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Crude oil dropped to as low as 80.06 last week before forming a temporary low there and turned sideway. Initial bias remains neutral this week and some consolidations would be seen first. However, note that another fall remains in favor as long as 84.52 minor resistance holds. Below 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.52 will flip intraday bias back to the upside for retesting 88.63 high.
In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.
In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.
Crude Oil fell, posting its biggest weekly loss in three months, after China ordered banks to raise reserves in a move that may slow growth in the world’s largest energy consuming country. Futures dropped 0.4 percent after China told lenders for the fifth time this year to set aside more funds to drain cash from the financial system and limit asset bubbles. Economic growth will spur a 9.5 percent jump in 2010 Chinese oil use, according to a Nov. 12 International Energy Agency report.
“These further moves by the Chinese to rein in their economy and the real concern they’re expressing about inflation is weighing on this crude market,” said John Kilduff, a partner at Again Capital LLC, a New York based hedge fund focusing on energy. Crude for December delivery fell 34 cents to settle at $81.51 a barrel on the New York Mercantile Exchange. Prices have dropped 4 percent since Nov. 12, the most since the week ended Aug. 13. The December contract expired today. The more active January contract slipped 44 cents, or 0.5 percent, to $81.98.
The People’s Bank of China said it will raise the reserve ratio requirement for the nation’s banks by 50 basis points starting Nov. 29. Speculation of an imminent increase in interest rates to counter inflation helped to drive the biggest selloff in China’s benchmark stock index since May over the past two weeks......Read the entire Bloomberg article.
Thursday was another example of Mr. Market playing games with traders and investors as equities and precious metals took part in a strong rally. Some market prognosticators noted short term oversold conditions across the board while others discussed the potential for a strong reversal that could potentially take out recent highs. In addition to the regular banter, to the average retail investor the market sure looks rigged when the government decides to sell a large stake in a massive IPO offering and a shaky tape suddenly becomes stronger than garlic.
There is a lot going on in the news as of late, and the expiration of the Bush tax cuts looms large on the minds of many, particularly small business owners. So the real question becomes, what should traders be watching or paying attention to before the light volume Thanksgiving week? The answer is simple, watch the tape! The market will provide plenty of clues and it will eventually tip its hand, experienced traders will wait for this process to unfold.
At this point in time, it is a bit early to begin making predictions as to which direction the equities market will go. What we do know is that the market was oversold in the short-term, so this could be a pause before prices turn lower. In contrast, this could be the beginning of another bullish move breaking recent highs on its way to a “Santa Claus” rally. My stance is neutral at this point in time; S&P 1200 should offer significant overhead resistance while S&P 1170 / 50 period moving average is near term support.
Crude oil settled at $81.51 a barrel Friday, a 34 cent decline from the previous day, as traders responded to action taken by the Chinese government to address rising inflation.
China's government, which many thought would raise interest rates to quell inflation, decided to take a somewhat milder approach Friday: increasing the required reserve replacement ratio for banks. Although less dramatic than the former approach, the move is expected to have a dampening effect on demand for oil and other commodities.
Also on the minds of traders was pending action by the Irish government, which faces a serious debt crisis brought on by a real estate bust. Ireland's prime minister on Friday confirmed the government was holding talks with the EU and the International Monetary Fund to craft a bank bailout plan to help stabilize the country's banks. The increasing likelihood of an Irish bank bailout has helped the euro to regain strength against the dollar recently. However, a weaker dollar was not enough to carry oil into positive territory for Friday.
December crude traded within a range from $80.59 to $82.75 Friday. Beginning with Monday's settlement price of $84.86, oil is down 3.9 percent for the week.
For natural gas, the story has been quite different. December gas futures surged 8.2 percent during the week, thanks to colder weather conditions taking hold in much of the country and forecast to continue through the Thanksgiving holiday.
Natural gas gained 15 cents Friday to settle at $4.16 per thousand cubic feet. It peaked at $4.17 and bottomed out at $3.975.
Gasoline for December delivery fell three cents to settle at $2.20 a gallon Friday. The futures price fluctuated from $2.16 to $2.25. Gasoline is virtually flat for the week, having risen only 0.2 percent since Monday.
The S&P 500 index closed higher on Friday as it extends Thursday's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning neutral to bullish signaling that a short term low might be in or is near. Closes above the 10 day moving average crossing at 1199.63 would temper the near term bearish outlook. If December extends the decline off last week's high, the 25% retracement level of the July-November rally crossing at 1169.37 is the next downside target. First resistance is the 10 day moving average crossing at 1199.63. Second resistance is this month's high crossing at 1224.50. First support is Tuesday's low crossing at 1175.20. Second support is the 25% retracement level of the July-November rally crossing at 1169.37.
Crude oil closed lower on Friday but remains above the 50% retracement level of the August-November rally crossing at 80.49. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If December extends the decline off last week's high, the 62% retracement level of the August-November rally crossing at 78.56 is the next downside target. Closes above the 10 day moving average crossing at 84.51 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 84.03. Second resistance is the 10 day moving average crossing at 84.51. First support is Wednesday's low crossing at 80.06. Second support is the 62% retracement level of the August-November rally crossing at 78.56.
Natural gas closed higher on Friday as it extends this week's rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December renews the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.362 is the next upside target. Closes below the reaction low crossing at 3.743 are needed to confirm that a short term top has been posted. First resistance is last Wednesday's high crossing at 4.249. Second resistance is the 38% retracement level of the June-October decline crossing at 4.362. First support is Monday's low crossing at 3.710. Second support is the reaction low crossing at 3.500.
Gold closed lower on Friday and the mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI remain bearish signaling that sideways to lower prices is possible near term. If December extends the decline off last week's high, the reaction low crossing at 1315.60 is the next downside target. Closes above the 10 day moving average crossing at 1372.90 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 1362.70. Second resistance is the 10 day moving average crossing at 1372.90. First support is Tuesday's low crossing at 1329.00. Second support is the reaction low crossing at 1315.60.
The U.S. Dollar closed lower due to profit taking on Friday as it consolidates some of this month's rally. The mid-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought 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 77.79 are needed to confirm that a short term top has been posted. If December extends this month's rally, the 38% retracement level of this year's decline crossing at 80.54 is the next upside target. First resistance is Tuesday's high crossing at 79.59. Second resistance is the 38% retracement level of this year's decline crossing at 80.54. First support is the 20 day moving average crossing at 77.79. Second support is this month's low crossing at 75.24.
China North East Petroleum reported third quarter results that fell well short of the one analyst estimate on Thomson Reuters. Total oil production plunged 40% on severe flooding. The oilfield services company also said it's working on improving its control environment and has engaged an outside firm to help with it's restatement process. Shares slipped 4.9% to $6.60 in after hours trading.
Exploration and production company Gastar Exploration Ltd. (GST, $4.64, +$0.35, +8.16%) said it has acquired about 59,000 net acres of leasehold in the Marcellus Shale, a natural gas rich rock formation. Terms of the acquisition, which is expected to close in mid-December, weren't disclosed.
Goldman Sachs started coverage on oil service provider RPC Inc. (RES, $26.97, -$1.53, -5.37%) with a sell rating, saying the market for U.S. pressure pumping remains very tight, stocks are near all time highs and Street estimates imply that the cycle goes through 2012.
Northern Oil and Gas Inc. (NOG, $22.07, +$1.29, +6.21%) boosted the size of its planned stock sale as the offering priced at a mere 2.6% discount to Thursday's close.
The Chinese moved to increase interest rates and Big Ben Bernanke struck back defending quantitative easing and bashing the Chinese. Ben forced the issue with QE2 and now the Chinese are forced to raise rates! Now the question is will the Chinese rate hikes keep coming or will it be too little too late to cool their hot inflation? Right now I would say it’s bordering on too little too late. Ben Bernanke lashed out at China saying they are causing global problems by preventing their currency from strengthening while their economy booms.
It’s just like what I said in my article in the upcoming issue of SFO Magazine when I wrote, “The Fed felt it had no choice (but to print more money,QE2) as the U.S. government moved slow to attack a rising budget deficit and at the same time face an imbalance as the Chinese continue to manipulate their currency." Chinese currency manipulation may help them in the short run yet it could sow the seeds of economic problems in the future.
The Chinese may feel that they have to cheat the world to be successful by controlling their currency but the truth is that if they want to maintain their meteoric economic growth over the long run they would be better served by allowing the market, not the government, to moderate their economy. Chinese currency manipulation is creating a bubble that will burst if they make a misstep, causing major pain the future. Right now that may be hard to imagine as everyone on the globe is so bullish on China yet the recent correction and history is a reminder that things can......Read the entire article.
Commodity prices sold off hard this week as concerns over credit tightening in the Chinese market prompted traders and investors to rethink their inflation notions. Unexpectedly, in October, year over year inflation on the Chinese mainland rose to 4.4 percent, prompting authorities to jawbone a jack up of interest rates and price controls.
Gold prices tumbled from the $1,400/oz level reached after a nearly unabated three month rise. Industrial commodities also took it on the chin, as fears of slowing growth in China percolated.
But the most industrial of commodities is, of course, oil. Oil had rallied in autumn along with gold, albeit with greater volatility, and with punier returns as well. Gold chugged uphill from July's end to a 14.8 percent gain ahead of the November election. Simultaneously, oil pitched and rolled 3.2 percent higher.
The wheels on the commodity undercarriage started wobbling after the votes were tallied and, more importantly, once the Fed laid out the parameters of its second tranche of quantitative easing. Then oil and gold both tumbled. Gold led the way down, just as it had led the way up. Since the top of November, bullion's slumped 1.7 percent, while front month WTI crude prices have slid 1.3 percent.
Recently, oil prices have gyrated nearly twice as much as gold. This autumn, the annualized standard deviation in oil's daily close has been 27.8 percent, while gold's wobbled at a 14.7 percent rate.
But most arresting is the expectations of future volatility reflected in option prices. As gold topped the $1,400 mark, the CBOE Gold Volatility Index (CBOE: GVZ) jumped to 24.65. This index represents the near term variance in the price of the SPDR Gold Shares Trust (NYSE Arca: GLD) here, an annualized 24.65 percent as imputed to option premiums. A week before, when gold was $50 lower, the volatility index registered 21.87......Read the entire article.
With the recent beating crude oil bulls have taken is it time to bail on industry leader ExxonMobil (XOM)? A quick look at our "Smart Scan Chart Analysis" technology confirms that a short term counter trend move is underway.
When this action is over look for the longer term positive trend to resume. Be sure to trade this uptrend with tight money management stops.
Based on a pre-defined weighted trend formula for chart analysis, XOM scored +85 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10......Last Hour Close Above 5 Hour Moving Avg
-15......New 3 Day Low on Tuesday
+20......Last Price Above 20 Day Moving Average
+25......New 3 Week High, Week Ending Nov. 13th
+30......New 3 Month High in November +85......Total Score
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Crude oil was higher due to short covering overnight as it consolidates some of the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.
If December extends the aforementioned decline, the 62% retracement level of the August-November rally crossing at 78.56 is the next downside target. Closes above the 10 day moving average crossing at 84.57 would confirm that a short term low has been posted.
First resistance is the 20 day moving average crossing at 84.06
Second resistance is the 10 day moving average crossing at 84.57
Crude oil pivot point for Friday morning is 82.09
First support is Wednesday's low crossing at 80.06
Second support is the 62% retracement level of the August-November rally crossing at 78.56
Mounting expectations that Ireland will accept a bank bailout from the European Union caused the greenback to weaken, causing December crude oil futures to end the day higher Thursday.
Oil rose $1.41 to settle at $81.85 a barrel. After some reluctance this week, Irish government officials on Thursday confirmed that they were pursuing a loan from the EU to bolster the country's banking system. The Irish government's shifting position in turn provided some comfort to other EU economies grappling with their own debt crises. Moreover, it helped the euro to reverse recent losses and gain 0.8 percent against the dollar.
Front-month crude traded within a range from $80.44 to $82.35 Thursday.
Buoyed by the prospect of a busier Thanksgiving travel period this year, along with low East Coast inventories, gasoline surged more than three percent to settle at $2.23 a gallon. December gasoline traded from $2.16 to $2.24.
Natural gas for December delivery fell two cents to end the day at $4.01 per thousand cubic feet. The futures price fluctuated from $3.85 to $4.04.
The S&P 500 index closed sharply higher on Thursday as it consolidates some of the decline off last week's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If December extends the decline off last week's high, the 25% retracement level of the July-November rally crossing at 1169.37 is the next downside target. Closes above the 10 day moving average crossing at 1201.82 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 1201.82. Second resistance is this month's high crossing at 1224.50. First support is Tuesday's low crossing at 1175.20. Second support is the 25% retracement level of the July-November rally crossing at 1169.37.
Crude oil closed higher due to short covering on Thursday as it rebounded off the 50% retracement level of the August-November rally crossing at 80.49. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If December extends the decline off last week's high, the 62% retracement level of the August-November rally crossing at 78.56 is the next downside target. Closes above the 10 day moving average crossing at 85.05 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 84.04. Second resistance is the 10 day moving average crossing at 85.05. First support is Wednesday's low crossing at 80.06. Second support is the 62% retracement level of the August-November rally crossing at 78.56.
Natural gas closed lower on Thursday as it consolidates some of Wednesday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If December renews the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.362 is the next upside target. Closes below the reaction low crossing at 3.743 are needed to confirm that a short term top has been posted. First resistance is last Wednesday's high crossing at 4.249. Second resistance is the 38% retracement level of the June-October decline crossing at 4.362. First support is Monday's low crossing at 3.710. Second support is the reaction low crossing at 3.500.
Gold closed higher due to short covering on Thursday as it consolidated some of decline off last week's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices is possible near term. If December extends the decline off last week's high, the reaction low crossing at 1315.60 is the next downside target. Closes above the 10 day moving average crossing at 1377.50 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 1361.40. Second resistance is the 10 day moving average crossing at 1377.50. First support is Tuesday's low crossing at 1329.00. Second support is the reaction low crossing at 1315.60.
The U.S. Dollar closed lower due to profit taking on Thursday as it consolidates some of this month's rally. The mid-range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought 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 77.75 are needed to confirm that a short term top has been posted. If December extends this month's rally, the 38% retracement level of this year's decline crossing at 80.54 is the next upside target. First resistance is Tuesday's high crossing at 79.59. Second resistance is the 38% retracement level of this year's decline crossing at 80.54. First support is the 20 day moving average crossing at 77.75. Second support is this month's low crossing at 75.24.
Can the global commodity markets shake off the threats of Chinese rate hikes? Well today they are going to try. Still yesterday the oil markets ignored a very bullish oil inventory report after Chinese Premier Wen Jiabao said that he and the state council were drafting measure to address inflation. This led to the belief that interest rates in China may go up dramatically and curtail that oh so precious Chinese oil demand... Not Even a massive drop in US oil supply was enough to deter the market from going lower.
The EIA reported that U.S. commercial crude oil inventories decreased by a whopping 7.3 million barrels from the previous week. At 357.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.7 million barrels last week and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week.
Distillate fuel inventories decreased by 1.1 million barrels and are above the upper boundary of the average range for this time of year. Oil Exports and Low imports and refinery maintenance are the reason for the draws. The strikes in France are still taking a toll on our supply. Bloomberg News China International United Petroleum & Chemical Co., the nation’s largest oil trader, plans to boost diesel imports for a second month in December to ease a domestic shortage of the transport fuel.
China International, or Unipec, plans to import 120,000 tons for December delivery, compared with......Read the entire article.
Crude oil was higher due to short covering overnight as it consolidates some of the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.
If December extends the aforementioned decline, the 62% retracement level of the August-November rally crossing at 78.56 is the next downside target. Closes above the 10 day moving average crossing at 85.03 would confirm that a short term low has been posted.
First resistance is the 20 day moving average crossing at 84.03
Second resistance is the 10 day moving average crossing at 85.03
Crude oil pivot point for Thursday is 81.06
First support is Wednesday's low crossing at 80.06
Second support is the 62% retracement level of the August-November rally crossing at 78.56
Crude oil rebounded from a four week low as the growing prospect that Ireland will get a rescue bailout from the European Union stoked gains for stocks and commodities around the world. Crude rose as much as 2.1 percent, snapping four days of declines, after Ireland’s central bank governor said he expects the country to seek a bailout from the European Union and the International Monetary Fund. Yesterday’s Energy Department report showed crude inventories unexpectedly dropped the most since August 2009.
“The situation in Europe looks like it’s going towards a solution,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “There will be a rescue for Ireland, and that’s good news for the euro. Fundamentals are on the side of investors; inventories are going down.” Crude for December delivery advanced as much as $1.70 to $82.14 a barrel on the New York Mercantile Exchange. It was at $81.72 at 11:37 a.m. London time. Brent crude for January settlement rose as much as $1.72, or 2.1 percent, to $85 a barrel on the London based ICE Futures Europe exchange.
The New York contract, which expires tomorrow, fell yesterday to $80.44, the lowest settlement since Oct. 19. The more actively traded January future was up $1.31 at $82.35. Crude slumped yesterday amid speculation that China, the world’s biggest energy consuming country, will raise interest rates to cool economic growth. Prices also dropped on concern Europe’s debt crisis is worsening. Oil has fallen 4 percent since last week and is up 2.7 percent this year......Read the entire article.
There have been some major trend changes recently and it looks as though more investments are about to follow. The real question though is… Are You Ready To Take Advantage Of It?
It has been an exciting ride to say the least with the equities and metals bull market and the plummeting dollar. But it looks as though their time is up, or at least for a few weeks. Traders and investors will slowly pull money off the table to lock in gains or cut losses and re-evaluate the overall market condition before stepping back up to the plate and taking another swing.
Below are a few charts showing some possible money making trade ideas in the weeks ahead.
TBT 20+ Treasury Note Inverse Fund
This fund moves inverse to the price of the 20 year T.N’s also known as bonds. Looking at the chart you can see the recent reversal which took place. We had a great entry point shortly after this reversal took place using my low risk setup strategy.
Falling bond prices are considered to have a negative impact on equities because it implies that interest rates may start rising which means more investors will pull money out of stocks and put that money into a safe interest earning investment. You will typically see bonds change direction before equities. That being said the chart below is an inverse fund, so when this bond fund goes up, it means actually indicates bond yields are falling. I will admit these inverse funds really throw my brain for a loop at time… I prefer the good old days, buying long and selling short....so simple and clean....
UUP – US Dollar Index Fund
This fund moves with the dollar and allows equities traders to take advantage of currency trading. This chart below shows a possible trend reversal for the dollar. If the dollar continues to rally then it’s also a good sign that interest rates could be rising in the near future and it also means more downward pressure on equities.
SDS – Inverse SP500 Index Fund
These bear funds make it possible for traders and investors to profit from a falling market using a regular buy and sell strategy. They can also be traded in retirement accounts making them a golden investment for those willing to play a falling market.
This chart moves the same as the SP500 index only flipped. As the SP500 falls this fund rallies.
The strategy we just used to play the recent rally is the same strategy we will use during a bear market, but instead of trading the SPY, we are trading this fund.
It is important to note that while bull market rallies tend to drag out; bear markets typically have faster movements. Fear is much more powerful than greed which is why the stock market drops quicker than it goes up.
GLD – Gold Exchange Traded Fund
Gold also looks to be topping and could actually be starting to form a Head & Shoulders reversal pattern.
Mid-Week Trend Trading Conclusion:
In short, understanding inter-market analysis is crucial for traders/investors to know. Not understanding how they affect one other can be very costly in the long run. Remember that volatility and volume rise together at the end of a trend. You can view the recent volatility index (VIX) to see its price action also. Volatility changes also make for great low risk options trades if options are your thing. Focus on trading with the trend, bounces in a down trend are typically muted or trade sideways making is very difficult to make money buying in a falling stock market.
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