Trade ideas, analysis and low risk set ups for commodities, Bitcoin, gold, silver, coffee, the indexes, options and your retirement. We'll help you keep your emotions out of your trading.
Oil dropped from its highest in almost two weeks as analysts forecast U.S. crude stockpiles swelled to the largest since June amid refinery maintenance and that fuel demand has slowed. Futures retraced some of yesterday’s 2.3 percent gain on expectations that crude inventories climbed 1.5 million barrels last week, according to analyst estimates before an Energy Department report tomorrow. U.S. industrial production fell for the first time since the recession ended in June 2009, according to Federal Reserve figures. Economists had forecast an increase.
“The fundamentals haven’t really improved by a great deal,” said Serene Lim, a commodity analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Inventories have been on the high range of the five year average so there are substantial supplies.” The November contract lost as much as 42 cents, or 0.5 percent, to $82.66 a barrel in electronic trading on the New York Mercantile Exchange, and was at $82.71 at 12:05 p.m. Singapore time. Yesterday it increased to $83.08, the highest settlement since Oct. 6. Prices are up 4.5 percent this year.
The more actively traded December contract slipped as much as 43 cents, or 0.5 percent, to $83.37. “We’re probably seeing a bit of profit taking today with $83 being a strong resistance level,” said Lim at Australia & New Zealand Banking Group. November oil surged yesterday to as much as $83.28 a barrel after a strike in France curbed fuel supplies. French truckers blocked highways and officials said they would use police to prevent strikers from cutting the delivery of fuel as the standoff hardened over President Nicolas Sarkozy’s plans to raise the retirement age to 62.....Read the entire article.
Ongoing French labor unrest and its effect on the country's refineries and fuel terminals contributed to a $1.83 increase in the oil futures price Monday. Crude oil for November delivery settled at $83.08 as French refinery workers, truckers, students, and others continued to strike in protest of the Sarkozy government's attempt to change the retirement age from 60 to 62. The retirement age increase, which would be fully phased in by 2018, has already been approved by France's National Assembly. The Senate is set to vote on the measure Wednesday, and strikers hope the civil unrest will pressure the upper chamber to kill Sarkozy's pension reform plan.
Strikers have prevented oil tankers from entering the major southern port of Fos Lavera, and all 12 of France's refineries have been shut down. Moreover, the protesters have attempted to block access to fuel terminals. An official with a fuel importers' group said Monday morning that roughly 1,500 of France's 12,000 retail fuel outlets have exhausted their supplies of some or all types of fuel. Also having a bullish effect on oil Monday were rising equities markets, with the Dow Jones Industrial Average and S&P 500 each closing up more than 0.7%. Crude oil traded within a range from $80.35 to $83.08 Monday.
The price of a gallon of gasoline also surged, thanks to many of the issues affecting crude oil. Front month gasoline settled a nickel higher at $2.15 after fluctuating between $2.09 to $2.155. Thanks to a mix of abundant inventories and underwhelming demand as traders continue to await cold winter weather, November natural gas fell 10.4 cents to settle at $3.43 per thousand cubic feet. Gas traded from $3.44 to $3.53.
The U.S. stock indexes closed higher today and hit or are near fresh multi month highs. The stock index bulls have the overall near term technical advantage as price uptrends are in place on the daily bar charts. Stock index bulls have been very pleased with price action so far this autumn a time which is normally not favorable to market bulls. My bias is that prices will trade mostly sideways, but with a slight upside bias, into the end of the year.
Crude oil closed up $1.86 at $83.11 a barrel today. Prices closed near the session high today. Trading has become choppy and sideways at the higher price levels. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the October high of $84.43 a barrel.
Natural gas closed down 11.8 cents at $3.417 today. Prices closed near the session low and hit another fresh contract low today. The bears have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $3.80.
Gold futures closed up $0.40 at $1,372.40 today. Prices today closed near the session high after being under profit taking pressure early on. Once again, bargain hunters stepped in to buy weakness in the gold market. The U.S. dollar index backed off its earlier highs today and that also allowed gold prices to move up from daily lows. The gold bulls still have the solid overall near term technical advantage. Prices are still in a 2 1/2 month old uptrend on the daily bar chart.
The U.S. dollar index closed down 10 points at 77.16 today. Prices closed nearer the session low today. Bears still have the solid overall near term technical advantage, as the bulls today could show no follow through strength from gains seen on Friday. There are still no early clues to suggest a market bottom is close at hand.
There is no doubt that Ben Bernanke can inflate the commodity bubble and at the same time let some of the air out. Ben Bernanke has somewhat disappointed commodity bulls by not being more forthcoming about the size and the scope of the next round of quantitative easing. While today the Wall Street Journal is raising legitimate concerns about the potential backlash from his policies due not only to rising commodity prices but also the surge of investment in some emerging markets.
The Wall Street Journal writes, “The Federal Reserve's latest effort to juice the U.S. economy is making many investors in emerging-market and commodity-producing nations confident the rally has longer to run. Others see trouble ahead, concerned too many investors are jumping into the rally and that these markets can't keep raising if the U.S. economy stays sluggish.” Already this year a record $60 billion has gone into emerging-market stock and bond funds... and investors expect another $500 Billion...”. The question becomes what will happen if investors run for the exits at the same time. Commodity inflation is now thought to be......Read the entire article.
The broad markets along with metals have been on fire but in the last two weeks we have seen the sentiment become stronger. The extreme bullishness we are seeing has made it difficult for low risk swing traders to get in on the action simply because there have not been many sizable pullbacks. Instead the prices have been inching their way higher with very minor pullbacks before surging again.
The only way to take advantage of this type of price action in order to keep risk low is to take small positions when the market drops to the 5, 10 or 14 moving averages with a mental stop to exit the position if the market closes below the 14ma. Any position take up here should be small because the market is in runaway mode, meaning everyone is buying on the smallest of dips. The largest moves tend to be near the end of a trend which is why I feel this market could keep running for a few more weeks before taking a sharp plunge.
Natural Gas
If you have been reading my work over the past year you should know I don’t like natural gas. More people have lost money trying to play natural gas than any other investment vehicle out there which is why I don’t cover it very often. Many of you have been asking about Natural Gas (UNG) so here are my thoughts on it.
UNG has been in a down trend for several years and the only trades should be short positions at this time. The argument from some is that it’s undervalued and with winter just around the corner prices should go up. It’s a valid argument but price action is what makes traders money, not fundamentals.
The daily chart of Nat Gas below shows what I feel is about to happen. Remember, UNG is a terrible fund to be buying. Unless natural gas is moving strongly in your favor, this fund continually loses value simply because of the way its created.
Looking at the actual natural gas commodity chart is a different story… The trend is still down, but it does look as though it’s trying to form a base when looking at a 3 year weekly chart. That being said, there is still a very good chance we see gas test near the $3 level before starting a new trend so trying to pick a bottom here is not something I would be doing.
Trading Conclusion:
In short, the equities market is still in a strong uptrend. I’m not comfortable taking any large positions at this stage of the game but if we get a setup I will not hesitate to enter with a little money.
As for natural gas...trying to pick a bottom is deadly in a down trend as bounces tend to be short lived or flat. I will cover the dollar, gold, oil and the market internals in the member’s pre market morning video....
Crude oil was slightly lower overnight as it extends last week's decline below the 10 day moving average crossing at 82.96. Stochastics and the RSI are overbought, diverging and are turning bearish signaling that additional weakness is possible.
Closes below the 20 day moving average crossing at 80.82 would confirm that a short term top has been posted. If December renews the rally off August's low, the 75% retracement level of May's decline crossing at 88.07 is the next upside target.
First resistance is the reaction high crossing at 85.08
Second resistance is the 75% retracement level of May's decline crossing at 88.07
Crude oil pivot point for Monday morning is 81.78
First support is the 20 day moving average crossing at 80.82
Second support is the reaction low crossing at 75.10
Crude oil declined for a third day in New York amid speculation that builders in the U.S. started fewer homes in September and as the dollar gained against the euro, curbing the appeal of commodities as an alternative investment. Crude fell as the U.S. currency climbed for a second day after rebounding from the lowest level since January. Work began on 580,000 houses at an annual rate, down 3 percent from August, according to the median estimate of 56 economists surveyed by Bloomberg News before Commerce Department figures due tomorrow. Futures are on the longest losing streak since September. “Oil continues to be heavily impacted by U.S. dollar movements,” said Ben Westmore, minerals and energy economist at National Australia Bank Ltd. in Melbourne.
The November contract dropped as much as 69 cents, or 0.9 percent, to $80.56 a barrel in electronic trading on the New York Mercantile Exchange, and was at $80.77 at 11:08 a.m. Singapore time. Futures lost $1.44, or 1.7 percent, to $81.25 on Oct. 15, the lowest settlement since Sept. 30. The market is in its longest pullback since a four day drop through Sept. 17. Prices slipped 1.7 percent last week and are up 1.8 percent this year. Brent crude for December settlement declined as much as 65 cents, or 0.8 percent, to $81.80 a barrel on the ICE Futures Europe exchange in London. The contract on Oct. 15 dropped $1.75, or 2.1 percent, to $82.45......Read the entire article.
World financial markets were influenced by 2 important themes last week. These themes are expected to affect investment appetite and asset price movements in the medium term. The first is Fed's return to quantitative easing. As indicated in the September FOMC statement, most Fed members inclined to implementing additional easing measures to boost the economy. Apart from buying long term Treasury securities, members also talked about strategies to anchor inflation expectations.
These views were echoed by Fed Chairman Ben Bernanke during his speech at a Boston Fed conference on Friday. Bernanke said the Fed may expand asset purchases or change the language in its statement. He said that 'there would appear, all else being equal, to be a case for further action'.
Speculations for further QE have sent the dollar to a 15-year low against the yen and the USD index to the lowest level since December 11. Weakness in USD has caused abundant capitals flowing into emerging countries and pushed currencies in these countries higher. This has triggered some sorts of 'intervention' in emerging markets. For instance, Brazil and South Korea are stepping up attempts to control their currencies. This round of currency tensions have been driven by global economic imbalances.
While advanced economies have been trying to depreciate their currencies and urge emerging countries (such as China) to speed up appreciation, emerging economies are unwilling to accept the 'beggar thy neighbor' policy. The new rounds of QE and currency tensions are particularly influential for gold and the precious metal complex......Read the entire article.
Crude oil attempted to draw support from 4 hours 55 EMA last week but lacked decisive strength to resume recent rally. Upside was limited below 84.43 resistance as crude oil weakened again towards the end of the week. Intraday bias remains neutral. Note that there is no confirmation of reversal yet. But even in case of another rise, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and turn focus back to this support level.
In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.
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. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.
A stronger dollar, spurred by indications that the Federal Reserve plans to buy more U.S. government debt, placed downward pressure on crude oil Friday. Oil for November delivery fell $1.44 to settle at $81.25 per barrel. The euro, meanwhile, was down 0.8% against the dollar; a weaker dollar typically makes oil, priced in dollars, more attractive to buyers holding other currencies.
Boosting the greenback were comments Friday from Federal Reserve Chairman Ben Bernanke, who said Friday that the Fed was prepared to take additional measures to combat high unemployment and the threat of deflation. Under this "quantitative easing" process, the Fed would try to stimulate the economy by printing more money to buy debt. By increasing the money supply, the central bank hopes the measures would make borrowing cheaper for consumers and thus encourage Americans to spend more. Crude oil traded from $81.22 to $83.33 Friday, and it is down 1.2% for the week.
The November natural gas futures price, already buffeted in recent weeks by mild weather and abundant inventories, settled at $3.535 per thousand cubic feet Friday. The intraday trading range for gas was $3.55 to $3.68 Friday, and the commodity's settlement price fell 1.8% during the week. The front month price for gasoline declined four cents Friday to settle at $2.10 a gallon. November gasoline traded from $2.11 to $2.15, and it is down 3.2% for the week.
The S&P 500 index closed lower due to profit taking on Friday as it consolidates below the 87% retracement level of the April-July decline crossing at 1178.21. The mid range close sets the stage for a steady to lower opening on Monday. 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 1148.52 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Wednesday's high crossing at 1180.80. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1160.64. Second support is the 20 day moving average crossing at 1148.52.
Crude oil closed lower due to profit taking on Friday as it consolidates some of the rally off August's low. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 80.62 are needed to confirm that a short term top has been posted. Closes above last week's high crossing at 85.08 are needed to renew the rally off August's low. First resistance is last week's high crossing at 85.08. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support last week's low crossing at 80.98. Second support is the 20 day moving average crossing at 80.62.
Natural gas closed lower on Friday renewing this year's decline. The low-range close sets the stage for a steady to lower opening on Monday. However, stochastics and the RSI are oversold and turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.827 are needed to confirm that a low has been posted. If November extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.827. Second resistance is the reaction high crossing at 4.250. First support is today's low crossing at 3.520. Second support is weekly support crossing at 3.390.
Gold closed lower due to profit taking on Friday as it consolidates some of the rally off July's low. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project if it extends this year's rally into uncharted territory. Closes below the 20 day moving average crossing at 1324.30 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1388.10. First support is the 10 day moving average crossing at 1350.00. Second support is the 20 day moving average crossing at 1324.30.
The U.S. Dollar closed higher due to short covering on Friday and posted a key reversal up. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are oversold, diverging and are 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 78.66 would confirm that a short-term low has been posted. If December extends the decline off August's high, the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07 is the next downside target. First resistance is the 10 day moving average crossing at 77.61. Second resistance is the 20 day moving average crossing at 78.66. First support is today's low crossing at 76.34. Second support is the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07.
The Europeans are Asking Him To Change His Ways. And No Message Could Have Been Any Clearer; If You Wanna Make The World A Better Place, If You Wanna Make The World A Better Place Take A Look At Yourself, And Then make a change. Or stop printing some for a change. The Man in the mirror or at least the spotlight is Fed Chairman Ben Bernanke! The whole world has gone on an anticipatory tear after his promise to print more money and now some officials are fearful that this printing binge could destabilize the global economy and start a currency war.
The Financial Times says that one unnamed European official said that a further aggressive round of qualitative easing by the Federal Reserve would make US exports more competitive at the expense of its rival. This comes as an ironic situation especially considering the fact that US trade deficit hit 46.3 billion in August as imports from China continue to rise. China of course might be named a currency manipulator which could even increase the chances of a potential currency war looming ahead. This comes after the dollar hit a 15 year low against the yen and metal prices such as silver and copper soared yesterday.....Read the entire article.
Crude oil was slightly lower overnight as it extends Thursday's decline but remains above the 10 day moving average crossing at 83.13. At the same time, stochastics and the RSI are overbought, diverging but are turning neutral to bullish signaling that additional short term gains are possible.
If December renews the rally off last week's low, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 80.68 would confirm that a short term top has been posted.
First resistance is last Wednesday's high crossing at 85.08.
Second resistance is the 75% retracement level of May's decline crossing at 88.07.
First support is the 10 day moving average crossing at 83.13.
Second support is the 20 day moving average crossing at 80.68.
Crude futures for November delivery edged lower Thursday as government reports showed demand for U.S. petroleum dropped to its lowest level in more than 10 months. Front month crude fell 32 cents, settling at $82.69 a barrel on the New York Mercantile Exchange.
According to the U.S. Department of Energy's Energy Information Administration (EIA), oil inventories decreased by 400,000 for the week ended Oct. 8 while gasoline stockpiles decreased by 1.8 million barrels to 218.2 million barrels. Analysts claim crude fell due to an eight and a-half month low in imports, causing inventories to decline. A weaker economy decreases demand for crude. First time claims for unemployment insurance increased by 13,000 from the previous week, reported the U.S. Department of Labor.
Additionally, the euro strengthened against the dollar. The euro rose 0.6 percent, while the ICE dollar index was down 0.6 percent. A weaker dollar heightens the appeal of commodities, making it cheaper for foreign currencies. The falling dollar has kept oil futures above the $80 mark for more than a week. The intraday range for oil prices was $82.21 to $84.12.
November natural gas lost 3.9 cents to settle at $3.66 per thousand cubic feet on the NYMEX Thursday. The EIA reported an increase of 91 billion cubic feet for natural gas inventories. Natural gas stockpiles for the week ended Oct. 8 were 3.59 trillion cubic feet. Natural gas traded from $3.60 to $3.76 Thursday. The price of gasoline also settled lower Thursday at $2.14 a gallon. During Thursday's trading session, gasoline prices fluctuated between $2.12 and $2.185.
The S&P 500 index closed lower due to profit taking on Thursday as it consolidates below the 87% retracement level of the April-July decline crossing at 1178.21. The mid range close sets the stage for a steady to lower opening on Friday. At the same time, stochastics and the RSI are overbought, diverging and are turning neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1145.58 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Wednesday's high crossing at 1180.80. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1157.02. Second support is the 20 day moving average crossing at 1145.58.
Crude oil closed lower due to profit taking on Thursday but remains above the 10 day moving average crossing at 83.04. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral signaling that sideways to higher prices are possible near term. Closes above last week's high crossing at 85.08 are needed to renew the rally off August's low. Closes below the 20 day moving average crossing at 80.35 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 85.08. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support last week's low crossing at 80.98. Second support is the 20 day moving average crossing at 80.35.
Natural gas closed lower on Thursday ending a two day short covering bounce off Tuesday's low. The low range close sets the stage for a steady to lower opening on Friday. However, stochastics and the RSI are oversold and turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.860 are needed to confirm that a low has been posted. If November extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.860. Second resistance is the reaction high crossing at 4.250. First support is Tuesday's low crossing at 3.545. Second support is weekly support crossing at 3.390.
Gold closed higher on Thursday as it extends the rally off July's low. The mid-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project as it extends this year's rally. Closes below the 20 day moving average crossing at 1320.00 would confirm that a short term top has been posted. First resistance is today's high crossing at 1388.10. First support is the 10 day moving average crossing at 1345.40. Second support is the 20 day moving average crossing at 1320.00.
The U.S. Dollar closed lower on Thursday renewing the decline off August's high. The mid-range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold, diverging but are turning neutral signaling that additional weakness is possible near term. If December extends the decline off August's high, the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07 is the next downside target. Closes above the 20 day moving average crossing at 78.88 would confirm that a short term low has been posted. First resistance is the 10-day moving average crossing at 77.72. Second resistance is the 20 day moving average crossing at 78.88. First support is today's low crossing at 76.48. Second support is the 87% retracement level of the 2009-2010 rally on the weekly continuation chart crossing at 76.07.
Crude oil fell after a government report showed U.S. petroleum demand dropped to the lowest level in more than 10 months as the economy struggled to recover. Crude declined for a third day this week after the Energy Department reported total petroleum demand decreased 0.7 percent to 18.3 million barrels a day in the week ended Oct. 8, the lowest level since the seven days ended Nov. 27, 2009. A Labor Department report today showed U.S. jobless claims unexpectedly rose to 462,000 in the week to Oct. 9.
“The demand numbers were very weak,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We don’t really have a bull market unless we have stronger consumer demand.” Oil for November delivery fell 34 cents, or 0.4 percent, to $82.67 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier today, futures rose to a one week high of $84.12. Prices have climbed 4.2 percent this year.
Brent crude for November settlement fell 35 cents, or 0.4 percent, to $84.29 a barrel on the ICE Futures Europe exchange in London. The Energy Department reported demand for gasoline decreased 2 percent to 8.81 million barrels a day, the lowest level since the week ended Feb. 12. Oil also declined as the report showed crude supplies fell 416,000 barrels last week, less than the American Petroleum Institute estimated yesterday......Read the entire article.
