Stock Market and Commodities Commentary For Wednesday Evening Oct. 6th

The U.S. stock indexes closed mixed today. A weak ADP U.S. jobs report did give the stock market bulls pause today. However, the index bulls still have the overall near term technical advantage. Traders are gearing up for Friday's U.S. employment report. Look for more subdued trading in the stock indexes until then, but then look for an active trading day on Friday, in the wake of the jobs data.

Crude oil closed up $0.41 at $83.23 a barrel today. Prices closed near mid-range today and hit a fresh nearly five month high. Bulls have the solid near term technical advantage in crude. Prices are in an accelerating six week old uptrend on the daily bar chart. The next near-term upside price objective for the bulls is producing a close above solid technical resistance at $86.00 a barrel.

Natural gas closed up 11.8 cents at $3.861 today. Prices closed nearer the session high today and saw more short covering in a bear market. The bears still have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.20.

Gold futures closed up $5.90 at $1,346.20 today. Prices today closed near mid-range and hit another fresh contract and all time record high. A weaker U.S. dollar index and strong investor demand continue to boost the gold market bulls. While gold bulls still have the solid overall near term technical advantage and there are still no significant early technical clues that a market top is close at hand, the market is now a bit over extended on a near term basis and due for a corrective pullback soon.

The U.S. dollar index closed down 33 points at 77.63 today. Prices closed nearer the session low again today and hit another fresh 8 1/2 month low. Bears have the solid overall near term technical advantage. There are still no early clues to suggest a market bottom is close at hand.


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The 5 year Massive Bull Run in Gold and Gold Stocks Continues

From Dave Banister at The Market Trend Forecast.com.....

Last August I penned an article predicting a massive five year bull run in gold and gold stocks. I outlined my reasoning and compared this 13 year period from 2001 to 2014 to the tech stock bull from 1986-1999. .

In February of this year, I again wrote an article for Kitco.com explaining the 13 year Gold Bull still had a lot more room to run. At the time Gold had pulled back to 1040-1070 windows and I mentioned that “smart money would be accumulating” and we should look for $1300-$1325 as the objective. That brings up forward to October of 2010, with Gold running to $1350 as recently as this morning.

We have a huge rally because we are in the 2nd year of this final 5 year run I predicted, and this is when the general investing public becomes “aware” of the bull market. They miss the first five years from 2001-2006, and then while we consolidate for three years from 2006-2009 they fall asleep. It is not until Gold breaks all time highs that people wake up and start buying. This is typical in a super bull cycle, the behavioral patterns are always the same with the herd. I based my forecast on herd mentality, whether bullish or bearish.

I am now looking for Gold to continue to run during this trampling into the asset from the herds of investors to about $1480-$1520 on this leg before we have a strong correction. That figure is not taken out of the thin air, it’s an Elliott Wave based pattern that I recognize and forecast in advance. Subscribers to my website are exposed to my outside the box forecasts on the SP 500 and Gold all the time. Usually it starts with them not believing, and later they wonder how I arrived at the predictions. To wit, on August 30th I predicted a huge breakout in Silver to $26-$29 per ounce when it was at $18.75 per ounce. This was purely based on the Elliott Wave pattern and the lack of awareness by the investing public at the time of the Silver bull. It is also “poor man’s Gold”, and as simple as that sounds, it is what drives the herd of investors to invest. Look for Silver to continue higher to those target zones before correcting.

Many investors who are briefly exposed to Elliott Wave Theory assume that a certain well known forecaster must be the only person in the world who uses it. Since he is wrong more often than he is right, people toss out Elliott Waves as mad science. That is a mistake and why I continually write articles for Kitco using my Elliott Wave methods to forecast SP 500 and Gold moves in advance. Look for Gold and Gold stocks to continue powering higher than people can imagine over the next four years, and pick up some darts and throw them at some juniors while you’re at it.

You can check out our forecast service at www Market Trend Forecast.com, consider subscribing ahead of our rate increase as well. Best to you and your trading!

Dave Banister- The Market Trend Forecast.com


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

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Alexander Smith: Crude Oil Is Spiking - Are You Positioned?

The domestic oil and gas sector has been under intense pressure to discover new resources and increase supply. A renewed emphasis on domestic, on-shore drilling has revitalized the industry from coast to coast in North America. To add to the pressure, demand from developing nations will soon exceed even the wildest predictions of only a few years ago. China, India and Brazil will be three of the largest emerging economies set to impact the global supply of oil.


China has overtaken the United States as the largest automaker in the world. There are millions of Chinese buying their first car every year and this trend will only increase. China has emerged as the world's third largest net importer of oil. Just 15 years ago it was a net exporter. It is currently the second largest consumer of oil behind the United States.


In August, China consumed an estimated 35.54 million metric tons of oil, or an average of 8.40 million barrels per day. This pales in comparison to the United States which consumes over 20 million barrels per day, but a dangerous trend is emerging. See the chart below which documents a net increase of 3,328% of oil consumption in China over the past 40 years. With China's middle class emerging at a faster rate than ever before, the next decade could be unforgettable for the oil markets. Are you positioned?


Although renewable energy sources have been making up some ground recently, there are thousands of applications oil is used for and many of them have no substitute. We are many years away from renewable energies taking hold of even a small percentage of the market share (from primary sources of fossil fuel demand).......Read the entire article.



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Crude Oil Market Summary For Wednesday Morning Oct. 6th

Crude oil was lower due to profit taking overnight as it consolidates some of the rally off August's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off last week's low, August's high crossing at 83.91 is the next upside target. Closes below the 20 day moving average crossing at 77.66 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 83.33
Second resistance is August's high crossing at 83.91

Crude oil pivot point for Wednesday morning is 81.65

First support is the 10 day moving average crossing at 79.07
Second support is the 20 day moving average crossing at 77.66


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Crude Oil Declines From Five Month High Before U.S. Government Supply Report

Crude oil fell from a five month high before a government report that may show U.S. crude supplies rose last week while traders bet that crude’s rally made the commodity too expensive. Crude earlier reached its highest price since May 4 after a report yesterday showed U.S. gasoline inventories dropped last week by the most since May 2009. The Energy Department may say today crude supplies rose by 413,000 barrels, a Bloomberg News survey shows. Oil’s 14 day relative strength index rose above 70, a sign that prices may drop after rising too far, too fast.

“There is some optimism in the market that inventories are decreasing and the oversupply is shrinking,” said Sintje Diek, an HSH Nordbank analyst in Hamburg. “This is an overreaction by the oil market. The higher prices are not sustainable.” Crude for November delivery traded at $82.71 a barrel, down 11 cents, or 0.1 percent, on the New York Mercantile Exchange at 1:08 p.m. London time. It earlier climbed as much as 51 cents to $83.33 a barrel. Brent crude for November settlement traded at $84.71 a barrel, down 13 cents, on the ICE Futures Europe exchange in London.

New York futures rose 1.7 percent yesterday after the Institute for Supply Management’s index of non manufacturing businesses, which covers about 90 percent of the U.S. economy, climbed to 53.2 from 51.5 in August. Economists surveyed by Bloomberg News projected the index would advance to 52. Crude’s 14 day relative strength index, a measure of how fast prices have risen or fallen in that period, was at 70.1 today. A reading of 70 or more can be taken as a sign that a market is “overbought” and prices may drop......Read the entire inventory report.


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New Video: The Ultimate Price Target For Gold

Recently we posted a video that projected some amazing levels for gold. Given the strong upward trend in gold and the price action on Tuesday the 5th of October, it is worthwhile looking at this video again. Today's new short video will certainly give you some more interesting price targets for gold that are based on sound trading principles. We hope you enjoy the video, and as always we would love to have your feedback so please leave a comment. The video is free to watch and there are no registration requirements.

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New Video: This Reliable S&P Formation Could Make You Money

In this new video we explain in detail a particular chart formation that has proven to be very reliable in the past. If we are right, we could see a further move and run in the S&P500 to the upside. The video is free to watch and there are no registration requirements.

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Commodity Corner: Weaker Dollar, Surging Equities Propel Dollar

Light, sweet crude for November delivery ended the day on a five month high Tuesday after the dollar weakened and equities markets surged. Crude futures settled at $82.82 a barrel Tuesday on the New York Mercantile Exchange, a $1.35 increase from the previous day. Oil prices tend to correlate with the dollar's relationship to the euro nowadays. On Tuesday the dollar lost ground against euro, supporting oil prices.

The dollar also plummeted against the yen Tuesday. Japan's Central Bank reported that it would cut benchmark interest rates to almost zero in an effort to boost that country's economy. By expanding its liquidity measures, growth oriented assets such as stocks and commodities become cheaper for investors to buy.

The Dow Jones Industrial Average increased more than 200 points in afternoon trading while both NASDAQ and S&P 500 rose more than two percent. Additionally, the disruption in crude shipments in the Houston Ship Channel and the strike at French terminals have also contributed to the increase in oil prices.

November crude oil fluctuated within a range from $81.15 to $82.99.

Henry Hub natural gas futures continued to weaken Tuesday as stockpiles remain abundant and mild weather lingers. Traders anxiously await the upcoming heating season, when cooler temperatures will increase demand for gas heating and hence natural gas fired electricity. Natural gas ended Tuesday's trading session at $3.74 per thousand cubic feet, up a penny from Monday. Natural gas traded from $3.69 to $3.78.

The reformulated gasoline blendstock futures price for November rose to $2.13 a gallon, a 4 cent improvement from Monday and its highest level since Aug. 5. Gasoline prices peaked at $2.13 and bottomed out at $2.08.

Courtesy of The Commodity Corner, Rigzone.Com

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Brian Shactman: Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Brian Shactman discusses the day's activity in the commodities markets, and where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Tuesday Evening Oct. 5th

The U.S. stock indexes closed solidly higher today. The index bulls have the near term technical advantage and gained some fresh upside technical momentum today. The indexes last week hit fresh multi month highs. Traders are gearing up for Friday's U.S. employment report. Look for more subdued trading in the stock indexes until then, but then look for an active trading day on Friday, in the wake of the jobs data.

Crude oil closed up $1.26 at $82.73 a barrel today. Prices closed nearer the session high today and hit another fresh two month high. Bulls have the solid near term technical advantage in crude. Prices are in a six week old uptrend on the daily bar chart. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the August high of $83.91 a barrel.

Natural gas closed up 4.4 cents at $3.771 today. Prices closed near the session high today and saw tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.00.

Gold futures closed up $24.50 at $1,341.30 today. Prices today closed near the session high and soared to a fresh contract and all time record high. A slumping U.S. dollar index continues to fuel the gold market bulls. Generally higher commodity markets today also supported fresh buying interest in the gold market. Gold bulls still have the solid overall near term technical advantage and gained more power today. There are still no significant early technical clues that a market top is close at hand.

The U.S. dollar index closed down 65 points at 78.00 today. Prices closed nearer the session low today and hit a fresh 8 1/2 month low. Prices also scored a bearish "outside day" down on the daily bar chart. Bears have the solid overall near term technical advantage. There are still no early clues to suggest a market bottom is close at hand.

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Crude Oil Inventories Climb as Refinery Processing Drops

U.S. oil supplies probably rose last week as refineries undergoing seasonal maintenance cut their processing rates to the lowest level since April, reducing demand for crude, a Bloomberg News survey showed. Stockpiles gained 400,000 barrels, or 0.1 percent, from 357.9 million, according to the median of 13 analyst estimates before an Energy Department report tomorrow. Gasoline stocks were unchanged in the survey and distillates fell.

Oil prices climbed above $80 a barrel to the highest level in eight weeks after the Energy Department last week reported declines in supplies of gasoline and distillate, including heating oil and diesel. Oil stocks were 13 percent higher than the five-year average in the week ended Sept. 24. “We’re in the heart of maintenance season, so we’d expect a little bit of an increase in crude and a little bit of a drop in products,” said Phil Flynn, a Chicago based analyst and trader with investment adviser PFGBest. “Refinery runs are going to continue to be low.”

Refineries probably operated at 85.3 percent of capacity, down 0.5 percentage point from the previous week, according to the Bloomberg survey. That would be the lowest level since the seven days ended April 2. Rates dropped 2 percentage points in the week ended Sept. 24, compared with a forecast decline of 0.6 percentage point. Eight analysts forecast oil supplies increased last week, four projected a decline and one said there would be no change.....Read the entire article.


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Phil Flynn: Rate Ruckus

Is the winner the country that has the most ink? Gold prices soar to a new record high as once again a global central bank decides to print their way to prosperity. The Bank of Japan gave gold another reason to make a new high by announcing what Dow Jones Newswires says is, “an ambitious” Y35 trillion monetary easing program to spur economic growth while cutting interest rates to virtually zero and launching a Y5 trillion program to buy private and public sector assets. Ambitious?! Boy, I’d say.

I guess there is more than one way to intervene in your currency. The Japan government is adding more stimuli while reducing the confidence in paper money. Looks like a golden opportunity to buy more gold. Perhaps it's time to buy black gold as well. Oil traders love to exploit devalued currencies and devalued confidence in the same way. Yesterday the oil market ignored the rebounding dollar and supplies that are 13% above the five year average and instead returned to focus on the shutdown of the Houston Shipping Channel that was shut down when a barge hit an electrical tower.

That disruption helped send oil to an eight week high. Dow Jones reported that U.S. Coast Guard says that the 3 1/2 mile stretch of the Houston shipping channel will likely be closed until late Tuesday so that low hanging power lines and a listing tower can be cleared away. The closure will affect crude deliveries to four refineries in the Houston ship channel. Dow says that the tower, which carries one of three transmission lines into Exxon Mobil Corp.'s (XOM) Baytown refinery, was struck.....Read the entire article.




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Crude Oil Higher From Here?

If you listen to "The Street" it would appear oil has no where to go but up. But a quick look ay our Smart Scan Chart Analysis gives us good reason to be cautious about going long at these levels. Let's look at the most popular crude oil ETF, USO.

Our Smart Scan Chart Analysis shows the current uptrend in USO is very weak and at a crossroads and has possibly ended. Look for choppy trading action in the near term and as always make sure to trade this trend with very tight stops.

Based on a pre-defined weighted trend formula for chart analysis, USO scored +60 on a scale from -100 (strong downtrend) to +100 (strong uptrend)....

-10......Last Hour Close Below 5 hour Moving Avg
+15......New 3 Day High on Monday
+20......Last Price Above 20 Day Moving Average
+25......New 3 Week High, Week Ending October 9th
-30......New 3 Month Low in May
+60......Total Score

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Crude Oil Technical Outlook For Tuesday Morning Oct. 5th

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

If November extends the rally off last week's low, August's high crossing at 83.91 is the next upside target. Closes below the 20 day moving average crossing at 77.31 would confirm that a short term top has been posted.

First resistance is Monday's high crossing at 82.38
Second resistance is August's high crossing at 83.91

Crude oil pivot point for Tuesday morning is 81.54

First support is the 10 day moving average crossing at 78.20
Second support is the 20 day moving average crossing at 77.31


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As Crude Oil Climbs, Expect $100 per Barrel by January, 2011

From analyst Dian L. Chu.....

Last week the shorts were all lined up for another bearish inventory report for Petroleum products from the EIA, but lo and behold, miracles do actually occur. We had an extremely bullish report (Fig. 1) which caught a lot of traders poorly positioned, and many fund managers underexposed to the commodity, which relative to Gold, Silver, and Copper, smelled like a bargain in the face of further quantitative easing expected by the Federal Reserve in the 4th quarter.

The technicals indicate that upward resistance will not be found until the $84 per barrel level, so despite Crude Oil moving from roughly $75.60 before the report on Wednesday morning to close Friday`s electronic session at $81.73, a $6.13 move in 3 days, there is still more room to go for this upward move in the commodity. (Fig. 2)

The real surprise in the report was the large drop--3.5 million barrels-- in gasoline inventories, and the RBOB contract needed to re-price itself given this change which was largely due to lower imports on the supply side, as demand for gasoline is still relatively anemic year on year.

Distillate demand has recovered strongly over the last 6 weeks from the lows of the summer (Fig. 3), and is quite robust year on year, and a great sign that the double dip scenario is officially off the table. Remember, that distillate demand represents usage from the industrial and manufacturing sectors of the economy, which will be the first indications of potential economic strength or weakness.....Read the entire article.

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Crude Oil Trades Near Eight Week High After U.S. Stocks Fall, Goods Orders Gain

Crude oil traded near an eight week high in New York after equities slipped and orders for U.S. capital goods increased the most since March. Futures retreated yesterday after stocks declined for the third time in four days and the dollar advanced against the euro. The Commerce Department reported that orders for non military capital goods excluding planes climbed 5.1 percent. An Energy Department report tomorrow will probably show crude supplies rose last week, according to a Bloomberg News survey.

“It’s hard to justify a further move higher with stocks down and the dollar stronger,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’ll see if we can consolidate here and keep an eye on this week’s economic reports.” The November contract traded at $81.39 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 9:45 a.m. Sydney time. Yesterday it lost 11 cents to $81.47. Oil closed at $81.58 on Oct. 1, the highest level since Aug. 5. Prices are up 2.5 percent this year.

The Standard & Poor’s 500 Index dropped 0.8 percent to 1,137.03 at the 4 p.m. close in New York, and the Dow Jones Industrial Average shed 0.7 percent to 10,751.27. The dollar strengthened from a six month low against the euro as concern that Europe’s major banks are undercapitalized made the region’s assets less attractive. The U.S. currency traded at $1.3676 after falling 0.8 percent yesterday.....Read the entire article.

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Hey Sharon....Where is Crude Oil and Gold Headed on Tuesday?

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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Stock Market and Commodities Commentary For Monday Evening Oct. 4th

The U.S. stock indexes closed weaker today on more profit taking. No near term chart damage has occurred and the bulls still have the near term technical advantage. The indexes last week hit fresh multi month highs. Traders are gearing up for Friday's U.S. employment report. Look for more subdued trading in the stock indexes until then, but then look for an active trading day on Friday, in the wake of the jobs data.

Crude oil closed up $0.03 at $81.61 a barrel today. Prices closed near mid range today and hit a fresh two month high. Bulls still have the near term technical advantage in crude and have good upside near term technical momentum. Prices are in a six week old uptrend on the daily bar chart.

Natural gas closed down 6.8 cents at $3.729 today. Prices closed near mid range today and hit a fresh contract low. The bears have the solid overall near term technical advantage and have gained more downside power recently. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.00. The next downside price objective for the bears is closing prices below solid technical support at $3.50.

Gold futures closed down $1.30 at $1,316.50 today. Prices today closed near mid range and did some consolidation after scoring another fresh record high on Friday. Mild profit taking pressure was featured amid a firmer U.S. dollar index today. Gold bulls still have the solid overall near term technical advantage. There are no early technical clues that a market top is close at hand. Prices are in a nine week old uptrend on the daily bar chart.

The U.S. dollar index closed up 34 points at 78.65 today. Prices closed nearer the session high today and saw short covering in a bear market. Bears still have the solid overall near term technical advantage. There are still no early clues to suggest a market bottom is close at hand.

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Crude Oil and Gas Reserves Rise Despite Decline in Investment

Total hydrocarbon reserves worldwide increased for the first time since 2005 despite a decline in worldwide upstream investment and development spending. Worldwide upstream investment declined by 23 percent to $378 billion in 2009 among 224 oil and gas companies surveyed, but total worldwide total hydrocarbon reserves grew three percent, according to IHS Herold's report 2010 Global Upstream Performance Review. Production also increased one percent, driven by a 2.2 percent increase in natural gas output. Development spending declined by nearly 20 percent, the first decline in a decade.

"We were very surprised at the strength of reserve additions given the weak economic conditions and tightness in credit markets during 2009," said Nicholas D. Cacchione, director of IHS Herold and author of the report. Oil reserves reversed a two year decline, rising three percent to 164 billion barrels, mostly due to extensions and discoveries in the Canadian oil sands that added 8.6 billion barrels in positive reserve additions. A record 7.9 billion barrels also was added in the South and Central American regions also added a record 7.9 billion barrels.

Natural gas reserves climbed 3.7 percent despite a record 11.4 Tcf in negative reserve revisions, as development of unconventional plays in North America and liquefied natural gas resources in Asia accelerated. The decline in capital spending resulted from a 40 percent reduction by exploration and production companies, while the integrated oil companies cut investment by just nine percent. Exploration spending was most resilient, dropping just 12 percent to $62.7 billion. Unproved acquisition costs were down 71 percent, and a two percent dip in proved acquisition outlays would have fallen 50 percent were it not for the $20 billion Suncor/Petro-Canada merger.

Lower capital spending and higher reserves resulted in a near 50 percent decrease in reserve replacement costs, to $11.41/barrel of oil equivalent (BOE), and lowered finding and development costs to $12.23/BOE. Strong natural gas reserve additions led reserve replacement rates to the highest levels in five years.....Read the entire article.


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Phil Flynn: Easy Oil

Who has the second largest amount of proven conventional oil reserves or easy to get to oil? Well if you asked me yesterday the answer officially was Iran but today that all may change. Iraq has announced that they will increase the amount of their proven oil reserves from mere 115 million barrels of oil to a whopping 143.1 billion barrels of oil putting them in second place in the world of cheap, easy to get to oil. Dow Jones reports that the figure, the first update since 2001, would mean Iraq has the world's second largest reserves according to statistics on the OPEC website.

Iraq would take second place from Iran, which has 137.01 billion barrels of proven reserves, but would still be far behind Saudi Arabia, which has 264.59 billion barrels of proven oil reserves, according to OPEC figures. These aren't random figures, rather they were the results of deep surveys carried out by the ministry's oil reservoir company and international companies which signed contracts with Iraq," al-Shahristani said. "Most of these figures were the result of surveys conducted by these international companies, especially at oil fields such as West Qurna and Zubair." Dow Jones say that Iraq has signed 12 deals with international oil companies to ramp up.....Read the entire article.


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