The Future of Crude Oil and the End of Globalization

"Jeff Rubins should be mandatory reading for all corporate executives." The National Post.....


This book is a great read, and one that should be required for anyone with a long term interest in energy, transportation, manufacturing or agriculture."

An internationally renowned energy expert has written a book essential for every American, a galvanizing account of how the rising price and diminishing availability of oil are going to radically change our lives. Why Your World Is About to Get a Whole Lot Smaller is a powerful and provocative book that explores what the new global economy will look like and what it will mean for all of us.

In a compelling and accessible style, Jeff Rubin reveals that despite the recent recessionary dip, oil prices will skyrocket again once the economy recovers. The fact is, worldwide oil reserves are disappearing for good. Consequently, the amount of food and other goods we get from abroad will be curtailed; long distance driving will become a luxury and international travel rare. Globalization as we know it will reverse. The near future will be a time that, in its physical limits, may resemble the distant past.

But Why Your World Is About to Get a Whole Lot Smaller is a hopeful work about how we can benefit personally, politically, and economically from this new reality. American industries such as steel and agriculture, for instance, will be revitalized. As well, Rubin prescribes priorities for President Obama and other leaders, from imposing carbon tariffs that will increase competition and productivity, to investing in mass transit instead of car clogged highways, to forging “green” alliances between labor and management that will be good for both business and the air we breathe.

Most passionately, Rubin recommends ways every citizen can secure this better life for himself, actions that will end our enslavement to chain store taste and strengthen our communities and timeless human values.

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It Looks Like Gold’s Cyclical 34 Month Run is About to Run Out

David Banister of  The Market Trend Forecast just updated his previous gold forecast which was spot on (no pun intended).....Now he has a new forecast for what to expect next which I'm sure all of our readers will find interesting......

Gold hit $1805 tonight in trading, a Fibonacci Fractal figure I gave out a few weeks ago as a possible top. We are close to a near term high in Gold and Investors should be trimming back positions on this run. Back as recently as $1600 an ounce I forecasted a run to $1805 for Gold using fractal and wave analysis and behavioral patterns, now that we hit that figure it’s time to update the cycle and where we are.

Here is the Chart I did at 1599 gold on July 22nd:

I have been a Gold Bull since November 2001, having conducted seminars for public employees on investing back then and advising gold mutual funds and gold stocks very early. I have talked in the past about a 13 fibonacci year Gold Bull cycle that will end around 2014, so there are still three years left in my opinion. However, gold does have peaks and valleys and has moved in very clear Wave and Fibonacci fractal patterns for years.

Given the history of how I have forecasted Gold, I am going to share my short term and moderately long term views on where we are in the up cycle which I expect to last 13 fibonacci years to 2014. Right now it is my opinion that we are completing a MAJOR WAVE 3 up in Gold from the 2001 lows from $300 an ounce. We have had a 34 fibonacci month rally since the October 2008 lows of $681 per ounce. Every Taxi driver, CNBC guest or analyst, and 200 Radio and TV commercials a day are blaring to buy Gold. This is how intermediate tops form.

The rough wave count is below:
Wave 1- 300 to 1030
Wave 2- 1030 to 681 (October 2008 lows)
Wave 3- 618- 1805 currently, 34 Fibonacci month cycle. *Likely high is 1862-1900*
Wave 4- Due up next… a multi month consolidation.

It is my opinion that at the top of a Major wave 3 in Gold, that everyone should be univerally bullish, that gold radio and TV commercials would be all over the place, and that everyone on CNBC would be talking about and recommending Gold.

Sound familiar?

So the likely conclusion to this massive parabolic blow off top of Wave 3 is nigh. Most recently I upped my estimates to as high as $1900 per ounce with $1805 already here as of tonight, which was one of my figures by the way many weeks ago. Gold should under normal circumstances top between 1862 and 1900 per ounce fairly soon should the 1805 level not hold as a high. At that level we will be dramatically overbought. 

We are already running 15.7% above the 20 week moving average line which historically is about as high as Gold will get before correcting hard and consolidating. A final lift to the 1862-1900 ranges should lead to a fairly good sized correction to the downside designed to kick all the late comer Taxi Cab driving buyers off the bull’s back. With that said, at $1805 I would be trimming my position and or hedging my long positions aggressively.

Watch for a Maximum Gold top at 1862 -1900 per ounce and keep in mind 1805 is being hit tonight and that is a qualifying fibonacci fractal top as well. Investors should be trimming back positions and looking to re-deploy back into Gold at better prices. We could get a huge blow off top over 1900, but it would be very very rare if it happens.

If you’d like to stay ahead of the peaks and valleys in Gold, Silver, and the SP 500 (Recently called a tradable bottom at 1101), then check out Market Trend Forecast for a 33% 48 hour coupon or sign up for the occasional but infrequent free updates.

Ken Salazar in Alaska....President Obama Backs Additional Oil Drilling in Alaska

Interior Secretary Ken Salazar came to Anchorage on Monday and said the Obama administration supports more oil drilling in Alaska, potentially including offshore Arctic development.

Salazar joined Alaska Sen. Mark Begich and Rhode Island Sen. Jack Reed, both Democrats, for a meeting with Alaska businesspeople and said the president's feeling toward Arctic offshore drilling is "Let's take a look at what's up there and see what it is we can develop." But any Arctic oil development must be done carefully, he said. Salazar said the Arctic lacks needed infrastructure for responding to potential offshore oil spills and cited painful lessons from the Deepwater Horizon spill in the Gulf of Mexico last year.

"Not the mightiest companies with multibillion dollar pockets were able to do what needed to be done in a timely basis, and the representations of preparation simply turned out not to be true from the oil companies that had a legal obligation to shut down that kind of an oil spill. ...

When you look at the Arctic itself, we recognize that there are different realities - the ocean is a much shallower ocean, conditions are very different than we had in the Gulf of Mexico. (But) there are challenges that are unique to the Arctic," Salazar told Alaska reporters......Read the entire article.

Adam Hewison: An Extraordinary Admission Of Failure!

Yesterday, the chairman of the Federal Reserve, Ben Bernanke, acknowledged in what was perhaps the most stunning statement ever by a sitting chairman of the Fed…. That the economy was not doing as well as they had predicted.

Duh Ben, welcome to the real world!

In our comments yesterday before the chairman spoke, we hoped that the Fed wouldn’t do anything stupid like announce QE3 or that they will be dropping money from helicopters. Instead, the United States has just played its cards out to the world, saying that we are not going to be raising interest rates until………let me guess 2013, after the elections.

What the chairman’s statement really meant to many traders, myself included, is that the U.S. economy is not even halfway good. It is in the toilet! The Fed also stated in a very subtle way, that there is not going to be another huge bailout for the economy. That can only mean one thing in my mind, and that is the equity markets are going to continue to erode for the balance of 2011 and for most of 2012.

I suspect that we have seen a minor bottom in the equity markets as they have churned back and forth trying to stabilize after there disastrous losses in the past 12 days.

Everyone is euphoric about the price of crude oil coming down, but I suspect this is just going to be a correction in what will be a bull market when inflation kicks in. Other commodity markets are, in my opinion, getting closer and closer to making a bottom. I would pay particular attention to the Reuters/Jefferies CRB commodity index that we talk about every day on this blog.

Here’s what I think is going to happen in the next few days: I think we will see more choppy, irrational and erratic market behavior that will rule the day. I think that investors who haven’t been using a structured approach, like our “Trade Triangle” technology, are going to be scared to death at what is happening to their investment and will find them selves without a rudder in these tumultuous financial seas. Only by having a game plan in place, can you survive what I believe is going to happen in the future.

In a nutshell, the balance of 2011 and 2012, will be more about capital preservation and less about growth. The good news is, with our “Trade Triangle” technology we will continue to find winning trades and you will come out ahead of the game.

So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Chances are we reached an interim low point yesterday. The Fibonacci retracement zone has been satisfied and this market is in a heavily oversold condition. Continue to see choppy action overall for this index.

SILVER 

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 60

Intermediate term traders should be on the sidelines and out of silver at the present time. Our -60 Chart Analysis Score indicates more two way market and a trading range.

GOLD 

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Short term, intermediate-term, and long-term traders should all remain long gold. We would use our Trade Triangles for exit points should they give signals. Is $1800 the next stop for gold.

CRUDE OIL 

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

Yesterday the crude oil market looked like we have put in the bottom in this market for the time being. We would not be surprised to see further two way action and a further reflex rally.

DOLLAR INDEX

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 60

The dollar index continues to remain in a broad trading range. The index remains below its 200 day moving average while our longer term Trade Triangle remains positive.

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Ray Carbone: Oil Correction Will Be Severe, But Short Lived

This weeks move in crude oil was severe, but Ray Carbone, President of Paramount Options believes the rally will eventually resume.




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Rigzone: Crude Oil Slips Below $80

Crude oil futures extended losses Tuesday after the Federal Reserve said risks to the economic outlook have increased. Light, sweet crude continued to retreat on the New York Mercantile Exchange Tuesday settling at $79.30 a barrel, down $2.01. For the first time in nearly 10 months, crude prices settled below $80 a barrel.


The Fed failed to ease fears as Chairman Ben S. Bernanke and his colleagues promised to extend the benchmark interest rate for another two years but stopped short of initiating an additional round of economic stimulus.


In separate monthly reports, the U.S. Energy Information Administration (EIA) and OPEC cut demand forecasts for 2011. The EIA cut its 2011 world demand growth forecast by 60,000 barrels per day (bpd). It raised its 2012 projections to 1.64 MMbpd. Meanwhile, OPEC cut oil demand growth for this year by 150,000 bpd and 20,000 bpd for next year. The intraday range for crude was $75.71 to $83.05 a barrel.


At its lowest close since Feb. 18, Brent futures lost $1.17 to end Tuesday's trading session at $102.57 a barrel. Prices traded as low as $99.06 and as high as $105.81 Tuesday. Gasoline for September delivery settled 2.4 cents lower at $2.67 a gallon Tuesday. The EIA reported a 2 percent decline in gasoline demand over the summer driving season, pushing prices as low as $2.59. The intraday high for gasoline was $2.76.


Conversely, natural gas futures gained 5.9 cents, or 1.5 percent, settling at $3.99 per thousand cubic feet. Natural gas futures pushed past the $4 mark Tuesday, peaking at $4.04 and bottoming out just below $3.89. High temperatures continue to support gains.


Posted Courtesy of Rigzone.Com




Today’s Trading Triangles

What is Next For The SP 500?

Three weeks ago he began urging members of his service to reduce risk and raise cash. He pounded the table incessantly for the past two weeks to continue to raise cash and reduce risk. He has not issued a trade alert to members in over 3 weeks, but by acknowledging risk ahead of the debt ceiling debate he was able to sidestep one of the worst weeks in U.S. financial markets since 2008.

Here's what else J.W. Jones saying about the potential bottom in these markets........

Armed with cash and my emotional capital intact, I am going to be able to take advantage of price action in coming days and weeks. I am expecting a bounce in the near term, but the downgrade of U.S. debt on Friday by the S&P rating agency could have a dramatic impact at the open on Monday morning. I intend to remain in cash until the news is digested by the marketplace.

My first public warnings about a potential top came back on July 8 when I posited an article which illustrated the bullish and bearish position of the market at that time ahead of the debt ceiling debate in Washington. The following excerpt and chart was taken directly from that article:

“In addition to the short term overbought nature of the S&P 500, the daily and weekly charts clearly illustrate a head and shoulders pattern. The head and shoulders pattern is a typical characteristic of a topping formation that is often found at several major historical tops. The daily chart below illustrates the head and shoulders pattern: 




This particular head and shoulders pattern is not getting a lot of recognition in the media which lends it a bit more credence. If we start hearing about this pattern on CNBC or FOX Business I will expect the pattern to fail. Call me a contrarian, but in the past when major television personalities are constantly talking about chart patterns they almost always fail.


Besides just technical data points, continued worries stemming from the European sovereign debt crisis helps the bear’s case further. In the event of a major default in the Eurozone, the implications to the financial sector of the U.S. economy will come into focus. It is widely expected that a banking crisis in Europe could spread to some degree to the large money center banks in the United States. Clearly this would have negative implications on price action in domestic equity markets.

In addition to the European debt crisis, the United States government has a looming credit crisis of its own. With politicians currently arguing over whether to raise the debt ceiling, bears point out that if the United States defaulted on its debt (unlikely) the implications would be severe. However, many traders and economists point out that the end of QE II may have dramatic implications on price action as well. The current uncertainty around the world lends itself in favor of the bears.”


Clearly the head and shoulders pattern has played out and barring a breakout over the 2011 highs on the S&P 500, an intermediate to long term top has been carved out. In fact, I believe we are likely entering the next phase of the ongoing bear market that started back in 2000.

Panic level selling pressure has been registered and the S&P 500 is in an extremely oversold condition as is evident by the charts below:
Stocks Above 50 Period Moving Average



Stocks Above 200 Period Moving Average

The charts above illustrate that we are extremely oversold in the intermediate term time frame and that we are nearing extreme oversold conditions in the longer term time frame as well. I am expecting a bottom to form in the next few weeks which should offer outstanding risk / reward long entries for short to intermediate term trades.

Another indicator that is showing some extreme fear in the marketplace is the Volatility Index (VIX). The VIX has traded in a choppy pattern for quite some time before finally pushing higher the past few weeks.

The daily chart of the VIX below demonstrates the fear in the marketplace:



Almost every indicator that I monitor is screaming that the current market is extremely oversold and fear levels are running at or near 2011 highs. When the masses are fearful and the S&P 500 is this oversold, I want to be looking for opportunities to get long risk assets.
While consistently picking bottoms is nearly impossible, there are a few key levels on the S&P 500 that I’m going to be monitoring.

The weekly chart below illustrates the key support levels which could hold up prices and also future targets for the likely reflex rally:



Once a bottom has been carved out, the use of Fibonacci Retracement and/or Extension analysis will help me determine more precise resistance levels. We could see further selling pressure this week before we see a pronounced bottom carved out. With volatility at these levels price action will be pretty wild. I intend to use smaller position sizes with wider stops to start layering into exposure as opportunities present themselves.

By sitting on the sidelines during this downside move, members of my service are ready to take advantage of lower prices to get long. Now the interesting part will be how Mr. Market handles the downgrade of U.S. debt on Monday ........


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What a Weekend....The United States Has Been Marked Down!

What a weekend!! S&P marks America down to to AA+. That bombshell comes on top of everything else that is happening like the markets crashing and Italy imploding. But you know what, it is also a time of great opportunity if you follow our Trade Triangle technology.

Let’s see how the markets performed last week. Out of the six markets we track every trading day, four markets were in negative territory for the week. The two markets that did not end up in the minus column were gold up 2.25% and the dollar index which was up 1.06%

The percentage loser for the week was crude oil which lost a massive 9.21% and is now officially in a bear trend according to our Trade Triangle technology. The S&P500 was close behind with another negative week which saw this index shed 7.18%.

Let’s take a look at the charts, because unlike politicians, pundits and gurus, they tell you what is really going on in the world.

So here’s what happened last week in the major markets....

S&P500: change for the week: -7.18%
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

Silver: change for the week: -3.38%
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 65

Gold: change for the week: +2.25%
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Crude Oil: change for the week: -9.21%
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

$ Index: change for the week: +1.06%
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 65

CRB Index: change for the week: – 4.46%
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Great Video: How to Spot Winning Trades

Adam Hewison: Welcome to the Bear Market

From Crude Oil Trader contributor Adam Hewison.....

Ladies and gentlemen, the market action yesterday was real. Please be aware that we have started on a bear market. As we have pointed out in our previous updates, we were looking for a move to the downside. That has now happened with all our indicators firmly in negative mode.

Most folks who are not in their 60s do not remember the bear markets of the 70s and 80s which caused a tremendous amount of pain for investors. It seems as though we just kicked the can down the road for the last time. The markets are bringing common sense back and they will find a solution for the economy.

President Obama came on the TV today to reassure everyone that it was not his fault that the stock market was down, it had to do with Europe, the tsunami in Japan. Mr. President we are and have been in a global economy for years. It’s too bad that Ben Bernanke and you don’t understand that.

Folks who saw their 401(k) and IRA retirement accounts decimated in 2008 are having a déjà vu moment. In the last 10 days the S&P 500 has lost over $1 trillion and we expect it will lose more. A simple solution to get America running again is to cut corporate taxes to 25%. Money will pour in, corporations will start hiring again and start building business. Corporations are the ones that create business and pay taxes in this country. It’s not the government that pays taxes.

So, President Obama will you please help give businesses the environment to thrive in, less regulation, less taxation? This is the only way for the country to get out of this recession.
The key element which is overriding everything right now is the current market psyche....Scared.

Last night every TV and cable show’s lead story was the market crash. If the market closes lower today, everybody will be frantic and worried about their investments over the weekend which means we’ll probably see a continuation early next week to the downside.

The equity markets are getting close to a 61.8% Fibonacci retracement level of 1148 for the S&P 500 index. We expect that this level will be reached. We would expect to see some profit taking at that area and a modest retracement back to the upside. That is not to say we are bullish, it just means we going to see some profit taking coming into this market.

I would like to thank everybody for their positive feedback! We are thankful we can help you muddle through this extremely volatile time in the markets.

So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100
Watch Video for update.

SILVER (SPOT)

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55
Watch Video for update.

GOLD (SPOT)

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 90
Watch Video for update.

CRUDE OIL (SEPTEMBER)

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100
Watch Video for update.

DOLLAR INDEX

Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 65
Watch Video for update.

REUTERS/JEFFERIES CRB COMMODITY INDEX

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

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Musings: Gas Shale Debate May Be Moving to Next Higher Stage

For the past 18-24 months, the debate about the economic performance of the gas shale revolution has been ongoing deep in the industry's trenches. Questions were originally raised by geologist Art Berman about the performance of natural gas shale wells writing in a column in an industry trade magazine, World Oil. The columns bothered certain managements of producers who were totally committed to gas shale developments.

As additional critical columns appeared using acceptable industry data analysis of the results of producing gas shale wells, these unhappy producers voiced their criticism to the publisher of World Oil. The pressure on Mr. Berman to drop the topic increased to the point that he elected to stop writing his column. World Oil's editor also left due to the pressure on Mr. Berman.

In late June, The New York Times published an article based on a number of emails between industry, government and investment professions discussing the latest gas shale data. Those exchanges focused on whether there might be a risk that the abundant volumes of natural gas trapped in the shales would not be developed because the cost of extracting them was actually far in excess of the current or even near term future gas price and that producers were misleading investors about gas shale economics.

If E&P companies were attracting the necessary investor funds to finance their gas shale developments predicated on assumptions that later proved overly optimistic, substantial financial losses could be experienced. Many of the participants in the email chains were long time students of the E&P industry and are aware of the history of producers destroying capital through poor management decisions......Read the entire article.



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