Phil Flynn: ISM Into The Wild Blue Yonder Flying High Into The Sky

Where the heck did that come from? The Institute for Supply Management gave the market just what the doctor ordered with a shocking good reading on manufacturing. Why was it so shocking? Well some of the regional manufacturing reports like the Philly Fed and the Empire State numbers were so lousy. Maybe the Chicago Purchasing Manger report should have given a clue but instead of lousy we go the first increase in four months with an expansive jump to 56.3, up from 55.5 in July.

That was much higher than the expected 53.2 expectations and came ohm the heels of a strong PMI number in China! And what was probably even more important was that the ISM Employment Index part of the report that registered 60.4 percent in August, which is 1.8 percentage points higher than the 58.6 percent reported in July. According to ISM this is the ninth consecutive month of growth in manufacturing employment. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment and should also beef up the expectations on Fridays whopping large monthly jobs report. It should also booster oil demand expectations as well as.....Read the entire article.

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Silver About To Break Out Big!

Silver is one asset class I do not cover very often, but have been largely bullish on since $6 an ounce many years ago. It can be considered “poor man’s Gold” as they say. I believe Silver is about to stage a pretty large advance based loosely on the Elliott Wave pattern I see unfolding after a 9 odd month consolidation. (Obviously, there are also fundamental fiat currency/debt events worldwide that give it the underlying bull chart pattern). Since the average person can’t run out and buy an ounce of Gold for $1,240 tomorrow, as the unfolding of the fiat crises continues to enter the public psyche, you will see a strong populace movement into buying silver, silver coins, etc. To wit, many silver stocks are moving up strongly of late, signally an imminent breakout of this precious and industrial metal.

The triangle pattern has taken nearly 9 months so far, and a move over $19.50 could start a multi-month run targeting $26-$29 per ounce for starters before a broad pullback. A few silver stocks worth looking at include SLW (Silver Wheaton, which purchases future silver mine production in advance at a discount), a long time favorite of mine and Fortuna Silver, a growing producer and explorer favored by some of the brightest minds in the business. I do not own shares in either, so I have no inherent bias to mention them other than they are worth your time to review sooner than later. TMTF does not offer stock or trading advice, so please do your own research and consult a professional if need be.

I post the Silver chart below and my outline shows my views of a multi month 5 wave bullish triangle pattern on a weekly chart. Silver needs to bust through $19.50 per ounce to confirm, but I suspect we will see this fairly soon.

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Crude Oil Futures Fall as U.S. Jobs Report Signals Slowing Economic Recovery

Crude oil fell as initial U.S. jobless claims bolstered concern that the country’s economy will be slow to recover, crimping fuel demand. Oil slipped as much as 1.1 percent as a report showed that the number of Americans seeking unemployment benefits decreased by 6,000 to 472,000 in the week ended Aug. 28. U.S. crude oil stockpiles climbed 3.43 million barrels to 361.7 million last week, an Energy Department report showed yesterday.

“Although jobless claims dropped a little, they are still above 470,000, which is a sign that the economy is still in a lot of trouble,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for October delivery fell 57 cents, or 0.8 percent, to $73.34 a barrel at 9:07 a.m. on the New York Mercantile Exchange.

Brent crude oil for October settlement lost 94 cents, or 1.2 percent, to $75.41 a barrel on the London based ICE Futures Europe Exchange. The increase in crude oil stockpiles left supplies 11 percent above the five year average for the period, according to the department. “U.S. inventories are pretty enormous,” said Alexander Ridgers, head of commodities at London based CMC Markets, which handles more than $150 million a day in U.S. crude contracts.

Overall petroleum stockpiles, a combination of oil and fuel supplies, climbed 4.04 million barrels, or 0.4 percent, to 1.14 billion, the highest level since at least 1990, according to yesterday’s report. “Supplies are ample,” McGillian said. “Yesterday’s inventory report showed that petroleum stockpiles were at a record high for a third consecutive week.”

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

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Crude Oil Daily Technical Outlook For Thursday Morning

Crude oil was lower overnight as it consolidates some of Wednesday's rally. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 75.51 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.

First resistance is the 20 day moving average crossing at 75.51
Second resistance is Monday's high crossing at 75.58

Crude oil pivot point for Thursday morning is 73.35

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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SP500 and Gold At Crucial Pivot Points

WOW that was some big short covering and buying today! And we hope you got a piece of it! Wednesday was a big session with better than expected manufacturing surging the market 3%. In this article I will do a quick technical take on the current situation for the SP500 and gold as they are both trading at a key resistance level. also its important to know what type of price action we will get in the next 1-2 days so you can have your profit targets or protective stops in place depending on which side of the market you are currently playing.

SPY – SP500 Exchange Traded Fund – 60 Minute Chart
The market is currently in a down trend which means bounces get sold. But if you take a look at the buying volume ratio at the bottom of the chart you will notice that in an uptrend buying surges are the beginning of a rally, and during a downtrend buying surges are the end of a rally. I also want to mention that a lot of volume traded at this current level which you can see on the volume by price bars on the chart. This means there will be a lot of sellers to overcome before breaking to the upside.

The situation the market is at now makes things difficult to tell if this bounce will get sold, or if its just the starting of a rally. There are several arguments for each side but the one which I think has the most influence is the buying volume. It was very strong on this current bounce. It feels more like a rally but we will not know for sure for a couple days…

That being said, if the SP500 moves up Thursday then I would consider the market to be in an uptrend and exiting any short positions is a smart play. But if this bounce is sold and the market drops, then the 3% rally on Wednesday could all be given back and then some.

GLD Gold Exchange Traded Fund – 60 Minute Chart
Gold has continued to grind its way up to the previous top. Problem is the volume has been very light and that tells me there is not much demand for gold at these elevated prices. While we are still long gold it is crucial to have your protective stop in place so we lock in as much profit as possible for when the sharp selling spike happens.

Mid-Week Technical Take:
In short, the market feels like its trying to reverse back up but at this time its still in a down trend and trading under a key resistance level. This means trading with the trend and selling the bounces is still the play.

That being said today’s strong volume makes this bounce suspect. Keeping positions small and setting a protective stop should be done as a safety precaution. The next couple days will shed some light for sure…

As for gold, I am still bullish but expecting our protective stops to be triggered any day now, which means we get paid and can mark another successful trade down on the scoreboard.

If you would like to receive Chris Vermeulen's ETF and Futures Trading Alerts visit his website at The Gold And Oil Guy.Com



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Leaked German Military Report Warns Of Apocalyptic Peak Oil Scenarios

The German army doesn't want you to know how freaked out it is about peak oil. But an internal report has leaked to the internet, with excerpts translated by Spiegel. The report says there is "some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later."

Nightmare scenarios include:
Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. "Shortages in the supply of vital goods could arise" as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95% of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. "In the medium term the global economic system and every market-oriented national economy would collapse."

Global chain reaction: "A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil," says the study. "It is likely that a large number of states will not be in a position to make the necessary investments in time," or with "sufficient magnitude." If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it's so tightly integrated into the global economy.

Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could comprehend the upheaval triggered by peak oil "as a general systemic crisis." This would create "room for ideological and extremist alternatives to existing forms of government." Fragmentation of the affected population is likely and could "in extreme cases lead to open conflict."

From Gus Lubin at Business Insider.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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Phil Flynn: Earl, The Grinch That Stole Labor Day

All of the Who’s down in Whoville may be safe but it seems Hurricane Earl is bent on washing out and stealing their Labor Day fun! The holiday weekend may wash away for many states up and down the East coast.

As Hurricane Earl barrels down it will bring a crashing end to the summer gasoline demand season that was already not up to par with market expectations. The so called “Summer of Recovery” and the all of the gasoline and oil demand expectations that came along with it, now looks like it should be more appropriately titled “The Boulevard of Broken dreams”.

Up and down the Easy Coast of the United States, vacations, tee times, picnics and frivolity of all kinds are being canceled as that heartless monster, Earl, is showing us he has not learned the true meaning of the Labor day holiday which is to relax and burn up a lot of gas. And Earl has his accomplices and no, it is not a dog dressed up as a reindeer.

No, Earl's accomplice is a companion tropical storm named Fiona and a potential tropical wave behind that as well will, at the very least, assure us some very lousy weather for much of the East Coast from Florida with the worst in the Carolina’s all the way up potentially to New York.....Read the entire article.

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Crude Oil Climbs After Reports Show Gains in U.S., Chinese Manufacturing

Crude oil rose after manufacturing in the U.S. and China, the world’s biggest energy consuming countries, accelerated at a faster pace than expected in August. Oil climbed as much as 3 percent and equities rebounded from the biggest August slump in nine years after the Tempe, Arizona based Institute for Supply Management’s factory index rose to 56.3 from 55.5 in July. U.S. crude oil supplies increased 3.43 million barrels to 361.7 million last week, an Energy Department report showed today.

“Oil moves along with equities, the fundamentals don’t matter,” said Chip Hodge, who oversees a $9 billion natural, resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Any shred of positive or negative economic news will move the oil market by a couple percentage points.” Crude oil for October delivery rose $2.26, or 3.1 percent, to $74.18 a barrel at 10:59 a.m. on the New York Mercantile Exchange. Oil traded at $73.63 a barrel before the release of the report at 10:30 a.m. in Washington.

Economists forecast the ISM factory index would decline to 52.8, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from 49.9 to 56. Manufacturing in China grew at a faster pace in August after the weakest performance since early 2009 in July, signaling that the economy’s slowdown is stabilizing.

Rising Index
The purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, a government-backed report showed. Seasonal factors might have had an effect because the index typically gains as factories restart following July maintenance, Mizuho Securities Asia Ltd. said. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4.

The August reading for the government index was more than the median 51.5 forecast in the Bloomberg survey of 17 economists. Fifty is the dividing line between expansion and contraction.
Australia’s economy grew at the fastest pace in three years last quarter, stoked by China’s demand for iron ore. Gross domestic product advanced 1.2 percent from the first quarter, when it rose a revised 0.7 percent, the Bureau of Statistics said in Sydney today.

Reporter Mark Shenk can be reached at mshenk1@bloomberg.net and Margot Habiby at mhabiby@bloomberg.net.

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Crude Oil Technical Outlook For Wednesday Morning

Crude oil was higher due to short covering overnight as it consolidates some of the decline off last Friday's high. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 75.88 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 Monday's high crossing at 75.58
Second resistance is the 20 day moving average crossing at 75.88

Crude oil pivot point for Wednesday morning is 72.73

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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