Crude Oil, Natural Gas, Gold and Dollar Commentary For Monday Morning

Crude oil was higher due to short covering overnight as it consolidates some of the decline off April's high. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends the decline off April's high, weekly support crossing at 69.50 is the next downside target. Closes above the 20 day moving average crossing at 80.26 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 76.15. Second resistance is the 20 day moving average crossing at 80.26. First support is the overnight low crossing at 69.82. Second support is weekly support crossing at 68.50.

Natural gas was higher overnight and is poised to extend last week's rally. Stochastics and the RSI remain bullish signaling that additional gains are possible near term. If June extends last week's rally, the reaction high crossing at 4.421 is the next upside target. Closes below the 10 day moving average crossing at 4.153 would temper the near term friendly outlook in the market. First resistance is last Thursday's high crossing at 4.414. Second resistance is the reaction high crossing 4.421. First support is the 10 day moving average crossing at 4.153. Second support is this month's low crossing at 3.855.

The U.S. Dollar was higher overnight as it extends this year's rally. Stochastics and the RSI are overbought but are bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.41 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 87.21. Second resistance is the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79. First support is the 10 day moving average crossing at 84.95. Second support is the 20 day moving average crossing at 83.41.

Gold was steady to slightly lower overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1185.20 are needed to confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 10 day moving average crossing at 1210.00. Second support is the 20 day moving average crossing at 1185.30.

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Crude Oil Falls for a Fifth Day on Concern Europe Debt Woes to Slow Growth

Crude oil fell below $70 a barrel in New York for the first time in three months on concern Europe’s sovereign debt crisis may derail the global economic recovery and reduce fuel consumption. Oil dropped for a fifth day, the longest losing streak in five weeks, as the euro extended losses against the dollar, damping the investment appeal of commodities. Oil’s tumble this month is being driven by Europe’s debt crisis and is beyond the influence of the Organization of Petroleum Exporting Countries, Qatar’s Energy Minister Abdullah al-Attiyah said May 15.

“There are concerns that the European debt crisis will have a negative impact on the global growth outlook and in turn, global fuel demand,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “We’re seeing an increase in risk aversion, which has in turn has put upward pressure on the U.S. dollar.” Crude oil for June delivery fell as much as $1.79, or 2.5 percent, to $69.82 a barrel in electronic trading on the New York Mercantile Exchange. That’s the lowest intraday price since Feb. 5. The contract was at $70.37 at 11:34 a.m. Singapore time. Futures have lost 12 percent so far this year.

The euro dropped to the lowest against the dollar in more than four years, amid speculation European measures to reduce fiscal deficits will undermine the region’s recovery. The 16 nation currency reached $1.2235, the weakest since April 2006, from $1.2358 on May 14 in New York.....Read the entire article.


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Weekend Gold, Silver and SP500 Trading Charts

Last week was amazing for both gold and index traders as gold surged higher and the SP500 tested a key resistance then fell 4% in our favor. The past couple weeks with the mini market crash and Euro issues making the market extra volatile both gold and the broad market (SP500) index has been wild.
The added volatility makes trading more difficult because price patterns become less predictable and price movements are much larger increasing risk for traders.

Below are the charts & videos of what to look for in the coming days…

GLD – Gold ETF Trading
Gold continues to trend higher at an accelerated rate. Friday we saw gold pullback and test a key support level then bounced to close in the middle of the days trading range. As you can see the trend line support has become very steep and once the trend line support is broken I figure there will be a sharp drop to digest the recent rally.

SLV – Silver ETF Trading
Silver popped and tested a key resistance level from a previous high as expected. It also tested the top of its trend channel providing even more resistance. This week will be interesting as we wait to see if precious metals have a small pullback or continue to rally.

SPY – SP500 Index ETF Trading Chart
This chart clearly shows what I think is about to unfold by looking at the past market drop. Because of the mini market crash triggering everyone’s stops already I figure we have made the low and the dip we are seeing now will drift down a few more percentage points then bottom out.

ES M0 – SP500 Mini Futures Trading Setup – Pre-Drop
Below is a chart of the SP500 which we shorted or bought the SDS bear etf trading fund last week looking to profit from a falling stock market. As you can see from the chart we saw the es mini contract drift into a key pivot point on light volume. What this means is that a large group of sellers will be waiting at that price, and because volume is light we know there are not many buyers at this price level. Simple supply/demand comes into play with more sellers causing the price to stop rising and eventually force the price lower which is what we were anticipating.

The green arrows show key support levels on the 60 minute chart where 1/3 of a position should be taken of the table to lock in gains which also reduces overall risk on the trade. Once we cash in the first 1/3 of the position we move our protective stop the breakeven which is the entry point for the remaining portion of our position. This turns the trading into a winner no matter what happens allowing us to enjoy the ride…

ES M0 – SP500 Mini Futures Trading Setup – Current Price
Here is the same chart 24 hours later showing both of our profit targets triggered pocketing 2/3rds of our position for a very nice gain. Depending on the type of trading vehicle you traded there was potential to make up to 150% return in less than 24 hours.

We currently hold 1/3 of the position left with a loose stop allowing the trade to mature incase the down trend continues for several days or weeks. If not and the price rallies then our stop will get triggered for small profit on the balance of the position. Either way we win.

Stock Market ETF and Futures Trading Conclusion:
In short, the market is trading on increased volatility making it difficult to find low risk setups. At the moment we are long gold and short the SP500 with both position deep in the money. All we can do now is manage our positions to make sure we maximize our profits.

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He's Back.....Watch the Trailer for 'Wall Street: Money Never Sleeps'

Watch the Trailer for 'Wall Street: Money Never Sleeps' debuted at the Cannes Film Festival on Friday and the reviews are, well, somewhat sleepy......We'll be the judge of that!

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The Six Advantages of ETFs

ETFs, or Exchange Traded Funds, have increased in popularity over the last few years, and for a number of reasons. Today, Price Headley of BigTrends.com, is going to give us the low down on everything we need to know about this increasingly utilized financial product.
We hope you'll enjoy today's guest blog post and perhaps consider adding ETFs or ETF options to your portfolio in the near future. As always, we're interested in hearing what you have to say about this post or your experiences trading ETFS in our comments section. In recent years the popularity of ETF Options has exploded.

The issue with ETFs and ETF Options has always been liquidity, but things have changed in that regard. Due to the advantageous architecture of ETFs, more investors are hedging their portfolios with ETF options. To understand the reason these vehicles are changing the options environment, let's take a look at the underlying securities and their benefits.

1. ETFs Trade Like a Stock - Unlike mutual funds or hedge funds which can only be entered or exited at the market close each trading day, ETFs can be bought and sold intraday. They can even be day-traded just like stocks. This advantage allows investors to make speculative bets on the direction of an index while still having the ability to exit the trade at any time of the day. ETFs also allow short selling, as well as often being optionable.

2. Diversification - One of the main benefits of trading ETFs is diversification. ETFs were created to track an index, be that a stock index, commodity index, currency index, or almost any other type of security index. The advantage of trading an index is that you are shielded from the volatile up and down swings of a given individual security.

3. Liquidity - There are many funds that are highly liquid. The QQQQ fund (follows the Nasdaq-100 Index) has an average daily trade volume of over 164 million shares and over 75 other funds have an average daily volume of more than 1 million shares. (Liquidity is important to get in or out of a position quickly. There are a lot of other buyers and sellers to facilitate your trades as opposed to relying on market makers to do everything for you. If you are trading options on the funds, many of these also have highly liquid options.)

4. Low Bid/Ask - As a result of high liquidity, many ETFs have low bid/ask spreads. A high bid/ask spread can cut into your trading profits. Most of the highly liquid ETFs have a bid/ask spread of only a few cents during the trading day.

5. Variety - Whichever sector of the market interests you, you can probably find and ETF for it. There are major index funds such as the QQQQ and SPY as well as sector funds such as XLF (Financials), international funds such as EEM (Emerging Markets). In addition to sector specific, fund companies are continually introducing "Ultra" and "Inverse" ETFs. "Ultra" ETFs are leveraged funds in which the returns of the fund are double that of the index. For example, if an ETF is up 10% for a given year, then the Ultra ETF for that same index would be up around 20% in the same year. Keep in mind that this leverage can work for you, as well as against you. "Inverse" ETFs are funds which move in the opposite direction of the underlying index. So if the S&P 500 Index is down 8%, then the inverse ETF for the S&P would be up 8%. To further increase your investing options, some ultra ETFs are also inverse funds as well.

6. Low Expense Ratios (Fees) - ETFs have much lower expense ratios than mutual funds or hedge funds. This means that more of your money stays in the investment rather than going to the firm that is maintaining it.

Some believe Exchange Traded Funds will become the primary investment instrument for most investors largely leaving mutual funds behind. This growth is demonstrated by the increasing availability of ETF options.

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Crude Oil Weekly Technical Outlook

Crude oil's fall from 87.15 resumed after brief consolidations and dived to as low as 70.83 last week. Short term outlook will remain bearish as long as 78.51 resistance holds and we'd expect a test on key support zone of 68.59/69.50 next. On the upside, above 78.51 will indicate that a short term bottom is formed and bring stronger rebound, possibly for a retest on 87.15 high.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

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 was strong, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Where is Crude Oil and Gold Headed Next Week?

CNBC's Sharon Epperson tries to make sense of the commodities markets, from oil's recent fall to gold's rise, and looks ahead to where oil and gold may be headed next week.





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Crude Oil Finishes the Week Sharply Lower, Bears Maintain Near Term Advantage

Crude oil closed sharply lower on Friday as it extended the decline off April's high but fell short of testing February's low crossing at 70.75. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends today's decline, February's low crossing at 70.75 is the next downside target. Closes above the 20 day moving average crossing at 80.83 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 77.59. Second resistance is the 20 day moving average crossing at 80.83. First support is today's low crossing at 70.83. Second support is February's low crossing at 70.75.

Natural gas closed slightly lower due to light profit taking on Friday as it consolidated some of this week's rally. 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 June extends this week's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. Closes below the 10 day moving average crossing at 4.119 would temper the near term friendly outlook. First resistance is Thursday's high crossing at 4.414. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 20 day moving average crossing at 4.140. Second support is the 10 day moving average crossing at 4.119.

The U.S. Dollar closed higher on Friday as it extends this year's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but are bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, weekly resistance crossing at 87.22 is the next upside target. Closes below the 20 day moving average crossing at 83.13 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 86.40. Second resistance is weekly resistance crossing at 87.22. First support is the 10 day moving average crossing at 84.52. Second support is the 20 day moving average crossing at 83.13.

Gold closed higher on Friday as it extended the rally off February's low. Profit taking tempered early gains and the mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally into uncharted territory, upside targets are hard to project. Closes below the 20 day moving average crossing at 1181.00 would confirm that a short term top has been posted. First resistance is today's high crossing at 1249.70. First support is the 10 day moving average crossing at 1206.30. Second support is the 20 day moving average crossing at 1181.00.


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Market Ends Week on a Down Note, Now What?

From guest blogger Kevin Kiefer of Ticker House.Com.....

Well folks, this week was pretty easy to call what would happen. We told you on Monday that we were being careful the rest of the week and that you shouldn't buy after that huge rally. We wanted to fill in that gap on the SPY chart before we got less bearish. Today, we have mostly filled in that gap. While you don't have to be a hero and buy stocks at the lows today, we don't see much more downside from here. We have good support at 1125, 1110 and the 200 day currently at 1100. We still think the market will not trade straight up from here but we do see the following things happening next week.

1) The stock market will finish next week at least slightly higher.
2) Oil/copper will finish the week higher.
3) US Treasury bills and the VIX will finish the week lower.
4) Gold will finish the week lower.

I didn't want to make a call on what will happen Monday but I am confident enough to call those four things. Of course, things can change and we'll keep you updated next week. It's possible we drift lower and retest the 200 day which is about 2% lower from here. However, I think that we have more of a chance of bottoming out today. My trade for next week is CELG which currently is in the green today. Celgene could be setting up for a decent bounce next week. If you want to read about the fundamental case for CELG, read the article that I wrote a few weeks back below. Take a look at Tuesday's article below to see the gap on the SPY we were talking about. Compare it to the chart of the SPY as of 2:10 pm today below this article. To sum things up, we think we are bottoming today but let's wait to see what happens early next week. If you want to buy a stock, I'd recommend CELG. It's chart looks good and it's not connected to the overall economy so it's more defensive.




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Phil Flynn: But It All Come Tumbling' Down

The oil bulls started the month with such high hopes, but it all come tumbling' down. Well it all comes tumbling' down. Yes, it all comes tumbling' down whenever you're credit isn’t sound.Austerity is a nice word and one the market wants to hear but there are doubts about whether or not that can happen. Not just in the European Union but in the good old United States as well. Oh sure an austerity plan put through by Portugal was welcome by the markets and seemed to calm the recent debt fears stormy seas, yet at the same time moves in the commodities markets are showing that they fear another round of economic anguish.

You see austerity is great, but for the euro zone, it is like removing economic stimulus or even like raising interest rates. Higher taxes and less government spending will slow down the EU’s growth and its demand for oil increasing the spectra of a deflationary down turn.That’s right, deflation. These fears are being clearly stated in the “decoupling” in the gold and oil market. As gold soared to record highs in dollar terms, crude oil has sunk ever lower. Yes it is in part because the dollar looks to be a better bet than the Euro in the short run or that the markets realize that perhaps the mystic of the Euro was a fantasy all along. Have you heard of any oil producers lately calling for oil to be priced in euros? How about any super models wanting to be paid in fiber?

What is being stripped away in oil and other commodities is the extent to which the price we see on the screen is artificially stimulated by a pile of economic puffery that when the true magnitude of debt is unmasked, the amount of economic growth it will take to bay it back is staggering. The inflation that we are seeing is being promoted willfully by central banks but as we continue to unmask the debt demons we see what the rally in gold now is really all about.The rally in gold is not just an inflation hedge but a hedge against a total global economic collapse. People are buying gold because they believe that global governments will dissolve and drown in heaps of mountainous debt that will suck growth down in a hole for decades and demand for commodities and everything else.

Sure when governments print money that is indeed the definition of inflation but by trying to get us to worry about inflation is to try to not have us worry about the real problems. In other words, inflation would be a nice problem to have.As bearish as I am for oil, it's been possible to do pretty good on the long side too. Long term I still feel that oil will break out to the downside yet for most traders, I think that the swing sizes make it harder for them to ride this out. We have seen a precipitous drop from the false breakout to $87 a barrel on the upside that came on a light volume holiday week and oil should target new lows for the year very shortly.

Still for many to ride the short side, the ups and downs may make that impractical. For them it may be better to try to pick the high range and low range for the day. In these market conditions it is imperative that you have a well defined plan.

You can reach Phil at pflynn@pfgbest.com and make sure to catch him every day on the Fox Business Channel.


The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010


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Crude Oil Falls to Three Month Low on Concern European Crisis May Slow Recovery

Crude oil fell to a three month low in New York on concern that Europe’s sovereign debt crisis will reduce global economic growth and fuel consumption. Oil dropped for a fourth day and the euro traded near a 17 month low against the dollar as the Spanish daily El Pais reported that French President Nicolas Sarkozy threatened to pull out of the common currency. Supplies at Cushing, Oklahoma, where New York traded West Texas Intermediate oil is delivered, rose to a record last week, according to the Energy Department.

“The European debt worries are hitting a lot of markets,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This together with rising inventories, especially at Cushing, will continue to weigh on oil.” Crude oil for June delivery fell $1.15, or 1.6 percent, to $73.25 a barrel at 10:06 a.m. on the New York Mercantile Exchange. Futures touched $72.72, the lowest level since Feb. 12. Oil is down 2.5 percent this week.

Oil has dropped 16 percent on the Nymex since it reached $87.15 a barrel on May 3, a 19 month high, as the euro weakened against the dollar. The euro traded at $1.2434, down 0.8 percent from $1.2535 yesterday. The euro breached $1.25 for the first time since March 2009 and touched the lowest level since Nov. 13, 2008. Portugal announced austerity measures yesterday, a day after Spain proposed to reduce its deficit, spurring concern that fiscal tightening in the region will undermine economic growth and derail the global recovery.....Read the entire article.

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Commodities Technical Outlook For Friday Morning

Crude oil's fall from 87.15 resumed by taking out 74.51 support and reaches as low as 72.72 so far. Intraday bias is now on the on the downside for 61.8% projection of 87.15 to 74.51 from 78.51 at 70.70 first. Break will have a test on key support zone of 68.59/69.50. On the upside, break of 78.51 resistance is needed to indicate that crude oil has bottomed. Otherwise, outlook will remain bearish and another fall is still expected even in case of recovery. In the bigger picture, as noted before, rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

Natural gas' rise from 3.855 extends further to as high as 4.414 so far and further rally might still be seen. However, strong resistance should be seen at 38.2% retracement of 5.68 to 3.81 at 4.524 to conclude the consolidation from 3.81 finally and bring down trend resumption. Below 4.109 minor support will flip intraday bias back to the downside. Decisive break of 3.81 low will target 3.0 psychological level next. In the bigger picture, medium term rebound from 2.409 has completed at 6.108 and the three wave corrective structure of the rebound argues that it's merely a correction, or part of the consolidation in the larger down trend. Current fall from 6.108 might extend further for a retest on 2.409 low next after sustaining below 61.8% retracement of 2.409 to 6.108 at 3.822. Sustained trading above 4.386 resistance is needed to be the first sign that the trend in natural gas has reversed. Otherwise, outlook will remain bearish.

While gold is losing some upside momentum, further rise would remain in favor as long as 1216.2 minor support holds. Current rally should extend to 1300 psychological level next. On the downside, below 1216.2 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained above 1170.7 resistance turned support and bring rally resumption. In the bigger picture, the break of 1227.5 indicates that correction from there is already completed at 1044.5 already. Longer term rally from 931.3 should have resumed. Next target will be 100% projection of 931.3 to 1227.5 from 1044.5 at 1340. Also, such rally is viewed as part of the long term up trend from 1999 low of 253. We're looking at the prospect of extending the up trend towards 100% projection of 253 to 1033.9 from 681 at 1462 level.



From the staff at ONG-Focus

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Where is Crude Oil and Gold Headed on Friday?

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




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Phil Flynn: Drivers Start Your Engines!

Drivers start your engines! Let the summer driving season begin. Despite all the talk of $4.00 a gallon gasoline this summer, more and more it looks as though retail gasoline prices have peaked for the season. Even yesterday's drawdown in supply, drop in refinery runs and gasoline production runs might be expected as gas goes up on the racks as refiners and retailers get ready for the official kickoff of the summer driving season on the Memorial Day weekend.

The Energy Information Agency, that awesome division of the Department of Energy, reported a steeper than expected drop in gasoline supply by saying that it fell by 2.8 million barrels last week against a backdrop of falling refinery runs which fell 1.2 percent to 88.4 percent. Gasoline production also fell, averaging 9 million barrels per day. Yet at the same time the report reminded us of our abundance as total gasoline supply is still well above the fiver year average.

And it is not like the refiners have no incentive to produce more gas. They absolutely do as the gas crack, according to Bloomberg News, is at a profit for refining oil into gasoline and it rose to a 15-month high. Besides as Bloomberg also points out, the bulk of last week’s gasoline drawdown was on the West coast where supply fell by a whopping 2.1 million barrels and was most likely caused by the deadline in California to switch to the summer grade blends by May 1, 2010.

Increasing gasoline prices as of late have really been a function of rising oil prices which according to the EIA is about 69% of what you pay for in a gallon of gasoline. We know that crude has risen as of late despite more than ample supply as it was being impacted by the weakness in the dollar and the global economic crisis as a whole. The Energy Information Agency, in their Short Term Energy Outlook, predicted that EIA forecasts for regular-grade motor gasoline retail prices will average $2.94 per gallon during this summer's driving season (the period between April 1 and September 30), up from $2.44 per gallon last summer. The summer gasoline price forecast is up very slightly ($0.02) from last month.

As far as oil goes, we have the International Energy Agency lower demand expectations and OPEC cheating on the rise. What is wrong with this picture here? Very bearish!


Phil can be reached at pflynn@pfgbest.com And be sure to watch him every day on the Fox Business News channel.


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Commodities Market Commentary For Thursday Evening

Crude oil closed lower on Thursday as it resumed last week'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 June extends today's decline, the 87% retracement level of the February-April rally crossing at 72.86 is the next downside target. Closes above the 20 day moving average crossing at 81.47 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 79.03. Second resistance is the 20 day moving average crossing at 81.47. First support is today's low crossing at 73.62. Second support is the 87% retracement level of the February-April rally crossing at 72.86.

Natural gas closed higher on Thursday as it extended this week's rally. 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. If June extends this week's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. Closes below the 10 day moving average crossing at 4.077 would temper the near term friendly outlook. First resistance is today's high crossing at 4.414. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 20 day moving average crossing at 4.128. Second support is the 10 day moving average crossing at 4.077.

The U.S. Dollar closed higher on Thursday as it extends the rebound off Monday's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought, diverging but are turning bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, weekly resistance crossing at 85.85 is the next upside target. Closes below the 20 day moving average crossing at 82.86 are needed to confirm that a short term top has been posted. First resistance is last Thursday's high crossing at 85.46. Second resistance is weekly resistance crossing at 85.85. First support is Monday's low crossing at 83.07. Second support is the 20 day moving average crossing at 82.86.

Gold closed lower due to profit taking on Thursday as it consolidated some of the rally off February's low. The low range close sets the stage for a steady to lower 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 June extends this year's rally into uncharted territory, upside targets are hard to project. Closes below the 20 day moving average crossing at 1176.40 would confirm that a short term top has been posted. First resistance is Wednesday's high crossing at 1249.20. First support is the 10 day moving average crossing at 1201.40. Second support is the 20 day moving average crossing at 1176.40.



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Crude Oil Falls Hard as Dollar Reverses Losses Against Euro

Crude oil tumbled to a 12 week low in New York as the strengthening dollar curbed the appeal of commodities as an alternative investment. Oil slipped as much as 2.7 percent as the U.S. currency climbed against the euro after Portugal announced austerity measures, spurring concern that fiscal tightening across Europe will limit economic growth. A U.S. Energy Department report yesterday showed that crude supplies rose 0.5 percent to 362.5 million barrels.

“We’ve been very sensitive to what’s happening on the currency side since the recession began,” said Phil Flynn, vice president of research at PFGBest in Chicago. “There’s been a new focus on currency markets since the crisis started in Europe.”
Crude oil for June delivery fell $1.47, or 2 percent, to $74.18 a barrel at 10:22 a.m. on the New York Mercantile Exchange. Futures touched $73.62, the lowest level since Feb. 12. Prices are down 6.5 percent this year.

The greenback advanced to $1.2558 per euro, up 0.4 percent from $1.2614 yesterday. It touched $1.2529 on May 6, the highest level since March 2009. Europe’s common currency has dropped 1.5 percent against the dollar this week, following the EU’s plan to shore up the region’s finances. The package included a pledge from the European Central Bank to buy government and private bonds to stem a surge in borrowing costs among so called peripheral nations such as Greece, Spain and Portugal.....Read the entire article.

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Commodities Technical Outlook For Thursday Morning

Crude Oil Daily Technical Outlook
Intraday bias in crude oil remains neutral as it's still bounded in range above 74.51. Consolidations from there might continue but after all, we'd expect upside to be limited by double top neck line (80.53) and 4 hours 55 EMA (now at 78.55) and bring fall resumption. On the downside, break of 74.51 will target 69.50 key support next.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

Natural Gas Daily Technical Outlook
Natural gas's consolidation from 3.81 continues with rise from 3.855 as the third leg. Such rise could still continue with 4.109 minor support intact. However, we'd expect upside to be be limited by 4.386 resistance conclude the consolidation and finally bring down trend resumption. On the downside, below 4.109 minor support will flip intraday bias back to the downside. Decisive break of 3.81 low will target 3.0 psychological level next.

In the bigger picture, medium term rebound from 2.409 has completed at 6.108 and the three wave corrective structure of the rebound argues that it's merely a correction, or part of the consolidation in the larger down trend. Current fall from 6.108 might extend further for a retest on 2.409 low next after sustaining below 61.8% retracement of 2.409 to 6.108 at 3.822. Sustained trading above 4.386 resistance is needed to be the first sign that the trend in natural gas has reversed. Otherwise, outlook will remain bearish.

Gold Daily Technical Outlook
Further rise in gold is still expected with 1216.2 minor support intact. Current rally should target 1300 psychological level next. On the downside, below 1216.2 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained above 1170.7 resistance turned support and bring rally resumption.

In the bigger picture, the break of 1227.5 indicates that correction from there is already completed at 1044.5 already. Longer term rally from 931.3 should have resumed. Next target will be 100% projection of 931.3 to 1227.5 from 1044.5 at 1340. Also, such rally is viewed as part of the long term up trend from 1999 low of 253. We're looking at the prospect of extending the up trend towards 100% projection of 253 to 1033.9 from 681 at 1462 level.

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Are Precious Metals and Indexes Going Parabolic?

It’s been an exciting couple weeks in the market with gold now making new all time highs as money floods into this shiny safe haven. It has everyone all worked up wanting to take part or they are riding the rally up already. But the big question is when should some money be taken off the table to lock in gains and lower your overall risk during these crazy times?

Below are a few charts showing you how I see things at this time.

GLD – Gold Exchange Traded Fund
The price of GLD and gold appear to be going parabolic (straight up). The tough part about this type of price action is that large moves can happen in a very short period of time. But on the flip side, when the price reverses we tend to see prices fall just as fast if not faster. Trading this type of price action carries a very high level of risk. Those chasing it up buying at these overbought market conditions is a double edge knife.



SLV – Silver Exchange Traded Fund
Silver is trading similar to gold but the key difference here is that silver has not broken to a new high as of yet. The high was set in 2008 just over $20 per ounce. But from looking at the chart I think metals are ready for a breather.



HUI Index – Gold Stocks
Gold stocks have yet to breakout along with silver as they both are nearing key resistance levels. With gold stocks and silver trading near resistance I figure we will see pause in the coming days as traders digest the recent strong moves up taking some money off the table incase prices get stuck under these resistance level.



SPY – SP500 Broad Market Exchange Traded Fund
The broad market appears to be forming a possible short setup on the daily chart as the price continues to drift higher with declining volume. Also indexes are testing key resistance levels and the 10 period moving average. The next few days should be interesting....



Mid-Week Precious Metals and Index Exchange Traded Fund Report:
In short, it looks like precious metals and the broad market could take a breather in the coming days. I’m not sure how large of a correction we will see but I do not think it will be all that big.

Gold and silver should have a quick dip with buyers stepping back in on weakness. The SP500/broad market is a little more tough to call as last weeks market crash messed things up washing out all the stops in one day instead of weeks....but we could easily see a 5% drop in the market still.

Check out Chris Vermeulen's trading services at The Gold and Oil Guy.Com.



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Where is Crude Oil and Gold Headed on Thursday?

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





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Crude Oil Market Commentary For Wednesday Evening

Crude oil closed lower on Wednesday and is poised to resume last week's decline. The low range close sets the stage for a steady to lower 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 June renews last week's decline, the 87% retracement level of the February-April rally crossing at 72.86 is the next downside target. Closes above the 20 day moving average crossing at 82.08 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 80.09. Second resistance is the 20 day moving average crossing at 82.08. First support is last Friday's low crossing at 74.51. Second support is the 87% retracement level of the February-April rally crossing at 72.86.

Natural gas closed higher on Wednesday as it extended this week's rally above the 20 day moving average. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends this week's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. If June renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is today's high crossing at 4.292. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 10 day moving average crossing at 4.042. Second support is last Thursday's low crossing at 3.855.

Gold posted another new all time high on Wednesday as it extends the rally off February's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally into uncharted territory, upside targets are hard to project. Closes below the 20 day moving average crossing at 1172.70 would confirm that a short term top has been posted. First resistance is today's high crossing at 1249.20. First support is the 10 day moving average crossing at 1194.90. Second support is the 20 day moving average crossing at 1172.70.

The U.S. Dollar closed higher on Wednesday as it extends the rebound off Monday's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 82.62 are needed to confirm that a short term top has been posted. If June extends this month's rally, weekly resistance crossing at 85.85 is the next upside target. First resistance is last Thursday's high crossing at 85.46. Second resistance is weekly resistance crossing at 85.85. First support is Monday's low crossing at 83.07. Second support is the 20 day moving average crossing at 82.62.



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