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Our Smart Scan Chart Analysis is showing some near term weakness in crude oil ETF, USO. However, this market remains in the confines of a longer term Uptrend. Trade with tight money management stops.
Based on a pre-defined weighted trend formula for chart analysis, USO scored +70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10.....Last Hour Close Above 5 Hour Moving Average
+15.....New 3 Day High on Thursday
+20.....Last Price Above 20 Day Moving Average
+25.....New 3 Week High, Week Ending July 24th
-30.....New 3 Month Low in May +70.....Total Score
Crude oil closed sharply higher on Thursday over concerns of the pending Gulf storm and spillover strength from the equity markets. Today's rally allowed September to breakout of its sideways trading pattern of the past week and the high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off this month's low, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook. First resistance is today's high crossing at 79.42. Second resistance is the reaction high crossing at 79.97. First support is last Tuesday's low crossing at 74.40. Second support is the reaction low crossing at 71.47.
Natural gas closed higher on Thursday and above the 20 day moving average crossing at 4.579. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above Wednesday's high crossing at 4.662 are needed to confirm that a short term low has been posted. If August resumes the decline off June's high, the reaction low crossing at 4.108 is the next downside target. First resistance is today's high crossing at 4.719. Second resistance is the reaction high crossing at 4.923. First support is the 10 day moving average crossing at 4.479. Second support is last Thursday's low crossing at 4.288.
The U.S. Dollar closed lower on Thursday and closed below the 10 day moving average crossing at 83.34 as Investors unloaded the Dollar over worries about a sluggish U.S. economic recovery persist and confidence in the euro zone and nations abroad increase. The low range close sets the stage for a steady to lower opening on Friday. Despite today's decline, stochastics and the RSI are turning bullish signaling that a short term low might be in or is near. Closes above the 20 day moving average crossing at 84.22 are needed to confirm that a short term low has been posted. If September resumes the decline off June's high, the 50% retracement level of the November-June rally crossing at 82.15 is the next downside target. First resistance is Wednesday's high crossing at 83.64. Second resistance is the 20 day moving average crossing at 84.22. First support is last Friday's low crossing at 82.25. Second support is the 50% retracement level of the November-June rally crossing at 82.15.
Gold closed higher amidst increased interest in many commodities after some bullish corporate earnings reports boosted confidence in the economic recovery. August gold continues to consolidate above the 38% retracement level of this year's rally crossing at 1183.90. At the same time, stochastics and the RSI are oversold and turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1210.90 are needed to confirm that a short term low has been posted. If August renews the decline off June's high, the 50% retracement level of the aforementioned decline crossing at 1158.30 is the next downside target. First resistance is today's high crossing at 1201.20. Second resistance is the 20 day moving average crossing at 1210.90. First support is Tuesday's low crossing at 1175.10. Second support is the 50% retracement level of the aforementioned decline crossing at 1158.30.
Ben what a bummer! Way to bring us all down Ben. Dude, we were feeling happy in this little bubble world of earnings driven economic expectations and you go and have to ruin our little economic recovery fantasy world bliss. Why did you have to tell us the truth man and ruin the buzz? That you and most of your friends at the Fed saw the risks to growth as weighted to the downside.
Why tell us that the economic expansion is only proceeding at a moderate pace and only because it is being supported by stimulative monetary and fiscal policies. We may be high but to some it felt like we were doing it on our own. Why tell us that the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction? And on top of that, you remind us that this is an important drag on household spending. Then you have to bring up that darn slow recovery in the labor market and the attendant uncertainty about job prospects.
Did you have to go and say that after two years of job losses, private payrolls expanded at an average of about 100,000 per month during the first half of this year, a pace insufficient to reduce the unemployment rate materially? Or that in all likelihood it is going to take a significant amount of time to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009.....Read the entire article.
The market continues to become quicker and fiercer as it move up and down 2+% on a regular basis This week we have seen some wild price swings due to earnings, events and the Fed’s which just makes trading that much more intense.
I have pointed out yesterday that this market only gives you a brief moment to take profits before it starts going wild shaking traders out of positions. This increased volatility is caused from a couple of things:
1. Traders/Investors know the financial system is still riddled with unethical practices/manipulation. This causes everyone to be extra jumpy/emotional and causes volume surges in the market as the herd starts to get greedy or fearful.
2. Volume overall on the buying side of things just isn’t there… I see some nice waves of buying but it doesn’t move the market up much… then it only takes a small wave of sellers for the market to drop....Investors are just scared to buy stocks and that is not a good thing…
I keep a close eye on the buying and selling volume for the NYSE as it tends to help pin tops and bottom within a 2-3 day period. In short when we get panic buying meaning 75%+ of volume is from buyers then I know the general public is jumping into the market buying everything up and that’s when the smart money starts to scale out of their position selling to these retail investors. These retail investors are buying on news and excitement much like what we are seeing now with earnings season. Stocks have run up for 5-10 days, as the smart money buys in on anticipation of good news, then the earnings are released which are better than expected and the stocks pop and drop. Well the pop higher on BIG volume are all the retail investors buying and are generally the last ones in. The smart money is quickly selling into this buying surge so they end up getting out at high prices.
My point here is that in general I see 4-6 of these panic buying or selling days a year which I find are tradable. The crazy part is that we have seen 11 of these panic days (both buying and selling) in just 8 weeks… We are seeing more selling than we did at the bottom in 2009! Something big is about to happen and I want to make sure we get a price of it once the moves starts.
Anyways, below is a chart of the SP500 showing how its trading under some key resistance levels. Today the market gapped up testing the 50 day moving average and above the 5 day moving average then sold down very strongly during Ben Bernanke’s speech. This is not a good sign for the overall health of the market.
On the commodities side of things we are not seeing much happening with gold or oil at the moment. Gold is still in a short term down. And gold took an $8 drop today when Ben Bernanke said inflation would remain low for an extended period of time.
As for crude oil, yesterday afternoon I pointed out to members that oil had a big run up on virtually no volume Tuesday and it would most likely give back those gains today. We saw this today with oil dropping from $78 down to 76.50 per barrel. Overall Oil looks like it wants to go higher but has some work to do before that can happen.
Mid-Week Trading Conclusion:
In short, the market remains choppy and we are getting more than normal news/events which are moving the market and this is causing extra noise and volatility for traders. Cash is king during volatile times and if you are doing some trades be sure to keep the positions small for another month or so.
If you would like to receive Chris Vermeulen's detailed trading analysis and alerts be sure to checkout The Gold And Oil Guy.Com
Earlier this week we produced a video on the Euro, Is the Euro on Shaky Ground?, making a case that the currency was very close, if not at its highs. Since then, we have had two significant events fall into place which made the dollar skyrocket against the euro.
This new video shows you exactly what transpired and where we are so far this week. We think you'll find it interesting and informative.
As always this video is free to watch and there is no need for registration. We would appreciate that if you have comments on this market that you please leave them for everyone to see.
Crude oil was higher overnight as it extends the trading range of the past two weeks. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
If September renews this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook.
First resistance is Wednesday's high crossing at 78.57
Second resistance is the reaction high crossing at 79.97
Crude oil's pivot point for Thursday is 77.11
First support is last Tuesday's low crossing at 74.70
Second support is the reaction low crossing at 71.47
Natural gas was higher overnight as it extends the trading range of the past five trading sessions. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above Wednesday's high crossing at 4.662 would confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below Monday's low crossing at 4.454 would temper the near term friendly outlook.
First resistance is the reaction high crossing at 4.662
Second resistance is the reaction high crossing at 4.923
Natural gas pivot point for Thursday is 4.552
First support is Monday's low crossing at 4.454
Second support is last Tuesday's low crossing at 4.334
Crude oil closed lower on Wednesday as it extends last week's trading range. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off this month's low, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday's low crossing at 74.70 would temper the near term friendly outlook. First resistance is today's high crossing at 78.57. Second resistance is the reaction high crossing at 79.97. First support is last Tuesday's low crossing at 74.40. Second support is the reaction low crossing at 71.47.
Natural gas closed lower on Wednesday as it continues to consolidate above the 10 day moving average crossing at 4.456. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above today's high crossing at 4.662 are needed to confirm that a short term low has been posted. If August resumes the decline off June's high, the reaction low crossing at 4.108 is the next downside target. First resistance is today's high crossing at 4.662. Second resistance is the reaction high crossing at 4.923. First support is last Thursday's low crossing at 4.288. Second support is the reaction low crossing at 4.108.
The U.S. Dollar closed higher on Wednesday and above the 10 day moving average crossing at 83.46 signaling that a short term low has likely been posted. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 84.38 are needed to confirm that a short term low has been posted. If September extends the aforementioned decline, the 50% retracement level of the November-June rally crossing at 82.15 is the next downside target. First resistance is today's high crossing at 83.64. Second resistance is the 20 day moving average crossing at 84.38. First support is last Friday's low crossing at 82.25. Second support is the 50% retracement level of the November-June rally crossing at 82.15.
Gold closed lower on Wednesday and remains poised to extend the decline off June's high. 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 August extends the decline off June's high, the reaction low crossing at 1168.00 is the next downside target. Closes above the 20 day moving average crossing at 1212.90 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 1198.10. Second resistance is the 20 day moving average crossing at 1212.90. First support is Tuesday's low crossing at 1175.10. Second support is the reaction low crossing at 1168.00.
I’d like to tell you that the supply report from the American Petroleum Institute matters and that we could go back to find love and happiness continuing to scalp oil in its very defined trading range. I would even like to tell you that todays Energy Information Agency report is going to matter as well. Yet the threat to our little trading range nirvana is being threatened by another potential storm down in the Gulf of Mexico. The National Hurricane Center now shows that a tropical wave that we have been watching now has about a 70% chance to biome a hurricane and play havoc with production and imports into the Gulf of Mexico.
The NHC says that “STRONG TROPICAL WAVE...LOCATED NEAR THE EASTERN DOMINICAN REPUBLIC AND EXTENDING NORTHWARD OVER THE ATLANTIC FOR A FEW HUNDRED MILES...IS PRODUCING A LARGE AREA OF SHOWERS AND THUNDERSTORMS FROM THE NORTHERN LEEWARD ISLANDS WESTWARD TO HISPANIOLA...AND OVER THE ADJACENT WATERS OF THE ATLANTIC AND NORTHEASTERN CARIBBEAN SEA. ALTHOUGH A CLOSED SURFACE CIRCULATION HAS NOT YET DEVELOPED...ENVIRONMENTAL CONDITIONS ARE EXPECTED TO BECOME MORE CONDUCIVE FORTROPICAL CYCLONE FORMATION AS THE SYSTEM MOVES WEST-NORTHWESTWARD AT ABOUT 10 MPH DURING THE NEXT DAY OR SO. THERE IS A HIGH CHANCE...70 PERCENT...OF THIS SYSTEM BECOMING A TROPICAL DEPRESSION OR A TROPICAL STORM DURING THE NEXT 48 HOURS. REGARDLESS OF DEVELOPMENT...LOCALLY HEAVY RAINFALL AND GUSTY WINDS WILL CONTINUETO AFFECT THE VIRGIN ISLANDS AND PUERTO RICO...AND LIKELY AFFECT THE DOMINICAN REPUBLIC...HAITI...EASTERN CUBA...THE TURKS AND CAICOS ISLANDS...AND THE BAHAMAS DURING THE NEXT COUPLE OF DAYS. THE HEAVY RAINS COULD CAUSE LIFE THREATENING FLASH FLOODS AND MUD SLIDES IN MOUNTAINOUS AREAS.”
So there is a possibility that oil and other petroleum products may put in some hurricane premium. The Natural gas seems less worried as on shore production is rising and supplies are ample. Yet we cannot be complacent. The API showed less than exciting numbers showing crude down 241,000 barrels gas down 412,000 barrels and distillates rising by 241000 barrels. Of Course oil may also take its cue from Big Ben and no that is not the name of a hurricane but our name trusty Fed Chairman Ben Bernanke.
Because oil has had a tendency to live and die with the fortunes of the stock market his words may inspire us. Of course the focus may be on the report that a few Fed Banks were pushed for a discount rate increase in an attempt to get credit flowing from banks too scared to lend money. If Ben says that he is considering this oil and stocks should get a quick boost.
Despite the storm threat we still feel oil will be locked in the twilight zone. Not really bearish and not really bullish. Call Phil for the best way to trade it and get signed up for a trial of his daily numbers. Jut call him at 800-935-6487 or email him at pflynn@pfgbest.com
Crude oil was higher overnight as it consolidates above the 10 day moving average crossing at 76.13. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
If August extends this month's rally, the reaction high crossing at 79.38 is the next upside target. Closes below last Tuesday's low crossing at 74.25 would temper the near term friendly outlook.
First resistance is last Wednesday's high crossing at 78.15
Second resistance is the reaction high crossing at 79.38
Crude oil pivot point for Wednesday is 77.16
First support is last Tuesday's low crossing at 74.25
Second support is the reaction low crossing at 71.09
Natural gas was higher overnight and is trading above the 20 day moving average crossing at 4.595. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.
Closes above the 20 day moving average crossing at 4.595 would confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below Monday's low crossing at 4.454 would temper the near term friendly outlook.
First resistance is the reaction high crossing at 4.659
Second resistance is the reaction high crossing at 4.923
Natural gas pivot point for Wednesday is 4.558
First support is Monday's low crossing at 4.454
Second support is last Tuesday's low crossing at 4.334
Crude oil rebounded in NY session Tuesday as driven by reversal in Wall Street. Corporate earnings results were disappointing while new home sales plunged to an 8 month low. However, investors looked forward for Fed Chairman Ben Bernanke's Congressional testimony in Capitol Hill today. The market anticipated Bernanke would downplay recent weak data that might lead to a double dip recession. He would probably say economic slowdown is temporary and the Fed is ready for new stimulus measures if the economy worsens. The front month WTI contract settled at 77.58, up +0.88%, yesterday.
Wall Street opened lower in the morning session as corporate earnings were weaker than expected. Earnings of IBM and Texas Instruments, large tech stocks, disappointed as revenues missed market expectations. Goldman Sachs reported it net income tumbled -82% y/y to $613M, the lowest level since end 2008, in 2H10 as trading revenue declined more than anticipated. At the same time, Johnson & Johnson revised down its guidance. The company said earnings excluding specia items will be $4.65-4.75/share this year, compared with consensus of $4.80-4.9. The cut is due to a series of drug recalls. These were then upstaged by a powerful report from Apple Inc. Net income jumped +78% y/y to $3.25B in the third quarter as driven by strong iphone sales which generated $5.33B revenue on 8.4M units.
Economic data released yesterday was mixed. While housing starts slid -5.02% to 549K in June from a downwardly revised 578K in the prior month, building permits surprisingly soared +2.09% to 586K during the month. The market, however, chose to focus on the positive side and sent stocks higher. DJIA and S&P 500 ended the day +0.47% and +1.1% higher respectively. Crude oil also rose after the National Hurricane Centre said that a weather system over Puerto Rico and the Dominican Republic has a 60% chance of becoming a tropical cyclone.
Concerning oil inventory, the industry sponsored API said crude and gasoline inventories fell, 0.241 mmb and -0.412 mmb respectively in the week ended July 16. Distillate stockpile, however, rose +0.979 mmb during the week. The market currently forecasts the US Energy Department will report another week of draw for crude inventory but builds in gasoline and distillate stockpiles.
Gold gained +0.83% to settle at 1191.7 as driven by modest safe haven demand. The Hungarian government raised 35B forint from issuance of the 3-month bills, compared with the 45B forint originally planned. The average yield surged to 5.47%, the highest level in 19 weeks, as the talk with the IMF/EU suspended.
