Crude Oil Market Commentary For Thursday Evening

Crude oil closed unchanged on Thursday as it consolidates above the 75% retracement level of the January-February decline crossing at 81.63. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 79.93 would confirm that a short term top has been posted. First resistance is Tuesday's high crossing at 83.36. Second resistance is the 87% retracement level of the January-February decline crossing at 83.53. First support is the 10 day moving average crossing at 81.20. Second support is the 20 day moving average crossing at 79.93.

Natural gas closed lower on Thursday as it extends some of this winter's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.924 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.682. Second resistance is the 20 day moving average crossing at 4.924. First support is today's low crossing at 4.487. Second support is weekly support crossing at 4.157.

The U.S. Dollar closed lower on Thursday as it extends the trading range of the past five weeks. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Wednesday's low crossing at 80.14. Second support is the reaction low crossing at 79.92.


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Crude Oil Is Steady as U.S. Trade Deficit, Jobless Claims Drop

Crude oil was little changed along with the dollar after U.S. government reports showed that the country’s trade deficit narrowed, indicating a slowing economic recovery, and jobless claims decreased. Oil fluctuated as the U.S. currency changed direction against the euro on the conflicting economic news. The strength of the dollar has guided commodity prices over the past three years as investors look at raw materials as a store for value. U.S. equities were little changed.

“We aren’t doing much because the dollar is consolidating and equities have been covering the same ground for the last three days,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “There’s a consensus that the economy is growing, but also a great deal of uncertainty about the strength of the recovery.” Crude oil for April delivery increased 2 cents to $82.11 a barrel on the New York Mercantile Exchange, the highest settlement price since Jan. 11. Futures are up 94 percent from a year earlier.

The dollar traded at $1.3677 against the euro, down 0.2 percent from $1.3657 yesterday. The Standard & Poor’s 500 Index gained 4.63, or 0.4 percent, to 1,150.24. The S&P 500 dropped as much as 0.6 percent earlier today. The index has risen 1 percent so far this week. “We don’t trade on oil-market news anymore, instead we look at what’s happening with the stock market and dollar,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.....Read the entire article.


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Phil Flynn: HOT! HOT! HOT!

HOT! HOT! HOT! Inflation in China may be getting too hot to handle! Don't touch or you could get burned. Could emerging China bubbles turn the commodities bull market into rubble? China’s inflation rate for consumer prices came out at a much hotter than expected 2.7 percent. That was sizzling compared to Januarys 1.5 percent rise and it was also a 16 month high. This sharp increase will make Chinese officials worry about potential trouble spots and may make them more aggressive trying to battle those inflationary demons.

So far it is obvious that steps by the Chinese government to let some air out of their rapidly expanding bubble have been a failure. Despite the aggressive move to raise reserve requirements on banks and step back from standing behind regional banks, it's obvious China is going to have to take away more of the punch bowel to help extinguish these inflationary flames. Heck they may need to pour the contents of the entire punch bowel over the flames to put it out. Of course the problem is that once you put out one fire another one seems to creep up.

Take for example this wonderful piece in today’s Financial Times titled, “Fears grow over China property bubble despite efforts at cooling." The FT says that, “Chinese real estate prices accelerated last month, rising by their fastest pace in two years despite government efforts to cool the market amid fears of a looming property. Prices of commercial and residential property in China's 70 largest cities rose 10.7 per cent in February from the same period a year earlier, up from the 9.5 per cent year-on-year gain in January, according to China's statistics bureau.

Since the start of the year, Beijing has introduced a series of policies aimed at cooling soaring property prices and a procession of senior officials has warned of overly fast price rises and bubbles in some markets. The figures released yesterday include subsidized and rent-controlled housing, where low price increases drag down the overall increase, as well as commercial real estate, where prices have been subdued or falling. Analysts say housing price increases are significantly higher - and this is what mostly concerns the government because they have a direct impact on people's lives and their satisfaction with Communist party rule.” A must read in today’s FT.

Of course at the same time China’s exports surged rising a whopping 45.7 percent from last year. Those strong numbers are going to increase pressure on China to allow their currency to increase in value as it is obvious that the dollar peg at this point is hurting other exporters. What is clear is that if the Chinese government fails to reign in these inconsistencies then the Chinese economy is on an unsuitable trek destined to crash. Oh sure I have heard that this time it is different, China is bubble proof! We hear it every time there is a bubble.

Day trading ranges are awesome! Did you get our latest trades? If you did not what are you waiting for! You can reach Phil by email at pflynn@pfgbest.com

And make sure to catch him every day on the Fox Business Network!


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Gold, Silver, Oil and Natural Gas Mid-Week Trading Charts

From guest analyst Chris Vermeulen....

So far this week has been pretty slow. Large cap stocks continue to lag the market which can be observed by looking at the Dow Jones Industrial Average which still has room to move higher before breaking the January high.

One important thing to note is that volume has picked up this week considerably, particularly on the SP500 and OEX. It’s difficult to say if this volume is a good sign or not.

A lot of stocks and sectors are trading near their January high and this gives traders a reason to unload shares. On the flip side, the several sectors and indexes have broken their January high and this triggers a surge in volume as breakout traders try to take advantage of the new high and momentum. So you can see how the surge of volume is not a useful indicator right now.

Here are some charts of what I think we could see in the coming weeks.

US Dollar Index – Daily Trading Chart
I follow the US dollar index very closely simply because it affects the prices of stocks and commodities. I used a line chart below in order to take out the daily candle stick noise which made it very difficult for our eyes to pick up this pattern.

The chart shows a possible head & shoulders pattern and if that is the case then we should see the dollar start to slide lower. In turn, this would boost stocks and commodities. This is the fuel that I think could really move the market sharply higher in the coming weeks.



GLD Gold ETF – Daily Trading Chart
The price of gold looks to be setup for a nice bounce off support and the timing could just work out if the US Dollar starts to drop over the next few days. There could be a low risk setup just around the corner.



SLV Silver ETF – Daily Trading Chart
Silver has held up well but today’s reversal candle to the downside scares me a little. The odds are that silver will carry this strong momentum selling down for another 1-2 days. Again, with any luck, it will test support and the US Dollar will start to slide lower.



Crude Oil – Daily Trading Chart
Oil has had a great run the past month but as you can see it’s currently trading at the top of a large trading range. I would like to see a sideways move before it takes another run at the $84 level, but the 7 day bull flag that formed two weeks ago may have been enough to maintain the upward momentum. Again, if the Dollar drops we will see oil rally.



Natural Gas – Daily Trading Chart
This chart is actually very attractive looking. Even if you do not understand how to read charts I think it’s safe to say this one is a no brainer.

I will be closely watching for a potential low risk setup in the coming days.


Mid-Week Trading Conclusion:
In short, stocks and indexes are trading at resistance levels with many of them making new highs and that is great to see.

A lot of things are trading in limbo waiting to see what the US Dollar is going to do. Several months ago I posted some charts showing that 81 would be a key resistance level for the dollar. If it broke above that then 84 would be the next key level to watch. So we just have to wait and see… the hardest part of trading is the waiting.

Gold, silver, oil and natural gas all look like they could continue higher in the next few days if things unfold that quickly. But the market always finds a way to drag out moves so we could still be a 2-3 weeks away.

I hope this report helps give you an idea of where things are at in the market.

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Crude Oil Daily Technical Outlook For Thursday

Crude oil is still staying in tight range as consolidations continues. Upside momentum is clearly diminishing with bearish divergence condition in 4 hours MACD. But still, another rise is in favor as long as 80.16 minor support holds. Current rally might still extend further for retesting 83.95 high. However, break of 80.16 minor support will argue that a short term top is already formed. In such case, deeper pull back should be seen to 38.2% retracement of 69.50 to 83.03 at 77.86 and below.

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 69.50 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 will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....
Nymex Crude Oil Continuous Contract 4 Hours Chart


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Crude Oil Market Commentary For Wednesday Evening

Crude oil closed higher on Wednesday as it consolidates above the 75% retracement level of the January-February decline crossing at 81.63. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 79.53 would confirm that a short term top has been posted. First resistance is today's high crossing at 83.36. Second resistance is the 87% retracement level of the January-February decline crossing at 83.53. First support is the 10 day moving average crossing at 80.79. Second support is the 20 day moving average crossing at 79.53.

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Natural gas closed higher due to short covering on Wednesday as it consolidates some of this winter's decline. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 4.974 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.715. Second resistance is the 20 day moving average crossing at 4.974. First support is today's low crossing at 4.512. Second support is weekly support crossing at 4.157.

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The U.S. Dollar closed lower on Wednesday as it extends the trading range of the past five weeks. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Wednesday's low crossing at 80.14. Second support is the reaction low crossing at 79.92.


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Trading the Crude Oil Inventories Report

Every Wednesday, spot crude oil traders look to one the most significant fundamental data pieces; the weekly crude oil inventories report. The crude oil inventories report has the ability to sway the price of spot crude oil to a new swing high, or a new session low.

The crude oil inventories report that is released by the U.S. Energy Information Administration can move the price of spot crude oil on average of $1.90 the day the report is released. But the direction of the price move varies. The change in price is not dependant on higher or lower inventory numbers, nor is it dependant on the levels of gasoline or other distillates that the report measures. We would expect that a lower level of crude oil inventories would help to increase the price of spot crude oil. However, there is no significant trend correlation between the price direction and the release of the report, telling traders in which direction the price will move, up or down. We do know that price volatility is typically higher the day the report is published.

When trading spot crude oil during the release of the crude oil inventory numbers, traders also need to be looking at the direction of the general price trend of the commodity. Traders should also be tracking other markets that can significantly influence the price of spot crude oil. The movements of the U.S. dollar and crude oil typically have an inverse relationship; as the USD strengthens, the price of spot crude oil falls. The opposite is true in relation to the S&P 500. As the value of the U.S. stock index rises, so does spot crude oil prices.

This is only a small list of the factors that can affect spot crude oil trading. Traders need to make sure they are taking in all relevant information when trading spot crude oil. The EIA crude oil inventories report is a significant factor, but certainly not the only influencer on the market.

From Russell Glaser at Forex Yard .Com

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Crude Oil Increases to Eight Week High as Fuel Supply Falls, Demand Gains

Crude oil fell from an eight week high after a government report showed that U.S. inventories climbed for a sixth week, the longest stretch since May.

Stockpiles rose 1.43 million barrels to 343 million in the week ended March 5, according to the Energy Department report. Imports tumbled 8.1 percent to an average 8.49 million barrels a day, the biggest one week drop since October.

Crude oil for April delivery fell 13 cents to $81.36 a barrel at 12:25 p.m. on the New York Mercantile Exchange. Futures reached $83.03, the highest level since Jan. 11.

Brent crude for April delivery declined 35 cents, or 0.4 percent, to $79.56 a barrel on the London based ICE Futures Europe exchange. Futures touched $81.46, the highest level since Jan. 11.


From Mark Shenk at Bloomberg news. You can contact Mark at mshenk1@bloomberg.net.



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Crude Oil Daily Technical Outlook Wednesday Morning

Intraday bias in Crude oil remains neutral for the moment as consolidation from 82.41 continues. Another rise is still mildly in favor with 79.75 minor support intact and above 82.41 will target a retest on 83.95 high. However, considering bearish divergence condition in 4 hours MACD, break of 79.75 support will indicate that a short term top is formed and will bring deeper fall to 38.2% retracement of 69.50 to 82.41 at 77.48 next.

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 69.50 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 will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart

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Crude Oil Market Commentary For Tuesday Evening

Crude oil closed lower due to profit taking on Tuesday but remains above the 75% retracement level of the January-February decline crossing at 81.63. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 79.18 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 82.82. Second resistance is the 87% retracement level of the January-February decline crossing at 83.53. First support is the 10 day moving average crossing at 80.58. Second support is the 20 day moving average crossing at 79.18.

Natural gas closed lower on Tuesday as it extends this winter's decline. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 5.009 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.744. Second resistance is the 20 day moving average crossing at 5.009. First support is Monday's low crossing at 4.525. Second support is weekly support crossing at 4.157.

The U.S. Dollar closed higher due to short covering on Tuesday as it extends the trading range of the past five weeks. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 are needed to confirm a downside breakout of the aforementioned trading range and would open the door for a larger degree decline into spring. If June renews this winter's rally, weekly resistance crossing at 81.97 is the next upside target. First resistance is the reaction high crossing at 81.70. Second resistance is weekly resistance crossing at 81.97. First support is last Wednesday's low crossing at 80.14. Second support is the reaction low crossing at 79.92.

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Inside Chevron's Strategy

An update on the energy company's growth strategy, with John Watson, Chevron chairman/CEO.




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Phil Flynn: China Appreciation Day

Oil prices are under a bit of pressure to start the day as attention turns again to the forex markets. Comments from China about their currency and their foreign exchange reserves are capturing the attention of traders across the commodity spectrum. Is it possible that the Chinese are on the verge of letting the Yuan appreciate for the first time since July of 2008?

Market Watch News reported that Chinese central bank Gov. Zhou Xiaochuan said China will in due course move away from its current currency exchange policy, indicating Beijing doesn't plan to keep the Yuan’s de-facto peg to the U.S. dollar indefinitely. These comments, as well as comments surrounding their reserves are giving a boost to the dollar and helping to bring inflated oil back down to earth. Oil prices have been supported by China in many ways and we are just not talking about demand.

China’s peg to the dollar, or should we say re-peg to the dollar, has created an excess of printed Yuan’s. The Chinese re-pegged their currency to the dollar as the rising Yuan caused China to lose manufacturing jobs as their exports became more expensive. So China went back to its tried and true formula of pegging its currency to the dollar.

hinese’s stimulus, along with the dollar peg, has created the perfect scenario for the Chinese to buy more oil driving up the price and doing no favors to the strength of the green back. The Chinese peg is another weight on the dollar making oil more expensive in dollar terms. Obviously if China lifts its dollar peg this will be bearish for oil, the question is how bearish. Well that depends how much room they give the Yuan to float and when. Gov Xiaochuan says, "Sooner or later, we will exit [these] policies. Of course maybe that means sooner rather than later.

IFAOnline says that China could end its near two-year currency peg on the dollar as soon as next month, according to respected economist Professor Nouriel Roubini. They say that Prof Roubini believes the Beijing government will authorize a 2% increase against the dollar initially, followed by a further 1%-2% strengthening over the next 12 months. "They will move by a token amount. The world is much cloudier in every dimension. They are super cautious."

Also comments about the Chinese appetite for gold may have an impact on commodities. Market watch reported that China's appetite for gold as a way to diversify its foreign exchange reserves is limited because of the metal's poor returns over the past 30 years, the nation's foreign exchange regulator was cited as saying in a report Tuesday. (What, doesn’t he believe G. Gordon Liddy?) Marketwatch says that Yi Gang, director of China's State Administration of Foreign Exchange, said China's gold reserve, at 1,054 metric tons, was the fifth-largest in the world, Dow Jones Newswires reported, citing comments by Yi at a press conference at the National People's Congress.

But Yi downplayed any desire to add the holdings as a strategy to diversify the nation's $2.4 trillion foreign exchange stockpile. "Gold is not a bad asset, but currently a few factors limit our ability to increase foreign-exchange investment in gold," Yi was quoted as saying. A precursor to another China purchase perhaps?
These types of stories are a reminder how the commodity bull market is built on shaky ground. When you build a base on printed money and central bank currency pegs, we know it creates bubbles that can easily burst. Make sure you get out before it does.

You can contact Phil at pflynn@pfgbest.com And as always catch him every day on the best in business news in town, the Fox Business Network.


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Crude Oil Declines on Stronger Dollar, Forecast of Gain in U.S. Inventory

Crude oil declined for the first time in three days as the dollar gained against the euro, reducing the appeal of commodities as an alternative investment. Oil slipped as much as 2.1 percent after the euro weakened amid concern that the Greek financial crisis will trigger a default on debts by other European countries. Prices also dropped on forecasts that a government report tomorrow will show U.S. oil supplies increased last week.

“There’s a healthy amount of skepticism about both the global economic situation and sovereign debt problems in Europe,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “This is leading to the revival of the dollar as a safe haven, which is hitting oil.”

Crude oil for April delivery fell 90 cents, or 1.1 percent, to $80.97 a barrel at 11:05 a.m. on the New York Mercantile Exchange. Yesterday, the contract rose 37 cents to $81.87, the highest settlement since Jan. 11.

Oil, equities and the dollar have rebounded from a year ago, when the Standard & Poor’s 500 Index fell to its lowest level since the collapse of Lehman Brothers Holdings Inc. Oil is up 72 percent, and the S&P Index has risen 68 percent since March 9 last year.

The greenback traded at $1.3573 per euro, up 0.4 percent from $1.3634 yesterday. It was the first increase in three days. “Economic concerns are hitting the oil market,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “Worries about sovereign debt in Europe are seeping into the market and giving the dollar a boost”.....Read the entire article.



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Gold Catches Traders by Surprise (video analysis)

The move down in gold yesterday surprised many traders and flashed an exit signal based on MarketClub's daily "Trade Triangle" technology. As we have mentioned before, we felt that gold was in a broad trading range and were not optimistic that it would shoot higher.

The action yesterday confirms that we have more of a two way market. We expect we'll see further selling on any rallies from this level.

Just click here to watch today's video, where we'll share with you some thoughts we have on gold based on one important element: how gold energy fields propel this market.

Please feel free to leave a comment letting us know what you think of the video and the direction of this gold market.

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Crude Oil Daily Technical Outlook For Tuesday

Crude oil's retreat from 82.41 extends further today. considering bearish divergence condition in 4 hours MACD, break of 79.75 support will indicate that a short term top is formed and will bring deeper fall to 38.2% retracement of 69.50 to 82.41 at 77.48 next. Nevertheless, before that, another rise could still be seen and above 82.41 will target a retest on 83.95 high.

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 69.50 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 will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Where is Crude Oil Headed on Tuesday?

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






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Crude Oil Market Commentary For Monday Evening

Crude oil closed up $0.31 at $81.81 a barrel today. Prices closed nearer the session high today and hit another fresh two month high. Crude oil bulls have the solid overall near term technical advantage. The next upside price objective for the bulls is producing a close above solid technical resistance at the January high of $84.96 a barrel.

April natural gas closed down 5.8 cents at $4.535 today. Prices closed near the session high today and hit another fresh contract low. Bears have the solid overall near term technical advantage. Prices are in a 10 week old downtrend on the daily bar chart. The next upside price objective for the bulls is closing prices above solid technical resistance at $5.00.

The June U.S. dollar index closed down 5 points at 80.69 today. Prices closed nearer the session high today. Trading has turned choppy. The bulls still have the overall near term technical advantage. Prices are still in a three month old uptrend on the daily bar chart.


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Crude Oil Futures Fluctuate Along With U.S. Equity Markets

Crude oil fluctuated along with equities as energy traders looked to stocks for signals of the strength of the economic recovery and fuel demand. Oil traded in a $1.66 range as stocks drifted between gains and losses after American International Group Inc. rose on the sale of a unit while drugmakers sank as President Barack Obama embarked on a final push to overhaul the health care system. An Energy Department report on March 10 will show that U.S. crude supplies climbed last week, a Bloomberg News survey showed.

“Until we get some solid statistics from the DOE on Wednesday, the market will look at equities for direction,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. Crude oil for April delivery rose 19 cents to $81.69 a barrel at 1:43 p.m. on the New York Mercantile Exchange. Futures touched $82.41, the highest level since Jan. 11. Prices are up 79 percent from a year earlier.

The Standard & Poor’s 500 Index gained 1.76, or 0.2 percent to 1,140.46. The Dow Jones Industrial Average increased 0.68 point to 10,566.88. “We are bouncing around with equities,” said Addison Armstrong, a director of market research at Tradition Energy in Stamford, Connecticut. “Crude oil is very much a follower and not trading on its own fundamentals.” Supplies of crude oil increased 2 million barrels last week, according to the median of 10 estimates from analysts surveyed by Bloomberg News.

Prices will probably fall to $60 a barrel during the fourth quarter of the year, Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington, said on Bloomberg Television. “The second half of the year could be weak because inventories are high, demand is still relatively weak, there’s plenty of supply and lots of OPEC spare capacity.” Brent crude for April delivery rose 40 cents, or 0.5 percent, to $80.29 a barrel on the London based ICE Futures Europe exchange. Oil reached $80.92, the highest level since Jan. 11.

Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net


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How Much Higher for the Indices, Gold and the Dollar?

From guest analyst Chris Vermeulen.....

Last week was exciting as we saw stocks and gold close above the February highs which confirms we are in a new up trend. The question everyone is wondering is:

How far will this market go before rolling over?

This is a tough question but we can get a good feeling about the risk and if it’s worth putting money to work or not at this point. Here are my quick points and thoughts about the stocks indexes at the current price (March 5th closing price).

• The market is extremely overbought on the hourly and daily charts. Buying here is just chasing prices around, and that is a net losing game.
• Small Cap stocks have been on fire making a new higher for the year. This is very bullish but again buying here carries too much risk because after such a sharp price appreciation, we can see it all be given back just as quick.
• Volume over the past three weeks has been below average and when I see higher prices on declining volume I expect prices to drop very quickly once the thrust upwards ends.
.

Stock Market Indexes – 21 Trading Days

Here is a simple chart showing the past 21 trading sessions. It compares the Nasdaq, NYSE, Russell 2000, Dow Jones, SP500, and Amex indexes.

As you can see the Russell 2000 (small cap stocks) and Nasdaq (tech stocks) have been on fire the past couple weeks while the solid large cap stocks lag.

Are The Small Caps Stocks Telling Us Something?

Its means investors and traders are confident enough to buy higher risk companies. This is good for the overall market because small cap stocks tend to lead the market in both up and down trends. What has me concerned is the low volume rally, which I don’t like.

One thing to note is that small cap stocks tend to do well during times when the US Dollar is rising. This is because they are not multinational dealing with currency exchange. So this small cap stock rally has me wondering if the US Dollar is about to continue its up trend or if investors really are comfortable with buying riskier stocks?



GLD Gold ETF – Daily Chart
Gold gained some ground last week but the majority of the money seemed to flow into small cap stocks. But take a look at this bullish chart.

This is a text book bull flag pattern complete with and ABC retrace, trend line break, and reversal candle off of a support zone. I am bullish on gold long term but think we could see prices rise a couple percent from here but will trend sideways/down for the next 2-3 weeks to digest the recent move up.



US Dollar Index – Weekly Chart
I have posted this chart several times in the past few months with 83 being a key resistance level. The dollar’s recent price action is very bullish and it is flagging just under this key resistance level. I feel the price is heading lower from here but only time will tell. A breakout to the upside will put a lot of pressure stocks and precious metals.



Weekend Trading Conclusion:
Last weeks strong rally into the close will most likely carry over into Monday and possibly Tuesday. The reason being is simply because retail traders and investors (John Doe’s) get excited when they see higher prices, thus it attracts more money into the market.

In short, I feel the market is overbought. All indexes are trading at resistance other than the Russell 2K index, and volume is below average. I am going to wait and see how things unfold this week before thinking about getting committed to any more long positions. If anything I will be looking to short the market using the intraday charts for a quick trade. Again low volume rallies that are overbought tend to snap back very quick on an intraday time frame providing a 1-4 hour trade.

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Crude Oil Bulls Face Overbought Conditions, Here's Mondays Numbers

Crude oil was higher overnight as it extends the rally off February's low. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 78.72 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 82.82
Second resistance is the 87% retracement level of the January February decline crossing at 83.53

First support is the 10 day moving average crossing at 80.33
Second support is the 20 day moving average crossing at 78.72

Trading the "Super Cycle" in Gold

Natural gas was lower overnight and posted a new contract low as it extends this winter's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends the decline off January's high, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 5.046 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.772
Second resistance is the 20 day moving average crossing at 5.046

First support is the overnight low crossing at 4.550
Second support is weekly support crossing at 4.157

Here’s a Great Alternative to High Price Trading Courses

The U.S. Dollar was slightly lower overnight as it extends last Friday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 would open the door for a larger degree decline during March.

If June renews this winter's rally, the 50% retracement level of the 2009 decline on the weekly continuation chart crossing at 81.97 is the next upside target.

First resistance is February's high crossing at 81.70
Second resistance is the 50% retracement level of the 2009 decline on the weekly continuation chart crossing at 81.97

First support is last Wednesday's low crossing at 80.14
Second support is the reaction low crossing at 79.92

Euro/Dollar Cross Video Analysis: Has the Euro Gone Too Far?

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