Is Consumer Confidence and Housing Enough to Stop Crude Oil's Run?

No doubt that 2010 was no 2009 when it comes to oil prices with 2010 bringing a mere 14% gain compared to 2009's 78%. Can 2011 continue the run in the face of even worse consumer confidence reports in the U.S. and a larger than expected drop in home values as the S&P/Case-Shiller index of U.S. property values reported a decline of 0.8 percent in October from a year earlier. If anything can bring down the commodity and equity markets in 2011 it's the much feared double dip in the U.S. housing market.

Say it can't happen? Like anything else in life, just follow the money. The smart money. Why are the banks refusing home loans without large cash down payments? Simple, because when issuing a loan it is really the bank that is investing in the home, not the home owner. The lender is only hoping the home owner will pay it off for THEM! Smart money [the banks in this case] know that the homes are not worth the current prices even as low as they are, making a double dip inevitable.

We know what this will do for consumer confidence in the U.S. but will it stop China and India's rapid expansion and continued increase in energy demand? Unlikely, welcome to the new world economy. Here's your trading numbers for Wednesday morning......

Crude oil was lower due to light profit taking overnight. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.45 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.08. Second support is the 20 day moving average crossing at 89.45. Crude oil pivot point for Wednesday morning is 90.94.

Natural gas was slightly lower overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 4.295 are needed to confirm that a short term low has been posted. If February renews this month's decline, November's low crossing at 3.913 is the next downside target. First resistance is the 20 day moving average crossing at 4.295. Second resistance is the reaction high crossing at 4.554. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Wednesday morning is 4.240.

Gold was slightly lower due to light profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If March extends Tuesday's rally, this month's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 1410.00. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1398.70.


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Free MarketClub Gold Alert!

Tuesday morning MarketClub issued an "enter long" for short term traders with a GREEN Daily “Trade Triangle” @ $1,387.72. Trade Triangles for intermediate and long term traders continue to remain in long positions.


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Commodity Traders to China....."Good Start Guys, But Not Enough"

Crude oil and commodity traders seem to be telling China "good start guys, but not enough" as commodity prices appear to be holding up with support of the continued bad weather in Europe and the U.S.

The usual low volume holiday trading is setting up an interesting first week for 2011. Will this "soft landing" in China's pullback be healthy and create sustainable economic growth in China?

The U.S. dollar showed continued weakness for a fourth day, keeping the appeal for commodities going in the U.S. markets. Traders are looking for U.S. oil stockpiles to decrease by 3 million barrels from 340.7 million in the week ended Dec. 24, according to the median estimate of nine analysts surveyed by Bloomberg News. With supplies falling this month by 19 million barrels, or 5.3 percent, the biggest decrease since December 2006.

Let's scrape the ice off of our monitors and trade the numbers given us. Here they are for Tuesday morning......

Crude oil was higher overnight and is poised to extend the rally off November's low. Stochastics and the RSI are diverging but are bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 89.12 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.85. Second support is the 20 day moving average crossing at 89.12. Crude oil pivot point for Tuesday morning is 90.38.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.167. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Tuesday morning is 4.119.

Gold was higher overnight and has renewed the rally off last week's low. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If March renews this year's rally into uncharted territory, upside targets will be hard to project. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1380.90.


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Who's Your Daddy Energy and Oil Traders?

We knew it was coming, China had already surpassed the U.S. [in some people's eyes] as the largest energy user in the world. But China's "surprise" rate hike over the holiday weekend [niiiice guys] was just a friendly reminder who is in charge of determining the price we pay for energy, commodities, food....really anything in the west and the rest of the world now.

Traders expected a rate rise coming out of China, but the timing caught them off guard. After taking loses early in the Sunday evening session markets recovered as traders expected the rate increases would do little to put a halt to China's appetite for commodities.

The news out of China combined with the last week of 2010 signaling an end to tax break season for refiners in the U.S. has most investors calling a top in crude oil.

While mostly bad news has been coming out of Europe, oil and energy traders have been given some holiday cheer in the form of horrible weather. Worst then normal conditions have energy needs across Europe spiking.

Here's Monday's trading numbers to get your week started......

Crude oil was lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are diverging but are turning bullish signaling that sideways to higher prices are possible near term. If February extends the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.89 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 91.07. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 89.67. Second support is the 20 day moving average crossing at 88.89. Crude oil pivot point for Monday morning is 90.29.

Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If February extends this month's decline, November's low crossing at 3.913 is the next downside target. Closes above the 20 day moving average crossing at 4.283 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.189. Second resistance is the 20 day moving average crossing at 4.283. First support is the reaction low crossing at 3.985. Second support is November's low crossing at 3.913. Natural gas pivot point for Monday morning is 4.17. With a score of -85 our "Smart Scan Chart Analysis" of natural gas etf UNG confirms that a short term counter trend move is underway. When this action is over look for the longer term negative trend to resume.

Gold was steady to slightly higher overnight as it consolidates some of last Thursday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1361.6 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is the reaction high crossing at 1408.90. Second resistance is this month's high crossing at 1432.50. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Monday morning is


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Even if Santa Forgot you, The Crude Oil Trader and MarketClub Didn't!

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Smooth Sailing For Crude Oil Bulls or Bearish Set Up?

Crude oil bulls are enjoying a gift from old Saint Nick. After hitting 90.79 in the overnight session the bulls are now being given a chance to break out of this month's trading range and have visions of $100 oil glistening with holiday cheer! But smart bears that know how to play these set ups with tight stops are peeking around the Christmas tree with such holiday glee. If the bears are regifted with trading below 89.06 [minor support] the trend will flip back to the downside to extend the consolidation from 90.76.

With so many commercial traders taking next week off you have to ask yourself "are you willing to sit on these oil long positions going into the holiday"? Enjoy your Christmas gifts and at the very least take part of your profits. Here's your trading numbers for Thursday morning.....

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below last Wednesday's low crossing at 87.43 are needed to confirm that a short term top has been posted. First resistance is this month's high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.49. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Thursday morning is 90.38.

Natural gas was lower overnight as it extends this week's trading range. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.280 are needed to confirm that a short term low has been posted. If January renews this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.280. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Thursday morning is 4.102.

Gold was lower overnight as it consolidates some of this week's gains. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 1408.90 are needed to confirm that a short term top has been posted. If March renews the decline off this month's high, the reaction low crossing at 1352.00 is the next downside target. First resistance is Tuesday's high crossing at 1393.00. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Thursday morning is 1387.50.


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Who Will Win The Battle, The U.S. Dollar or Crude Oil?

It's true, oil demand has improved slightly. But crude oil has still over shot it's real value going into this Santa Claus rally and something has to give. History tells us that the dollar and the currency exchanges will win out. We are still bearish the U.S. Dollar for the long term as Washington shows no sign of easing the printing presses. But the near term weakness in the Euro gives dollar bulls the upper hand against commodities, especially oil.

So despite the TV talking heads wild dreams of $100 oil in the near future we just don't see that until summer of 2011....if even then! But we don't trade this market as if we were pshyic, we trade the numbers given us each and every day. And here are those numbers for Wednesday morning......

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.17 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.17. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Wednesday morning is 89.66.

Natural gas was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.290 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.290. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Wednesday morning is 4.120.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1388.20 would confirm that a short term top has been posted. If March renews this month's decline, the reaction low crossing at 1352.00 is the next downside target. First resistance is the 20 day moving average crossing at 1388.20. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1387.70.


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What Patterns are Telling Us That Gold is Going Up?

David Banister has been keeping us on top of gold lately with his expert use of Fibonacci and Elliot Wave patterns he has been shareing with us. This gold bull market has been moving in very reliable Elliott Wave and Fibonacci patterns for many years now, but once in awhile the waters get a little murky for sure. Recently we have seen a fair amount of volatility near year end as position squaring and year end machinations take hold. With that said, it does appear that Gold should be poised to power higher near term, and I’m looking for a completion to a 5 wave rally that began from about $1,040 per ounce in February of this year.

Over the past several weeks, I see a clear Fibonacci trading day relationship on Gold’s swings from pivot highs to pivot lows. 8 days of correction, 13 days of rally, 8 days of correction is the recent pattern over the past 5 weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:

Based on the recent patterns, I believe we completed a minor wave 3 from the February bottom at $1424 a little over 5 weeks ago, and had a shallow period of 8 days to complete a wave 4 to $1,330. Now, we are in the final 5th wave up pattern to complete an entire 5 wave move from February of 2010. In the near term then, I’m expecting a pretty strong rally from this recent $1365 area to at least $1,480 per ounce, and eventually a good shot at completing the structure at $1525 ranges. Short term, we should begin a wave 3 up here, followed by a 4th wave correction, and then a final and terminal 5th wave. Below is a multi- month weekly chart view of where I see us heading and where we’ve been.

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Crude Oil Moving Higher Going Into The Year End, What's New!

As usual oil prices are ending the year with a bullish tone. Not pushing through to new highs, but hovering around the high end of the range established in 2010. But as our calls for Tuesday's trading will show, signals are neutral to bearish telling us traders are trying to put a top in here as we go into the end of the year. Looks like natural gas is going to take in the limelight as we head into 2011 with reminders of the good old take over days in the oil and gas industry. Carl Icahn is seeing to that [check out Dian L. Chu's latest article] and something tells me T. Boone is right around the corner. Ah yes, the good old days. Sometimes you can only dream of being physic and getting ahead of the take over trades. For now here is your trading numbers for Tuesday morning......

Crude oil was mostly steady overnight while extending this month's trading range. 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 87.73 are needed to confirm that a short term top has been posted. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 87.73. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Tuesday morning is 88.89.

Natural gas was lower overnight as it consolidates some of Monday's rally. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.317 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.317. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Tuesday morning is 4.167.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the reaction low crossing at 1352.00 is the next downside target. Closes above the 20 day moving average crossing at 1387.60 would confirm that a short term top has been posted. First resistance is the 20 day moving average crossing at 1387.60. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Tuesday morning is 1383.90.


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What is the Holiday Grind, and How Can You Trade It?

We go through this every year and it's amazing how many traders forget how to approach this market every year. It’s that time of year when volume dries up and prices rise into the new year. A lot of individuals are scrambling to prepare for the holidays, even though we had a year to prepare. The big money has already done most of their year end shuffling and will be taking it easy until January.

The market is overbought and sentiment readings are at extreme levels which in the past have been the start of large sell offs and even bear markets. While I am keeping a close eye for a top, there is not much we can do but stay long stocks and commodities until the market tips its hand and distribution selling is in control. The U.S. federal government is the only wild card going into year end that should be on traders’ radars. They have been doing a great job boosting prices in the equities and commodities market, but can they continue to hold things up when the big money and the proverbial herd start unloading positions in 2011?

SP500 Holiday Grind – Daily Chart
This chart shows the slow and steady grind higher that we have seen in the S&P 500. I expect this to continue into 2011 The market in my opinion is on the verge of some serious selling so long positions should be small going forward.

US Dollar On Pause For A Couple of Weeks
This 4 hour candle stick chart of the dollar shows price testing resistance (a previous high). I am expecting to see the U.S. Dollar trade sideways or possibly move closer to the previous high as we enter the new year. A sideways dollar will allow the equity and commodity markets to rise.

Conclusion:
In short, I think we could see an intraday pullback early this week and then a grind higher. The pullback would shake out some weak positions before the holiday march higher takes place. I typically don’t trade much going into the holiday season and new year. I may put on a small long position if I like what I see forming on the charts, but that would likely be about it. Light volume can be very dangerous to trade because sharp price spikes up or down can occur in a blink of an eye catching traders off guard.

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