Traders Come to Their Senses, Crude Oil Trades Sharply Lower

Crude oil plummets in European session as investors see price above 80 not justifiable with weak fundamentals. Crude oil traded sharply lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target. Closes below the 20 day moving average crossing at 76.32 would confirm that a short term top has been posted.

Tuesday's pivot point, our line in the sand is 80.25

First resistance is Monday's high crossing at 81.15
Second resistance is the 75% retracement level of the January-February decline crossing at 81.63

First support is the 10 day moving average crossing at 77.77
Second support is the 20 day moving average crossing at 76.32

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Natural gas was lower overnight as it extends last week's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If March extends the overnight decline, the 87% retracement level of the December-January rally crossing at 4.734 is the next downside target. Closes above the 20 day moving average crossing at 5.285 would confirm that a short term low has been posted.

Natural gas pivot point for Tuesday is 4.904

First resistance is Monday's gap crossing at 5.008
Second resistance is broken trading range support crossing at 5.060

First support is Monday's low crossing at 4.841
Second support is the 87% retracement level of the December-January rally crossing at 4.734

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The U.S. Dollar was higher overnight hinting that the two day correction off last Friday's high might be ending. Despite the overnight rally, March remains below the 50% retracement level of the 2009 decline crossing at 81.32. Stochastics and the RSI are diverging but are neutral hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 80.03 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is the 20 day moving average crossing at 80.03
Second support is last Wednesday's low crossing at 79.61

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Crude Oil Daily Technical Outlook For Tuesday

With 4 hours MACD crossed below signal line again, an intraday top is in place at 80.51 and bias is turned neutral. Some consolidations could be seen, with risk of retreat to 4 hours 55 EMA (now at 77.40). But downside should be contained above 75.69 support and bring another rise. Above 80.51 will target a retest on 83.95 high. However, note that Break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support is now needed to indicate that crude oil has topped out.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Where is Crude Oil Headed on Tuesday?

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 Bulls Continue to Maintain Slight Near Term Advantage

Crude oil closed higher on Monday as it extends the rally off this month's low. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If March extends this month's rally, the 75% retracement level of the January-February decline crossing at 80.72 is the next upside target. Closes below the 20 day moving average crossing at 75.30 would confirm that a short term top has been posted.

First resistance is today's high crossing at 80.51
Second resistance is the 75% retracement level of the January-February decline crossing at 80.72

First support is the 10 day moving average crossing at 76.30
Second support is the 20 day moving average crossing at 75.30

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Natural gas gapped down and closed lower on Monday as it extended last Friday's breakout below the lower boundary of this month's trading range, which crosses at 5.060. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If March extends today's decline, the 87% retracement level of the December-January rally crossing at 4.734 is the next downside target. Closes above the 20 day moving average crossing at 5.323 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 5.265
Second resistance is the 20-day moving average crossing at 5.323

First support is today's low crossing at 4.841
Second support is the 87% retracement level of the December-January rally crossing at 4.734

Is Gold Poised to Go Higher or Lower?

The U.S. Dollar closed lower on Monday due to profit taking as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 79.93 are needed to confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is the 10 day moving average crossing at 80.31
Second support is the 20 day moving average crossing at 79.93

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Crude Oil Fluctuates Near $80 a Barrel on Total Strike and Dollar's Increase

Oil fluctuated near $80 a barrel as strikes at Total SA refineries and depots in France supported prices of refined products such as gasoline and the dollar strengthened against the euro. Oil rose to a five week high after gasoline futures gained as much as 2 percent amid union calls on Total workers to extend walkouts. The dollar’s advance makes oil and other commodities less attractive as an alternative investment.

“Once you get up to the $80 level, it’s just having trouble maintaining that,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. Demand from industrialized countries “just doesn’t support it. I think we’re stuck in a very broad range of $70 to $80 until something decisive happens.”

Crude oil for March delivery increased 27 cents to $80.08 a barrel at 1:46 p.m. on the New York Mercantile Exchange. Earlier it touched $80.51, the highest price since Jan. 13. The March contract expires at the close of trading today. The more-active April contract gained 27 cents to $80.33.

Workers at Total’s six French oil-processing plants and six of its 31 storage depots have been on strike since Feb. 16 to protest against the permanent shutdown of refining at its Flanders plant in northern France. The strike comes as weak demand has curtailed refinery production worldwide.

“When you have that coupled with the situation in the U.S. with the low run rates, it’s constructive for the overall market,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities.....Read the entire article.

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Schlumberger To Buy Smith International In $11 Billion Dollar Deal

Schlumberger Ltd. (SLB) will acquire Smith International (SII) for about $11 billion in an all stock deal that is the year's largest acquisition and will make Schlumberger by far the world's biggest oilfield services company.

The deal, which the companies announced Sunday, will cement Schlumberger's position atop the oil services industry, which helps oil producers locate and drill for oil deposits. After the deal, Schlumberger, already the biggest company in the sector by revenue and market value, would have revenues double that of its nearest rival, Halliburton Co. (HAL), although most analysts expect Schlumberger to sell some assets for antitrust or other reasons.

Under the terms of the deal, Smith shareholders will receive 0.6966 Schlumberger share for each Smith share they own, a 37.5% premium over Smith's share price on Thursday, when news of the deal was first reported. The deal, which must still be approved by shareholders of both companies, is expected to close in the second half of this year. Smith shareholders would own about 12.8% of the combined company.

The $11 billion price tag, which values Smith at $44.51 per share based on Friday's close, was higher than most analysts expected. Dan Pickering, an analyst for energy focused investment bank Tudor Pickering Holt & Co., said some Schlumberger shareholders might also have preferred a cash and stock deal to an all stock deal. But he said the deal makes sense for Schlumberger, which will now be able to package Smith's products with its own services to win more business.


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Crude Oil Bulls Cling to Overbought Conditions, Here's Monday's Numbers

Crude oil opened higher this morning and traded higher overnight as it extends this month's rally. 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 month's rally, the 75% retracement level of the January-February decline crossing at 80.72 is the next upside target. Closes below the 20 day moving average crossing at 75.29 would confirm that a short term top has been posted.

Monday's pivot point, our line in the sand is 79.50

First resistance is the overnight high crossing at 80.51
Second resistance is the 75% retracement level of the January-February decline crossing at 80.72

First support is the 10 day moving average crossing at 76.27
Second support is the 20 day moving average crossing at 75.29

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Natural gas gapped down and was lower overnight as it extends last Friday's decline below the lower boundary of this winter's trading range crossing at 5.060. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If March extends the overnight decline, the 87% retracement level of the December-January rally crossing at 4.734 is the next downside target. Closes above the 20 day moving average crossing at 5.324 would confirm that a short term low has been posted.

Natural gas pivot point for Monday is 5.073

First resistance is broken trading range support crossing at 5.060
Second resistance is the 10 day moving average crossing at 5.267

First support is the overnight low crossing at 4.911
Second support is the 87% retracement level of the December-January rally crossing at 4.734

Just click here for your FREE trend analysis of natural gas ETF UNG

The U.S. Dollar was lower due to profit taking overnight as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. Stochastics and the RSI are diverging but are turning neutral to bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 79.93 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is the 10 day moving average crossing at 80.31
Second support is the 20-day moving average crossing at 79.93

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The Dollar & Gold – What’s Next?

From guest analyst Chris Vermeulen....

Last week was strong with stocks and commodities moving up sharply. As nice as it was to see a rally, I still have my doubts whether this move has legs behind it. As prices moved higher throughout the week we saw volume become thinner and thinner.

Basic technical analysis of the recent price action, when looking at the hourly charts is pointing to a sharp pullback. The indexes, gold and silver have both rallied (drifted) higher on declining volume as they near resistance.

Let’s take a quick look at the US Dollar and Gold Charts
The US Dollar has been in a strong rally since the last week of December. The once easy money trade (short the Dollar) has been over for a couple of months but it may be another good trade if gold is rejected here at the 50% retracement level.

The next month or so will be interesting to see whether the dollar will continue to rally or drop like a rock as traders sell Dollars for another easy short trade. There is not much we can do here other than wait for a setup on the daily and hourly charts to form.

US Dollar – Weekly Chart



GLD – Gold Daily Chart
Gold still looks very bullish. Actually, the more gold pulls back the more I like the chart. This daily chart shows a very nice bull flag. The price is currently testing the upper trend channel line and this is what makes me think we are going to see a pop in gold prices or a sharp drop.

I would like to see gold pullback one more time and make a new multi-week low before heading higher. We did see extreme fear in the market 2 weeks ago which is when we took some long positions, but the lighter volume rally is not giving me comfort in adding more positions at this time.



Weekend Trading Conclusion:
In short, we nailed the market bottom on February 5th taking some long positions in US and Canadian ETF’s. I tightened our protective stops for these positions a couple days later making sure to protect our hard earned money. The Canadian trades have performed extremely well for us.

Now we just wait for another low risk entry point which could happen this week depending on what the market does.



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Crude Oil Trades Near a Five Week High on Speculation Demand Is Increasing

Crude oil traded near a five week high on speculation energy demand will increase as the global economy recovers from its worst recession since World War II. Global consumption may increase by as much as 1.4 million barrels a day in the second half, Iran’s OPEC governor Mohammad Ali Khatibi said in an interview on the Shana Web site yesterday. Prices pared early gains as the dollar traded little changed after posting its sixth straight weekly increase against the euro, the longest streak since 2000.

“That growth story suggests that oil prices will continue to firm as the global economy recovers,” said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. “But that firming dollar, if it does continue, that will keep prices fairly well in check.” Crude oil for March delivery rose as much as 30 cents, or 0.4 percent, to $80.11 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $80.06 at 7:55 a.m. in Singapore.

The contract, which expires today, rose 0.9 percent to $79.81 on Feb. 19, the highest settlement since Jan. 12. The more actively traded April contract rose 31 cents to $80.37 today. Oil prices climbed 7.7 percent last week, the biggest gain since October, as U.S. refiners lifted operating rates for a second week and the Federal Reserve increased its discount rate for the first time in three years amid signs of recovery in the nation’s economy.....Read the entire article.


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Crude Oil Weekly Technical Outlook

Crude oil's rise from 69.50 extended further to as high as 80.10 last week and closed strongly at 79.81. The stronger than expected rebound and break of 78.04 resistance suggests that fall from 83.95 has finished with three waves down to 69.50 already. This in turn argues that 83.95 might not be the top yet. Initial bias remains on the upside this week and further rise could be seen to retest 83.95 first. On the downside, below 77.76 minor support will turn intraday bias neutral and bring retreat towards 4 hours 55 EMA (now at 76.24). However, note that break of 72.66 support is needed to indicate that rise from 69.50 has completed. Otherwise, another rise would be in favor.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The stronger rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 72.43 support is now needed to indicate that crude oil has topped out.

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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