Crude Oil Technical Outlook For Monday Morning

Crude oil was lower overnight as it consolidates some of last Friday's rally but remains above broken resistance marked by the 10 day moving average crossing at 74.09. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 76.96 are needed to confirm that a short term low has been posted. If October renews this month's decline, May's low crossing at 70.35 is the next downside target.

First resistance is the overnight high crossing at 75.58
Second resistance is the 20 day moving average crossing at 76.96

Crude oil pivot point for Monday morning is 74.27

First support is last Wednesday's low crossing at 70.76
Second support is May's low crossing at 70.35

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High Volume Resistance Plagues Precious Metals, Crude Oil & SP500

Last week was a relatively strong week for stocks and commodities. Although the SP500 closed slightly lower on the week the price action Friday was strong. The recent pop in commodities has everyone feeling good and bullish again and we all know how the market works… When everyone is feeling good the market has a way of shaking things up.

Below are a few charts showing heavy volume resistance levels that will most likely cause the broad market & commodities to pullback or trade sideways for a few days as buyers and sellers play tug-o-war.

SLV – Silver Bullion ETF Trading
Silver had a very nice pop last week but if you step back and look the recent price action you can see that it’s still trading below the previous major bounce from back in June. It looks as though silver is a little over extended as large percentage moves tend to give back 25-50% of the mover shortly after.

Take a look at the price by volume bar. It shows there has been heavy volume traded at that $19.00 level and the previous time it was reached sellers stepped back in pulling silver down.

GLD – Gold Bullion ETF Trading
Gold is trading deep into the resistance level and struggling to hold up. Last week we went long GLD after the bullish engulfing candle and took profits near the high two days later on Thursday’s price. Although gold is trading at resistance the intraday price action remains somewhat bullish/neutral for the time being.

USO – Oil ETF Trading
The oil ETF broke down from its large multi-month bear flag and is now bouncing up to test that breakdown/resistance level. This could be a possible kiss good bye. I will keep my eye on this commodity as it could provide us with a great shorting opportunity in the coming days.

SPY – SP500 ETF Trading
The equities market has been tried to bottom all week and Friday’s price action looks strong. While the chart looks strong the market internals are telling me the opposite. Last week we saw a gap down and Friday that gap window was filled. With heavy volume resistance just above the current price the odds are pointing to lower prices.

Weekend Equities and Commodities ETF Trading Report:
In short, it looks as though everything is trading just under or at resistance levels. That means sellers will start to enter the market and cause prices to stall (trade sideways/choppy) and or reverse lower.

That being said, with Friday’s strong close for oil and the sp500 I am expecting a gap higher in the morning because traders will review those charts this weekend and enter the market Monday feeling bullish.

Just click here if you would like to get Chris Vermeulen's ETF Trade Alerts for Low Risk Setups


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Natural Gas Weekly Technical Outlook

Natural gas's decline extended further last week as expected and the strong break of 3.81 support confirms that whole fall from 6.108 has resumed. Initial bias remains on the downside this week for 161.8% projection of 5.196 to 4.288 from 4.007 at 3.538 first. On the upside, above 3.86 minor resistance will turn intraday bias neutral and bring recovery. But upside should be limited below 4.288 resistance and bring another fall.

In the bigger picture, the strong break of 3.81 support last week confirms that whole decline from 6.108 has resumed. Further fall should be seen to 100% projection of 6.108 to 3.81 from 5.194 at 2.896 next. More importantly, the development revived the case that medium term rebound from 2.409 is completed at 6.108 already. Also, fall from 6.108 might indeed be resuming the long term down trend for a new low below 2.409. We'll pay attention to the structure of the current decline for more hints. On the upside, break of 4.288 resistance is needed to be the first signal of bottoming. Otherwise, outlook will remain bearish.

In the longer term picture, while the bounce from 2.409 was strong, it's been limited below 55 months EMA (now at 5.877) and reversed. The failure to sustain above 55 weeks EMA (now at 4.617) also argue that 2.409 might not be the bottom yet. We'll stay bearish as long as this year's high of 6.108 holds and favor a new low below 2.409 going forward.

Nymex Natural Gas Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

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Crude Oil Analysts' Horrible Track Record Shows Why Prices Could Super Spike Thanks To China

Last week we highlighted a chart from the Council on Foreign Relations, which showed China's potential to become a truly monstrous oil consumer, should it approach the oil consumption-per-capita levels of Taiwan, Korea, or heaven forbid, the U.S.. Here's a quick refresher of the chart, for those who don't want to check the previous post:

China could rock oil. Basically, China has the potential to truly rock the oil market, just as it has already done for other commodities such as iron ore, given that even at its currently low level of oil consumption per capita, it is the second-largest oil consuming nation in the world.
If so, then why aren't more people talking about this? Is it just a scare story?

So far the consensus view is that China won't fulfill the scare story shown in the chart above, since the Chinese government is already working to restrain oil consumption growth in the future, via initiatives such as natural gas powered transportation and research into mass market electric cars. The consensus oil view is thus that China's oil demand will rise for the next few decades, but not by as much as the CFR shock chart above would suggest. We even received some push back from an experienced oil analyst for discussing the topic.

Many professionals believe it won't happen. Here's a slightly dated China oil forecast we pulled from the IEA, which shows a rather tame growth trend for Chinese oil consumption. While the chart below is from 2007, the latest China oil consumption forecast is about 9 million barrels per day by the end of 2010, which is similar to what's shown below.

Problem is... professional oil demand forecasts are horribly inaccurate. Thing is, the IEA has been hiking their Chinese demand forecasts for years as shown below. Even as recently as 2004, the IEA expected that China's 2015 oil consumption would be 9 million barrels per day... which is about what today, in 2010, China's consumption is expected to be by the end of this year. Oops. Forecasts just keep rising:

Moral of the story -- commodity price spikes happen because nobody expects them to. Just because many pros think China will diversify its fuel sources into electricity and natural gas, thus keeping oil consumption in check, doesn't mean it will happen. Many oil market pros could easily be wrong, as they've been in the past, and Chinese demand could continue to be revised upwards, just as the CFR chart we showed last week suggests is a possibility.
Sharp spikes in prices happen, after all, since few expect them to happen, and reality keeps bewildering expectations. Does this mean oil prices are guaranteed to super-spike? Of course not. But don't discount the simple historical analysis shown by the CFR chart above, China could easily fail in its quest to reduce its oil dependence, and send oil prices through the stratosphere as a result.


For more check out Vincent Fernando at Business Insider .Com


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Crude Oil Weekly Technical Outlook For Saturday August 28th

Crude oil dropped to as low as 70.76 last week but was supported by 71.09 support and rebounded. As short term bottom should be in place with bullish divergence condition in 4 hours MACD. More recovery would likely be seen in near term. But upside should be limited by 61.8% retracement at 78.31 and bring fall resumption. As discussed before, decisive break of 71.09 support will confirm our bearish view that whole rebound from 64.23 is finished at 82.97 already and target another low below 64.23.

In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Decisive break of 71.09 will confirm this case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, break of 82.97 resistance is needed to invalidate this view. Otherwise, we'll stay bearish in crude oil.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.

Nymex Crude Oil Continuous Contract 4 Hour, daily, weekly and monthly Charts.



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Sorry BP, No One Wants You Drilling In The Arctic

BP has been dissuaded not to join in on oil drilling operations in the Arctic region around Greenland, according to The Guardian. BP was persuaded not to join in the bidding process by the country of Greenland, which felt that the company's involvement in the project might make a bad PR situation worse.

A Greenpeace ship is already stationed off the coast of Greenland, protesting Cairn Energy's exploration activities there. Cairn announced on Tuesday that it had found natural gas in the area, but not any oil.

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New Video: Why Weekly Charts Work

Many traders get so involved with the market on a daily or even an intraday basis, that they somehow lose out on the bigger picture. Weekly charts are enormously helpful in giving clues to the future direction of the market.

In today's video we examine one of the biggest markets in the world, the S&P 500, using a weekly chart. The video runs about two minutes in length and we think you will find it both educational and informative.

As always our videos are free to watch and there are no registration requirements. Enjoy the video and be sure to share your thoughts.

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Crude Oil Technical Outlook For Friday Morning

Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 77.23 are needed to confirm that a short term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target.

First resistance is the 10 day moving average crossing at 74.03
Second resistance is the 20 day moving average crossing at 77.23

Crude oil pivot point for Friday morning is 73.29

First support is Wednesday's low crossing at 70.76
Second support is May's low crossing at 70.35

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Crude Oil Falls on Concerns About Economic Recovery, Spain's Deficit

Crude oil declined for the first day in three after equities fell as a slowdown in U.S. manufacturing added to concern that economic growth is faltering, curbing fuel demand. Oil is dropping for the third week, the longest losing streak since May, as Asian stocks slipped on expectations of revisions to U.S. economic growth figures later today. A Federal Reserve Bank of Kansas City report yesterday showed manufacturing slowed in August. U.S. crude inventories climbed more than expected last week, an Aug. 25 report from the Energy Department showed.

“The oil market is very bearish,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The fundamental picture is just not positive at all. If oil breaks $70, it will come under pressure and then you’ll see it substantially lower.” Crude oil for October delivery dropped as much as 49 cents, or 0.7 percent, to $72.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $73.03 at 11:27 a.m. Singapore time. Yesterday, the contract rose 84 cents, or 1.2 percent, to $73.36. Prices have dropped 0.6 percent this week and 8 percent since the start of the year.

Economists who projected the U.S. recovery would gain speed in the second half of the year are now scaling back those forecasts as the outlook for jobs and business investment dims. Second quarter gross domestic product growth may be revised down to 1.4 percent from 2.4 percent earlier , according to a Bloomberg News survey of economists.....Read the entire article.

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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 and gas are likely headed tomorrow.





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