bought. Most notably U.S. Treasury notes.
Alerts registered for falling yields on three-, five- and ten-year Treasury securities. Yields plunged as traders piled into these investments, driving up prices.
This is significant. Many analysts recently predicted investors would shun U.S. government debt as America's deficit spending rises and the nation's monetary base remains ballooned by more than $1 trillion compared to just 18 months ago.
But it appears when the markets get shaky, buyers still see U.S. bonds as the safe haven investment of choice.
Particularly interesting was investors' choice of Treasuries. Yields fell most notably for the three year note, dropping nearly 7% to 1.34% yield. This is the lowest yield registered since late December 2009.
Buying was also strong on the five-year note, which fell 4.6% to 2.29% yield. And the ten-year, falling 2.9% to 3.62% yield.
This contrasts with previous "flight to safety" buying of Treasuries, where purchases were focused on short-dated notes and bills. Often with maturities of 52 weeks or less.
Bill yields did fall yesterday. With the 52 week bill down 12.1% to 0.29% yield. But overall buying of these securities hasn't been as strong as might be anticipated.
52 week bills are still trading in the same range that's prevailed over the last few weeks. By contrast, two-, three- and five-year note yields appear to have broken resistance, moving markedly lower than recent trading ranges yesterday.
If this trend continues, it suggest investors are willing to lock in their money with the U.S. government for longer periods than they were previously comfortable with. A big vote of confidence for America and the U.S. dollar.
From The Staff at Oil Price .Com
Statsweeper is the financial community's premier data monitoring engine. The site tracks commodities, economics and finance data from around the globe, and alerts investors to critical changes and emerging trends. Visit www.statsweeper.com for more, and sign up for Pierce Points daily e-letter (www.piercepoints.com) for commentary on what the data mean for your commodities investments.
info@statsweeper.com
The information provided here is based on data collected by www.statsweeper.com and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained herein is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided herein and any other materials which are referenced herein are provided "as is" without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions.
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Prices fell dramatically, with all six of the nearest contracts down over 5%. Four-month futures took the biggest percentage dive, dropping 5.6% from $78.60 to $74.21 per barrel.
Front month futures fell 5.1%, from $77 to $73.06.
As widely reported, the fall in WTI was part of a larger sell off in commodities. Triggered by strengthening of the U.S. dollar.
With all the focus on yesterday's selling, there was less press on the things being bought. Most notably U.S. Treasury notes.
Alerts registered for falling yields on three-, five- and ten-year Treasury securities. Yields plunged as traders piled into these investments, driving up prices.
This is significant. Many analysts recently predicted investors would shun U.S. government debt as America's deficit spending rises and the nation's monetary base remains ballooned by more than $1 trillion compared to just 18 months ago.
But it appears when the markets get shaky, buyers still see U.S. bonds as the safe haven investment of choice.
Particularly interesting was investors' choice of Treasuries. Yields fell most notably for the three year note, dropping nearly 7% to 1.34% yield. This is the lowest yield registered since late December 2009.
Buying was also strong on the five-year note, which fell 4.6% to 2.29% yield. And the ten-year, falling 2.9% to 3.62% yield.
This contrasts with previous "flight to safety" buying of Treasuries, where purchases were focused on short-dated notes and bills. Often with maturities of 52 weeks or less.
Bill yields did fall yesterday. With the 52 week bill down 12.1% to 0.29% yield. But overall buying of these securities hasn't been as strong as might be anticipated.
52 week bills are still trading in the same range that's prevailed over the last few weeks. By contrast, two-, three- and five-year note yields appear to have broken resistance, moving markedly lower than recent trading ranges yesterday.
If this trend continues, it suggest investors are willing to lock in their money with the U.S. government for longer periods than they were previously comfortable with. A big vote of confidence for America and the U.S. dollar.
From The Staff at Oil Price .Com
Statsweeper is the financial community's premier data monitoring engine. The site tracks commodities, economics and finance data from around the globe, and alerts investors to critical changes and emerging trends. Visit www.statsweeper.com for more, and sign up for Pierce Points daily e-letter (www.piercepoints.com) for commentary on what the data mean for your commodities investments.
info@statsweeper.com
The information provided here is based on data collected by www.statsweeper.com and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained herein is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided herein and any other materials which are referenced herein are provided "as is" without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions.
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Where is Oil Headed Next 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.
Crude Oil Bears Take a Clear Advantage Into The Weekend
I must admit, I have been looking forward to posting my bear waiting for his steak dinner, and it looks like he is getting it. Crude oil closed lower on Friday and tested the 87% retracement level of the September-January rally crossing at 69.58. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends the decline off January's high, September's low crossing at 67.46 is the next downside target. Closes above the 20 day moving average crossing at 76.85 are needed to confirm that a short term low has been posted.
First resistance is the 10 day moving average crossing at 74.36
Second resistance is the 20 day moving average crossing at 76.85
First support is today's low crossing at 69.50
Second support is September's low crossing at 67.46
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Natural gas closed higher on Friday and above the 20 day moving average crossing at 5.489 confirming that a low has been posted. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If March extends today's rally, the reaction high crossing at 5.804 is the next upside target. Closes below Thursday's low crossing at 5.227 would temper the near term friendly outlook.
First resistance is today's high crossing at 5.598
Second resistance is the reaction high crossing at 5.804
First support is Thursday's low crossing at 5.227
Second support is last week's low crossing at 5.060
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The U.S. Dollar closed higher on Friday as it extended this week's rally above the 38% retracement level of the 2009-2010 decline crossing at 79.71. The high range close sets the stage for a steady to higher opening on Monday. 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 78.47 would confirm that a short term top has been posted.
First resistance is today's high crossing at 80.82
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 79.34
Second support is the 20 day moving average crossing at 78.47
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Crude Oil Futures Fluctuate in New York After U.S. Unemployment Rate Drops
Crude oil fluctuated after a government report showed the U.S. unexpectedly lost jobs last month while the unemployment rate declined.
Oil rose as much as 1.1 percent and slipped 0.9 percent after the Labor Department report was released in Washington. Employment fell by 20,000 in January as the jobless rate dropped to 9.7 percent, the lowest level since August. Prices plunged 5 percent yesterday, the biggest decrease since July 29.
“There’s a lot of uncertainty about how to interpret the payroll data,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “After yesterday’s big drop the market looks shaky, and it will be hard to maintain any moves higher.”
Crude oil for March delivery declined 8 cents to $73.06 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Futures were little changed this week and are up 77 percent from a year ago.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,064.35. The dollar climbed 0.3 percent versus the euro to $1.3677, from $1.3723 yesterday.
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Goldman: Oil Will Get Expensive Now That The Tankers Are Done Hoarding It
Goldman's David Greely is making a near-term bullish case for oil. His optimism is driven by A) The strong U.S. ISM Manufacturing data we had two days back, B) the fact that renewed Nigerian violence threatens supply, and C) the reduction in overhang caused by oil hoarded at sea in tankers (floating storage).
While the relationship appears far from perfect, he argues that U.S. oil demand tends to track ISM Manufacturing Index readings:
Most interestingly for short-term traders, Falling floating storage implies a tighter market, since less supply is basically out there ready to be sold into the market.
David Greely @ Goldman: [emphasis added] The area where the improvement in near-term fundamentals has been most pronounced in recent weeks is in the amount of oil in floating storage. The use of tankers to store excess supplies of crude oil and gasoil over the past year has been emblematic of the weakness in supply demand fundamentals during the recession, and the unloading of these tankers has been broadly viewed as a necessary precursor to a cleanup over the overall oil market.
Consequently, reports that anywhere from 0 to 50 million barrels of the total oil in floating storage has been recently unloaded have suggested a potential turn around in oil market fundamentals.
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While the relationship appears far from perfect, he argues that U.S. oil demand tends to track ISM Manufacturing Index readings:
Most interestingly for short-term traders, Falling floating storage implies a tighter market, since less supply is basically out there ready to be sold into the market.
David Greely @ Goldman: [emphasis added] The area where the improvement in near-term fundamentals has been most pronounced in recent weeks is in the amount of oil in floating storage. The use of tankers to store excess supplies of crude oil and gasoil over the past year has been emblematic of the weakness in supply demand fundamentals during the recession, and the unloading of these tankers has been broadly viewed as a necessary precursor to a cleanup over the overall oil market.
Consequently, reports that anywhere from 0 to 50 million barrels of the total oil in floating storage has been recently unloaded have suggested a potential turn around in oil market fundamentals.
Follow guest blogger Vince Fernando at twitter @vincefernando
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Crude Oil Higher on Better then Expected Unemployment Numbers, Short Covering
Crude oil was higher due to short covering overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are diverging but are turning neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends this week'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 76.94 are needed to confirm that a short term low has been posted.
Crude oil pivot point, our line in the sand is 74.24
First resistance is the 10 day moving average crossing at 74.53
Second resistance is the 20 day moving average crossing at 76.94
First support is Thursday's low crossing at 72.42
Second support is the 75% retracement level of the September-January rally crossing at 71.70
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
Natural gas was higher due to short covering overnight as it consolidates above the 10 day moving average crossing at 5.378. Stochastics and the RSI remain neutral to bullish signaling that additional strength is possible near term.
Closes above the 20 day moving average crossing at 5.487 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target.
Friday's pivot point for natural gas is 5.381
First resistance is the 20 day moving average crossing at 5.487
Second resistance is Wednesday's high crossing at 5.558
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
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The U.S. Dollar was higher overnight as it extends this week's rally above the 38% retracement level of the 2009 decline crossing at 79.71. Stochastics and the RSI are overbought but are 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 78.45 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 80.59
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 79.31
econd support is the 20 day moving average crossing at 78.45
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Crude Oil Daily Technical Outlook For Friday
Crude oil's rebound from 72.43 should have completed at 78.04 already and fall from 83.95 is resuming. Break of 72.43 low will target 68.59 support next. On the upside, above 74.50 will turn intraday bias neutral and bring recovery. But upside should be limited below 78.04 resistance and bring fall resumption.
In the bigger picture, current development revives the case that medium term rise from 33.2 has topped out at 83.95 on bearish divergence condition in daily MACD. Break of 68.59 will confirm this case and target 58.32 support next. On the upside, however, above 78.04 resistance will dampen this view and argue that the medium term rise might still be in progress. Nevertheless, even in case of another high above 83.95, we'd continue to look of reversal signal as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
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Thursday, February 4, 2010
Despite Sell Off in Oil, Bulls Maintain a Slight Near Term Advantage
Crude oil closed sharply lower on Thursday as a result of today's bearish jobs data, which leaves any economic recovery in question. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bullish despite today's decline signaling that a low might be near.
Closes above the 20 day moving average crossing at 77.42 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target.
Crude oil's pivot point for Thursday evening is 74.19
First resistance is the 20 day moving average crossing at 77.42
Second resistance is the 50% retracement level of January's decline crossing at 78.43
First support is today's low crossing at 72.42
Second support is the 75% retracement level of the September-January rally crossing at 71.71
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Natural gas closed slightly higher on Thursday as it consolidates above the 10 day moving average crossing at 5.407. The high range close sets the stage for a steady to higher opening on Friday. 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 5.501 are needed to confirm that a low has been posted. If March renews the decline off January's high, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target.
Thursday evenings pivot point for natural gas is 5.398
First resistance is the 20 day moving average crossing at 5.501
Second resistance is the reaction high crossing at 5.804
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
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The U.S. Dollar closed higher on Thursday and above the 38% retracement level of the 2009-2010 decline crossing at 79.71. The high range close sets the stage for a steady to higher opening on Friday. 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 78.32 would confirm that a short term top has been posted.
First resistance is today's high crossing at 80.13
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 79.12
Second support is the 20 day moving average crossing at 78.32
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Phil Flynn: Worms in Space
Yesterday the petroleum markets were all about trying to digest the weekly inventory reports. Refineries are running at the lowest level since the 1980’s if you exclude time when refineries were shut down for hurricanes and this shows that demand is lousy. Yet at the same time there are fears that we are finally getting down to a point where refiners have cut back enough to meet slowing demand. Despite this fascinating study of supply versus demand, we will get more into what really made the market pop and drop and that was a story from the AP that was released again by the AFP on the Dow Jones commodity wire.
A breaking oil market seemed to rally quickly after a headline crossed that said, “WHITE HOUSE: Reported rocket launch by Iran would be a provocative act.” Oh my gosh! Rocket launch! What was that, Get Me Out! Well that seemed to be the reaction or a higher buy got triggered but the story had come out earlier. The report did say that the White House reported a rocket launch by Iran would Be a "provocative act.", but the White House was still checking out reports of the launch. The Kavoshgar 3 (Explorer) rocket was launched Wednesday, Iranian state-owned Al-Alam television reported.....Read the entire article.
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Crude Oil Drops the Most in 6 Months as Stocks Tumble, Dollar Strengthens
Crude oil tumbled the most in six months as the dollar gained and a drop in stocks bolstered skepticism that the economic recovery will be sustained. Oil fell as much as 5.4 percent as the greenback climbed versus the euro, curbing the appeal of commodities as an alternate investment. The Standard & Poor’s 500 Index dropped after more Americans filed first time claims for unemployment insurance last week, raising concern that an improvement in the job market is stalling.
“Oil is down because of the dollar’s strength and the poor fortunes of the S&P, especially after the jobs report,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The whole commodity sector is looking weak today.” Crude oil for March delivery fell $3.83, or 5 percent, to $73.15 a barrel at 11:49 a.m. New York time. Oil declined as much as $4.12 to $72.86, and is heading for the biggest daily drop since July 29. Prices are up 81 percent from a year ago.
“Everything on the screen is red because of negative economic news,” said Chip Hodge, who oversees a $9 billion natural resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Unless the economy rebounds, prices should move in one direction, south.” The dollar climbed to the highest level against the euro since May after European Central Bank President Jean-Claude Trichet said the economic outlook is subject to “uncertainty.”
The dollar traded at $1.3745 per euro, up from $1.3893 yesterday. It traded earlier at $1.3728, the highest level since May 21.
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Trends for Stocks & Commodities: Gold, Oil and Indexes
Stocks and metals have been on a steady rise this week. The US Dollar drifting lower has helped to add fuel to the oversold bounce in equities and metals we are seeing.
Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.
If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.
Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.
US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.
Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.
All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.
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Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.
If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.
Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.
US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.
Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.
All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.
Just click here if you would like to receive these free trading reports from The Gold and Oil Guy Chris Vermeulen at The Gold and Oil Guy .Com
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