Pipeline Closure....Higher Oil Prices or Jobs?

The possibility of supply constraints on crude oil from the closure of the Trans Alaska Pipeline helped crude oil spike up a $1.22 on Monday. This 800 mile long oil pipeline, which ships crude from Alaska's North Slope to the port of Valdez, is a vital supplier for refiners on the U.S. west coast.

The pipeline was shut down Saturday after Alyeska Pipeline Service discovered the leak. Alyeska has stated that they are developing a plan to restore the pipeline for the entire 800 mile line. Gasoline prices also came under pressure from traders for the closure.

In reports from Reuters News, "shutdown of one of the United States key oil arteries, which carries about 12 percent of the country's production, is the latest setback for the aging, 33 year old pipeline, which handles less than a third of the oil it did at its peak in the 1980s. Closures of the pipeline, although short, has provoked criticism of its operators, particularly major owner BP, whose reputation is already at an all time low after the Gulf of Mexico blow out last year, causing the largest ever U.S. oil spill.

The shutdown of the 800 mile line, which runs from the Prudhoe Bay oilfield to the tanker port of Valdez, has not yet affected shipments and tankers are being loaded on schedule at Valdez, meaning there is no immediate danger of restricted oil supply. Oil produced during the shutdown will be stored at Prudhoe Bay until the pipeline reopens".

With tankers loading on schedule this should have effect on futures prices but this will become a political football for both sides of the isle. The left will paint this as another reason to curtail oil production and the right will be calling for a new energy policy out of Washington. Jobs? Remember the 70's and all of the men traveling to Alaska to build the pipeline? A new pipeline and a few "fast tracked federal approvals" for some new nuclear power plants would go along way to getting to Americans back to work. And all done with private money, what a concept.

Just click here to get a FREE trend analysis of BP. Now let's trade some crude oil, natural gas and Gold today........

Crude oil was higher due to short covering overnight as it consolidates some of last week's decline but remains below the 20 day moving average crossing at 89.87. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If February renews last week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 89.87 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 89.87. Second resistance is last Monday's high crossing at 92.58. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Tuesday morning is 89.12.

Natural gas was slightly higher overnight as it consolidates some of last week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below the 20 day moving average crossing at 4.315 are needed to confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.315. Second support is December's low crossing at 3.985. Natural gas pivot point for Tuesday morning is 4.390.

Gold was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 10 day moving average crossing at 1391.50 would confirm that a short term low has been posted. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. First resistance is the 10 day moving average crossing at 1391.50. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Tuesday morning is 1371.80.


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Crude Oil Rebounding But is $90 Our New Resistance Level?

Crude oil is rebounding this morning but still trading below 90 dollar levels at the moment. Traders seem to be focusing on the minimal impact the shut down of the Alaskan pipeline system is having and appear to be more concerned about Chinas sharp trade surplus decline. Is the $90 level showing itself to be firm resistance today?

Crude oil was higher in Sunday evenings overnight session due to short covering as it consolidates some of last week's decline but remains below the 20 day moving average crossing at 89.82. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends last week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.01 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.01. Second resistance is last Monday's high crossing at 92.58. First support is last Friday's low crossing at 87.25. Second support is the reaction low crossing at 84.09. Crude oil pivot point for Monday is 88.98.

Natural gas was lower overnight as it extends last week's decline. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.318 would confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is last Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.318. Second support is December's low crossing at 3.985. Natural gas pivot point for Monday is 4.479.

Gold was slightly lower overnight as it extends last week's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends last week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1392.90 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1392.90. Second resistance is last Monday's high crossing at 1424.40. First support is last Friday's low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Monday is 1372.00.


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Does This Indicator Make Gold an "Easy" Trade?

Gold bulls took one of their biggest hits in some time on January 4th and so far it has failed to appreciably recover. So what's next for this most precious metal? Take a few minutes and watch how this one little indicator has been catching the swings in gold incredibly well for the last several months. You may or may not be familiar with this little known profit maker, but if you're not yet using it you certainly want to learn how to profit from it in 2011.

We are talking about the Williams %R indicator. The Williams indicator is calculated using 14 periods and can be used on intraday, daily, weekly or monthly data. The time frame and number of periods will likely vary according to desired sensitivity and the characteristics of the individual security. And lately it has been very reliable for entry and exit strategies on gold. Watch our latest video from MarketClubs Adam Hewison on how he has used the Williams indicator for trading gold.

In December Hewsison told us "On charts, gold cut early losses, bouncing off lows at around $1,362 an ounce, a key support level in line with a series of lows set in December". Hewison also said "gold's bounce up from session lows signals that it has found support after falling this week. Every time when gold had gotten down to these levels, it's very close to making a reversal higher. Gold has risen toward its record $1,430.95 an ounce level three times since November but failed each time." Let's go to the video and see how Adam will trade gold using the Williams indicator.

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Crude Oil, Natural Gas and Gold Traders Respond to Labor Departments Employment Numbers

Crude oil did rebound overnight due to short covering after crude oil for February delivery settled at $88.38 a barrel, $1.92 lower than Wednesdays trading session. Big pressure was put on commodities as the U.S. dollar rose to a one month high against the euro on Thursday. But all markets were awaiting the U.S. Labor Department's monthly report that was expected to show that the unemployment rate dipped to 9.7 percent from 9.8 percent and that the economy created a net total of 145,000 jobs. But traders were disappointed as only 103,000 jobs were added bringing the unemployment rate down to 9.4%. The lowest unemployment rate in 19 months but not enough to give investors the confidence needed to rebound at Fridays opening.

While crude oil did consolidate some of Thursday's decline it remains below the 20 day moving average crossing at 89.84. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.31 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.31. Second resistance is Monday's high crossing at 92.58. First support is Thursday's low crossing at 87.85. Second support is the reaction low crossing at 87.43. Crude oil pivot point for Friday morning is 88.98.

Natural gas was lower overnight as it extends this week's decline. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.325 would confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.317. Second support is December's low crossing at 3.985. Natural gas pivot point for Friday morning is 4.479.

Gold was sharply lower overnight and has broken out below support marked by December's low crossing at 1361.60. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1393.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1395.90. Second resistance is Monday's high crossing at 1424.40. First support is the overnight low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Friday morning is 1372.00.


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Surviving and Thriving as the U.S. Dollar and Silver Reverse!

The first week of trading for 2011 has been interesting for traders as precious metals melt down on the new found strength in the U.S. Dollar. Equities on the other hand bucked the trend and moved higher as they get bought into earning season. Once the earnings start to be released we should see the market get sold on the good numbers and retail traders will buy into the good numbers as the smart money selling their shares while there is liquidity in the market.

Speaking of pullbacks, we have been talking about silver and gold forming a top. A couple months ago in November we saw the first warning sign of distribution selling in the precious metals sector. There was a large drop in price with heavy volume which is a warning sign that the BIG MONEY is starting to roll out of that crowded trade (precious metals). The thing with tops is that they take a long time to form and become very choppy.

Since the November highs both silver and gold have more or less traded sideways. They never really went much higher and that’s because the big money is distributing their shares to smaller investors slowly overtime (retail buyers/average Joe’s). They try not to scare investors off so they sell their positions in chunks. What most people do now is that these sellers want higher highs to forming because once a new high has been created everyone become bullish again buying more on the breakout. It’s these waves of bullishness that the big money sells into which is why you see heavy volume after a new high has been formed.

Let’s take a look at some charts….

Silver Daily Chart

The silver chart clearly shows the bull market (markup phase) and also the distribution phase taking place now..... If things go according to plan then choppy/lower prices should take place in the coming 1-4 months.

Gold Daily Chart

Gold is doing the same thing as silver and we don’t think the selling is over yet.

Dollar Daily Chart

The past 12 months it seems like everything has been a dollar based play. Meaning if you were to pull up a 1 minute chart of the dollar and a 1 minute chart of the SP500 or Gold, you would now that when the dollar moves up stocks and commodities go down and vise-versa. That being said the SP500 has started to move up with the dollar in the past month so there is a shift happening but it’s a slow change and is not much of a concern for gold right now.

If the dollar starts another leg higher it will make for good timing as market sentiment is at an extreme and earning season is here. That typically means lower prices in stocks and commodities.

Mid-Week Silver, Gold and Dollar Trading Conclusion:

In short, in the next 1-4 weeks we are bullish on the dollar, and bearish/neutral on stocks and commodities. The reason we are neutral is because we don’t like to short things in a bull market phase as they can keep going up much longer than we think at times. Rather hold our strong positions and wait for a correction to buy/add once we feel the selling momentum has stopped later this year.

We would not be surprised if we get a 4-10% drop in the next few weeks in both stocks and commodities, but until we see a clear roll in price we will not be looking for any trades to the down side. We are not in a rush to pick a top/short the market but if we get a setup we will take a small position to play a falling market.

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Could The Over Printed U.S. Dollar Be The Market Leader? For Now, YES!

With so much good economic news coming out of the U.S. from a second straight month of job growth to reduced crude oil inventories, why does it seem a temporary top has been formed at 92.58? Answer is easy, strength in the U.S. Dollar. And that strength doesn't appear to be fading soon as the dollar was higher overnight extending it's trading range of the past five weeks. Stochastics and the RSI are turning bullish for the dollar signaling that sideways to higher prices are possible near term. Combine that with bubble talk in the gold trade and all the good news in the world won't support $100 oil.

The number one factor in determining sector rotation is "currency of choice". And these days the world markets only see three choices. The U.S Dollar, Gold and crude oil. Their choice this week is obvious, the U.S. Dollar. We still view the long term trend of dollar weakness to be in place but for now the dollar will bring misery to the crude oil bulls until more dire news can take it's place.

As we predicted yesterday our friends in Saudi Arabia took their first step in assuring $100 oil was not in the cards by lowering the prices of heavy crude exports to Asia. Forcing Iran to follow suit and making it even more difficult for Iran to show a profit on their heavy crude production.

So let's turn on the TV and watch the parade of fund managers turned TV stars on our favorite CNBS channels call for $100. We'll trade for today and we'll trade using these numbers.....


Crude oil was lower overnight as it consolidates some of Wednesday's rally. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.74 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.74. Second resistance is Monday's high crossing at 92.58. First support is Wednesday's low crossing at 88.10. Second support is the reaction low crossing at 87.43. Crude oil pivot point for Thursday morning is 89.75.

Natural gas was higher overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If February extends the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 20 day moving average crossing at 4.325 would confirm that a short term top has been posted. First resistance is Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is Monday's gap crossing at 4.454. Second support is the 20 day moving average crossing at 4.325. Natural gas pivot point for Thursday morning is 4.520.

Gold was slightly higher due to short covering overnight as it consolidates some of this week's decline. However, stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1395.90 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 1395.90. Second resistance is Monday's high crossing at 1424.40. First support is the reaction low crossing at 1361.60. Second support is the reaction low crossing at 1331.10. Gold pivot point for Thursday morning is 1374.30.


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Lower Oil Prices.....Blame it on the Gasoline!

Well that didn't take long. Even in the face of better job estimates crude oil bulls have already begun to show their "nervousness" as they trade oil down as low as 88.10 in the overnight session. The lowest crude oil has traded since December 20th. And what do they blame it on? Blame it on the gasoline.

The street is saying that massive snow storms during the recent holiday week have caused a large drop in gasoline demand. MasterCard Inc., the second biggest payments network company, said in its SpendingPulse report that motorists bought an average 8.41 million barrels of gasoline a day in the week ended Dec. 31, down from 9.61 million the previous week.

This even with continued draw down in crude inventories is giving us an insight into where the tolerance level of the commodity traders is. The bulls are screaming "$100 oil is just not in the cards". And that just might be the case. Weather you believe the long term oil production capabilities claimed by the Saudis or not the effect they have on the market is real. And they have made no secret of the fact that they do not want $100 oil.

The Saudi's, saviors of the U.S. economy. Strange as it sounds it just might be true as they know better then anyone that we can't have it both ways. We can't have high gas prices and an expanding U.S. economy. And still our politicians in this country [U.S.] still do everything in their power to keep us from increasing our own oil production and weaning ourselves off of foreign oil. Just sell electric cars, that is the answer. While we do everything we can to limit the production and expansion of energy production and distribution.

Good thing we don't have to trade what will happen in the future, we can trade today! And here's the numbers we'll be using to do just that......

Crude oil was lower overnight as it extends Tuesday's decline below the 20 day moving average. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.61 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.61. Second resistance is Monday's high crossing at 92.58. First support is the overnight low crossing at 88.16. Second support is the reaction low crossing at 87.43. Crude oil pivot point for Wednesday morning is 89.94.

Natural gas was lower due to profit taking overnight as it consolidates some of the rally off December's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends the aforementioned rally, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 20 day moving average crossing at 4.334 would confirm that a short term top has been posted. First resistance is Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is Monday's gap crossing at 4.454. Second support is the 20 day moving average crossing at 4.334. Natural gas pivot point for Wednesday morning is 4.644.

Gold was slightly higher due to short covering overnight as it consolidates some of Tuesday's decline. However, stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 1372.70 are needed to confirm that a short term top has been posted. Closes above the 10 day moving average crossing at 1397.80 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 1397.80. Second resistance is Monday's high crossing at 1424.40. First support is the reaction low crossing at 1372.70. Second support is the reaction low crossing at 1361.60. Gold pivot point for Wednesday morning is 1390.50.


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Hedge Funds Appear to be on Board the Crude Oil Bull Bus

It appears the crude oil rally and the pain being felt by some oil companies could be getting some support from the Obama administrations delay in approving the resumption of drilling for rigs in the gulf region. While the public hears "we have lifted the ban" coming out of Washington. The fact remains that no operator has been given the green light to resume drilling. Costing some companies $100,000's per day in rig expenses while the rigs sit idle waiting for word out of Washington.

And the smart money is paying attention. Bloomberg News reports this morning that hedge funds and other large speculators increased their net long positions, or wagers on rising prices, by 4.6 percent in the seven days ended Dec. 28, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the biggest total in records going back to June 2006.

We always put a lot into the "smart money", these funds take up such a large percentage of the money that is on the table at any given time that you have to. And these funds tend to be the slow moving indicator in the market, not the fast moving commercial traders that also make up 50% of the market. But we are sticking by our correction outlook that focuses on the middle of January as there is just to many bulls in this market right now. That is never healthy. Show me a rallying market with plenty of bulls and bears on each side of the trade and I'll show you a sustainable rally. But as always we will trade the numbers given to us today, and here they are.......

Crude oil was higher overnight as it extends the rally off August's low. 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 August's low, May's high crossing at 93.87 is the next upside target. Closes below last Thursday's low crossing at 89.02 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 92.58. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 91.00. Second support is last Thursday's low crossing at 89.94. Crude oil pivot point for Tuesday morning is 91.78.

Natural gas was higher overnight as it extends the rally off December's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If February extends the aforementioned rally, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 10 day moving average crossing at 4.321 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.688. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is Monday's gap crossing at 4.454. Second support is the 10 day moving average crossing at 4.321. Natural gas pivot point for Tuesday morning is 4.610.

Gold was lower due to profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends last week's rally, December's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1372.70 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 1424.40. Second resistance is December's high crossing at 1432.50. First support is the 20 day moving average crossing at 1395.50. Second support is the reaction low crossing at 1372.70. Gold pivot point for Tuesday morning is 1420.10.


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Big Trends Are Coming in 2011, How Will We Trade Them?

From Chris Vermeulen at The Gold and Oil Guy.Com......

With the start of a new year comes starting at zero on our performance numbers and time to start looking for new profitable trades along with managing our current open positions on our small cap stocks which we continue to hold with gains of 66%, 35% and 10%.

Last year was a tough one as the stock market chopped around in a very large range giving off buy and sell signals every week and some times every other day… If you understand how to trade options then these conditions can make you a boat load of money.

Those who follow me or trade with me through my trading newsletter know how conservative I am when looking for low risk setups in both ETFs and stocks. And no doubt agree there were some extended periods of time when we did not have any trades because the volatility on a daily basis was making it the risk higher than what I wanted us to take, thus we waited for setups instead of chasing prices. We still locking in some solid gains with 8 winning trades, but feel we can better this year especially if we get less chop and more of a trending market.

It’s safe to say some people just do not like being in cash, hence the reason so many want stock picks and trades all the time. But to be flat out honest, I love being in cash or at least holding a good chunk in cash waiting for a high probability opportunity to pop up on my charts before committing my hard earned cash. It’s better to be wishing you were in a trade than to have all your money tied up in losing positions just because you wanted to be active… Because I give you only the trades I am making with my own money, I think that is the reason things are slower paced, unlike some other newsletters in this industry which fire off new trades each day or week just to keep those addicted (wanting stocks picks all the time) happy.

Anyways, 2011 should be a great year for trading, investing and education. Last years fast paced market I know either took your money and got you really frustrated, or you made money and was able to use the difficult conditions to fine tune your trading and money management stills like I did. 2011 feels like it’s going to start out similar to 2010 where we get a move up into mid January, but once earning season starts the market sells off on the good news for an 8-10% correction.

The good news is that after last years fast paced market and my constant refining of my strategy and money management rules, we should be able to catch the majority of the trends this year both up and down using stocks, regular ETFs and Inverse ETFs.

As much as I would like to forecast what I think will happen this year, I have decided to take the market one quarter at a time to keep everyone more in tune with what’s happening now and a glance forward up to 2-3 months.

Take a look my SP500 charts for the next 3-8 weeks below.

SP500 Index – Daily Chart
On this chart you can see that the overall trend right now is still clearly up. But with this current situation I feel one should be on the sidelines waiting for the market tip its hand telling us its headed higher or lower. If it prices start to fall we will look to short the market in order to profit from the correction as long as the market provides an optimal opportunity.

Currently the market sentiment levels are at extreme highs, which is the same as last January and April’s highs. With extreme sentiment, light volume (lack of buyers) and earning season just about to start I cant help but think a nice correction is about to take place which will cleanse the market before the next big leg higher.

If all goes according to plan we should see an 8-10% correction. A pierce of the November low is what I am looking for as that would trigger a lot of protective stop orders and create panic selling in the market. It is panic selling which creates a market bottom. That being said we may not get that large of a correction which is why we must continue to monitor the market closely as my analysis will change with the market.

Jan 2010 SP500 Correction
This time last year the market was in a very similar situation with market sentiment, light volume, and earning season just around the corner…

Its difficult to pick tops because they can stay overbought for an extended period of time, bottoms are a little different simply because fear is more powerful than greed and shows it’s self on the charts once you know what to look for and how to trade it. My point here that you should not jump the gun and start shorting just because you think one is around the corner. I prefer to wait for more of a clear signal that sellers are in control then ride the short term down trend and hope it blows up into the correction I think we are about to see.

During bottoms there are new low washouts, and the same goes for tops, we get several small new highs just before the price rolls over, and that has yet to happen.

Weekend Market Trend Conclusion:
In short, 2011 should have several great plays as I am looking at the SP500, Precious Metals, Oil, US Dollar, Bonds and Emerging Markets for some big moves. You can get my pre-market daily videos, intraday updates along with my stock and ETF trades by visiting my website and joining my newsletter at > The Gold and Oil Guy.com


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Crude Oil Bulls Start 2011 on a Positive Note

We can't deny the run, crude oil gained 15 percent last year and most analyst who called the bull run in oil prices were spot on. But is that it? Can a "V" shaped recovery in oil continue in the face of slowed Chinese manufacturing in December 2010 for the first time since July. The Bloomberg survey of economists shows that China, the world’s biggest energy consumer, will slow to 9 percent this year from 10 percent, that would still be three times the rate in the U.S. and six times Europe’s.

Russia for one is doing it's part to put an end to the run. Reporting oil production numbers not seen since the Soviet era. And while that increase in crude oil production was a mere 2.2% Russian natural gas production spiked a whopping 15% in 2010. Do they have more of that in store for us in 2011? And how will our "friends" in OPEC respond? Regardless of what they say I would not expect any pull back from the cash strapped countries of the now obsolete organization. In fact we expect to see an increase from the.....can we call them an organization?

The 2010 run ended with crude oil inventories dropping 4 weeks in row, the longest drop in more then a year. Does all of this scream out bubble? We suspect the bulls are going to enjoy a warm welcome from the sun tanned returning traders. But we stick by our cautioning tale that the second week of January could bring these oil prices back to earth with higher inventory reports. But we are trading TODAY, and here are the numbers we are going to use......

Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI are diverging but are turning neutral to bullish again signaling that sideways to higher prices are possible near term. If February extends the rally off August's low, May's high crossing at 93.87 is the next upside target. Closes below last Thursday's low crossing at 89.02 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 92.20. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 90.80. Second support is last Thursday's low crossing at 89.02. Crude oil pivot point for Monday morning is 90.83.

Natural gas gapped up overnight and was higher as it extends the rally off December's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If February extends the aforementioned rally, December's high crossing at 4.635 is the next upside target. Closes below the 10 day moving average crossing at 4.268 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.563. Second resistance is December's high crossing at 4.635. First support is the 20 day moving average crossing at 4.310. Second support is November's low crossing at 4.268. Natural gas pivot point for Monday morning is 4.388.

Gold was slightly lower due to light profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends last week's rally, December'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 last Friday's high crossing at 1422.00. Second resistance is December'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 1416.00.


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