Statements Out of Europe Not Enough to Push Oil Prices Through Resistance

The hope that the credit crisis in Europe will fade and support higher commodity prices itself is fading as oil traded slightly higher in Wednesday evenings overnight session. Crude oils Stochastics and RSI are overbought and diverging. If the bulls can break through strong resistance at 90.60 the May-July downtrend line crossing near 92.55 will be the next upside target.

Crude oil bears will gain a solid technical advantage if oil closes below Monday's low crossing at 85.17. This would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall.

First resistance is Wednesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.55. First support is Monday's low crossing at 85.17. Second support is last Tuesday's low crossing at 83.47. Crude oil pivot point for Thursday morning is 89.12.

Good News Out of Europe is Not Enough to Send Oil Higher

Yesterday, crude oil closed over the $90 a barrel level. Today is another story, as crude oil is down. This movement underscores the importance of knowing when there is a conflict between indicators. In this case, our monthly Trade Triangle which is the dominant trend indicator is pointing down, while our intermediate and daily Triangles are pointing up.

This creates a Chart Analysis Score of + 60, indicating a trading range. Presently we would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil posted an inside day with a lower close on Wednesday as it consolidated some of the rebound off Monday's low. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are neutral signaling that sideways trading is possible near term.

Closes below Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low. Closes above the May-July downtrend line crossing near 92.92 would confirm an end to this summer's decline. First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.92. First support is Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Crude Oil Trade Triangles......

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

David Banister: Gold Heading to $2,350 Per Ounce After 4th Wave Consolidation

In my most recent few forecasts for subscribers and public articles I’ve discussed a major correction in Gold, and it dropped $208 within 3 days of that forecast several weeks ago as Gold traders will recall. Last week I wrote about further consolidation being required in what I’m seeing as a either 4th wave likely “Triangle Pattern” that will consolidate the 34 month run from $681 to $1910 into August of this year, or a 3 wave “A B C” pattern. We are right now in some form of C wave, it’s just a matter now of confirming if we are going to get a “D and E” wave to follow, or the C wave drops lower before we bottom.

A Triangle pattern serves to let the “economics of the security” catch up with the prior large movement upwards in price. In essence, the crowd behavior pushed the price of Gold a bit too high too fast, and this consolidation pattern lets the fundamentals catch up to price action. We had a parabolic move I discussed many weeks ago, and those always end badly to the downside. The $208 drop in three days is a typical reaction to a spike run like that. At the end of the day though, I had been forecasting what I call a “Wave 3” top and was looking for a multi week or multi month consolidation pattern before Gold could move higher.

Let’s examine what that triangle projection may look like. 

They take the form of 5 waves, or what we can call ABCDE in a pattern. The biggest drop is always the “A” wave, and that was 1910 to 1702 in 3 days or less. The next biggest drop is the “C” Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop relative to the A wave. In other words, each successive wave down in the 5 wave triangle is smaller. This is due to the sentiment finally shifting and the trading patterns moving from people chasing the hot sector or stock or metal, to the long term investors accumulating the dips.

If we end up consolidating in a “Triangle”, then Gold should end up looking something like the below pattern I drew, with a target of $2,350 per ounce many months out:

The other pattern we are watching for at TMTF is the ABC Correction pattern. We had the A wave down to 1702, which corrected 50% of the move from 1480-1910 in 3 days. Rarely do you get a major move down like that and not get some type of “re-test” of that low, but because the fundamentals for Gold are strong and getting stronger, we are favoring the Triangle pattern still as most likely. With that said, there is a fat and juicy “Gap” sitting in the chart around 1660 on Gold and dropping down there is what a lot of traders are watching. If that were to fulfill, then we will see an ABC correction ending around $1643, and then Gold will begin another multi month rally to new highs:

At The Market Trend Forecast I teach people my crowd behavioral methodologies and give them reliable forecasts in advance so they can be prepared with their investments. Consider working with us and following the SP 500, Silver, and Gold by going to Market Trend Forecast.com You can take advantage of a 33% discount over the next 48 hours as well.

Get David Banisters Free Weekly Index & Commodity Forecast

Musings: Trying To Solve Mystery Of Missing Marcellus Resource

A tenant of America's gas shale revolution is that shale is ubiquitous and uniformly spread under our oil and gas producing basins. That belief has translated into growing estimates of the resource's potential and how it has radically changed the long term outlook for America's, and potentially the world's energy future. Is it possible this tenant has been knocked into a cocked hat by the latest estimate of the resource potential of one of our largest gas shale basins.... the Marcellus Shale?

The recent assessment by the U.S. Geological Survey (USGS) that the Marcellus Shale contains 84 trillion cubic feet (Tcf) of undiscovered natural gas and 3.4 billion barrels of undiscovered natural gas liquids was greeted with both joy and consternation. The joy came from the recognition that the USGS estimate was a huge increase from its prior assessment made in 2002 that said there was only about 2 Tcf of gas reserves in the shale formation that stretches from Alabama to New York.

The consternation stems from the assessment being about 80% less than an estimate promoted earlier this year by the Energy Information Administration (EIA) that there was 410 Tcf of gas in the basin. Talk about a gap wide enough to drive a truck through, how about a whole fleet of pickups?

First, it is important to understand that the USGS estimate is the mean of various estimates the agency prepared. Each estimate was assigned a confidence level based on how sure the agency was that the estimated volume actually is present. The estimates ranged from a very highly confident (95%) estimate of 43 Tcf to the estimate with the lowest confidence (5%) of 144 Tcf. The 50% confidence scenario estimated total gas reserves of 78.7 Tcf, or somewhat below the mean estimate the agency decided to publish.

Second, it is important to understand that these estimates reflect a view that the resources are technically recoverable, which, to quote from the agency's press release, means "are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations." The USGS went on to say, "…these estimates include resources beneath both onshore and offshore areas (such as Lake Erie) and beneath areas where accessibility may be limited by policy and regulations imposed by land managers and regulatory agencies."

Importantly, the USGS attributed the increase in its undiscovered resource estimate to the "new geologic information and engineering data, as technological developments in producing unconventional resources have been significant in the last decade." Clearly, the USGS was referring to the improvements in horizontal drilling and hydraulic fracturing, which the petroleum industry has embraced wholeheartedly in driving the gas shale revolution......Read the entire article.

Crude Oil Technical Outlook For Wednesday Morning Sept. 14th

Crude oil met strong resistance in overnight trading as the continued financial crisis in Europe weighs on traders. Worse then expected retail spending in the U.S., the IEA cut in global oil consumption forecasts for 2011 and 2012, the prospect of Libyan oil production coming back online and the end of hurricane season all contribute to the inability of oil to push through the 50 moving average near $91 per barrel.

Closes below last Tuesday's low crossing at 83.47 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall. If November extends the rebound off August's low, the May-July downtrend line crossing near 92.92 is the next upside target. WTI Stochastics and RSI are overbought this morning.

First resistance is last Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.66. First support is last Tuesday's low crossing at 83.47. Second support is the reaction low crossing at 79.76. Crude oil pivot point for Wednesday morning trading is 89.51.

Adam Hewison: The Big Picture

Let’s take a look at the big picture and what it means today. There are a number times when the markets trade erratically. When this happens, you get out of the market with some quick move either up or down against you. Then, the market immediately goes your way the next day and afterwards you say to yourself, “I should’ve stayed in!”

That’s why it’s important to look at the big picture, and the big trends. What looked like a possible reversal yesterday, did not change the big trends in the markets. It just doesn’t happen in one day.

So let’s look at the big trends in the various markets we cover. Equity markets, the big trend is down. Metal markets, the big trend is up. Crude oil, the big trend is down. The dollar index, the big trend is up. And lastly, the CRB index, the big trend is down. Providing you are trading in the direction of the major trend, you have the odds in your favor. Always remember to keep your trading logs and game plan up to date. They will help you become a better trader.

Let's look at where we stand in the crude oil and gold markets......

The crude oil market once again came very close to moving over the $90 a barrel level, and at the time of this report has failed. Presently the Trade Triangles are mixed, indicating that this market is in a trading range. We would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. The big trend monthly Trade Triangle remains negative for this market. Look for crude oil to continue to move in a sideways to lower manner.

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

With a golds chart analysis Score of + 55, it would appear that the gold market is in near term trading range. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. The Williams % R is not yet in an oversold condition. The $1,850 to $1,900 levels are resistance for gold, at the moment. Support comes in around the $1,800 area and extends all the way down to $1750. Looking at the market, it would possibly appear as though we have put in a double top. This will only be confirmed with a close below the $1,750 level. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

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


Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology

Rigzone: Iraq Energy Panel Approves Gas Deal

A top Iraqi government energy committee has approved a deal with Royal Dutch Shell PLC (RDSA) to capture and exploit gas from its giant southern oil fields, the country's oil minister said Sunday.

The Iraqi oil ministry struck a deal in July with Shell and Japan's Mitsubishi Corp. (8058.TO, MSBHY) to develop gas production in southern Iraq. To become valid the deal needs approval from the Baghdad government.

"It was agreed upon by the energy committee and was sent to the cabinet for approval," Abdul Kareem Luaiby told Dow Jones Newswires on the sidelines of an Iraqi energy meeting in Amman, Jordan. The committee is chaired by the deputy prime minister for energy affairs, Hussein al-Shahristani, and its members include the ministers of oil, electricity and finance.

Luaiby declined to say when exactly the cabinet would approve the deal. The agreement must first be examined by the cabinet's legal and specialized offices, he said......Read the entire article.

Lower Inventory Forecast Boost Oil Prices Before Tuesdays Open

According to Bloomberg news this morning a survey of analyst [according to the median of 10 analyst estimates in a Bloomberg News survey] shows the U.S. Energy Department may say U.S. crude supplies dropped by 3 million barrels last week in a report due out tomorrow. Giving crude oil bulls a boost before Tuesdays open in the U.S.

But that boost is only enough to bump traders into the "new normal" resistance in the 90+ area with Stochastics and RSI remaining overbought and diverging. Turning bearish signaling that sideways to lower prices are still likely near term.

Closes below last Tuesday's low crossing at 83.20 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.15 later this fall. If October renews the rebound off August's low, the May-July downtrend line crossing near 92.66 is the next upside target.

First resistance is last Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.66. First support is last Tuesday's low crossing at 83.20. Second support is the reaction low crossing at 82.95. Crude oil pivot point for Tuesday morning is 87.39.


Just click here for your FREE trend analysis of crude oil ETF USO

Commodities Bounce Back as Japanese Sell Off Euro Overnight

Reuters is reporting that the dollar came off it's seven month highs against major currencies after Japanese exporters were detected selling it. Falling 0.7 percent to 77.07, helping lift dollar denominated commodities such as gold, copper and crude oil.

The euro held firm on Tuesday morning after a choppy session overnight saw a wave of short covering lift it by more than two cents on hopes that China will bolster Italy by buying its bonds, but traders found few reasons to stay upbeat about the currency.

Read the entire Reuters article.

Oil Tankers to Lose Money on Saudi - U.S. Route Through 2012

The U.S. is importing the smallest amount of Persian Gulf crude in 14 years as demand weakens and domestic production climbs, signaling that tankers on the route will lose money for at least another year.

The world’s biggest oil consumer bought 1.7 million barrels a day from Saudi Arabia and six other Persian Gulf states in the first half, the least since 1997, according to the latest Department of Energy data. Daily U.S. output averaged 5.58 million barrels, the most since 2004, the data show. Some owners have paid clients to charter their tankers on the route since March and will probably have to keep doing so until at least the end of 2012, Arctic Securities ASA in Oslo estimates.

The U.S. is boosting output of oil, shale gas and ethanol as President Barack Obama seeks to cut the nation’s dependence on foreign fuel. Fewer cargoes from the Middle East to the U.S., the world’s second-biggest tanker route, mean an expanding vessel glut. There are about 25 percent more supertankers than cargoes available in the Persian Gulf, the most since October, according to Bloomberg surveys of shipbrokers and owners.

“The U.S. is awash with domestic oil and increasingly divorced and less reliant on foreign imports,” said Andreas Vergottis, the research director at Tufton Oceanic Ltd. in Hong Kong, which manages the world’s largest shipping hedge fund. “Not only is end use of oil shrinking, but domestic production of crude oil is rising rapidly”......Read the entire article.

Sharon Epperson: Where Are Commodities Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks at where oil and precious metals are likely headed tomorrow.

Euro Rebound Gives Crude Oil Bulls Hope

Crude oil closed higher on Monday due mostly to a rebound in the Euro against the dollar. The high range close sets the stage for a steady to higher opening on Tuesday and bulls are under pressure to follow through if they stand a chance of gaining the upside momentum this week or anytime soon. Stochastics and the RSI are overbought, diverging and are turning neutral to bearish signaling that a short term top might be in or is near.

And we know traders are getting tired of hearing it but closes below the reaction low crossing at 83.20 would confirm an end to the corrective rally off August's low. Closes above the May-July downtrend line crossing near 92.66 would confirm an end to this summer's decline.

First resistance is still last Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.66. First support is the reaction low crossing at 83.20. Second support is the reaction low crossing at 79.38.

The U.S. ...... Top Crude Oil Producer By 2017?

We have been known to poke some fun at the oil futures predictions that have come out of Goldman Sachs the past couple of years. Most have been almost laughable. But we can't help but report on a statement coming out of Goldman Sachs this week as they predict the U.S. to be the leader in crude oil production in 2017. Honestly, if we had some leadership in Washington we would be the worlds leading oil producer and all of our economic woes a thing of the past. Both, are yet to be seen.

In the release Goldman Sachs is saying that U.S. oil production should reach 10.9 million barrels a day by 2017, a third higher than 8.3 million barrels currently. Russia, now the top oil producer, should see production increase only 100,000 barrels in the same period, for an output of 10.7 million barrels a day.

QR Energy [QRE] Makes Big Investment in U.S. Oil and Natural Gas

QR Energy LP, ticker QRE, announced on Monday it will purchase oil and natural gas fields in Texas, Oklahoma and New Mexico. Costing the company $577 million.

The Houston based energy company will purchase the properties from the Quantum Resources Fund. Funding of the purchase will come from the issue of $350 million in convertible preferred units and it will also pay Quantum $227 million in cash. This deal should close on Oct. 1.

QR Energy said the fields contain an estimated 37.1 million barrels of oil and is spread over 109,305 acres and already has approximately 1,600 wells.

QRE investors are already enjoying a great dividend at 9 1/2 percent, $1.65 per share as QRE trades slightly to the upside this morning at 17.14.

Transaction Highlights

Properties located in existing core areas: Permian Basin, Ark-La-Tex and Mid-Continent

Net production of 8,000 Boed expected for the fourth quarter of 2011

Total proved reserves of 37.1 MMBoe are 65% proved developed and 41% liquids (oil and NGLs)

More than 1,500 producing oil and natural gas wells

Inventory of low risk development opportunities

Reserve life (R/P) of 12.7 years

77% operated by value based on standardized measure

Expected to be immediately accretive to Distributable Cash Flow per unit

Click here to get a free trend analysis for QRE

Crude Oil Starts The Week Down as European Debt Crisis Looms Large

Crude oil starts the week on a sour note falling for a third day, the longest decline in a month, as most traders feel that Europe will not shake off their debt crisis and economic growth will continue to be under pressure. Combine that with the return of normal production in the Gulf of Mexico as hurricane season appears to be winding down.

Crude oil was lower in Sunday evenings overnight trading as it extends the decline off last Wednesday's high. Stochastics and the RSI are still overbought, diverging and are turning bearish signaling that sideways to lower prices are possible near term.

Closes below last Tuesday's low crossing at 83.20 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.15 later this fall. If October renews the rebound off August's low, the May-July downtrend line crossing near 92.85 is the next upside target.

First resistance is last Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.85. First support is last Tuesday's low crossing at 83.20. Second support is the reaction low crossing at 82.95. Crude oil pivot point for Monday morning trading is 87.46.

Oil N' Gold: Weekly Technical Outlook For Crude Oil

Crude oil edged higher to 90.48 last week but lacked follow through buying and failed to sustain above 90 psychological level. The recovery from 75.71 is so far slightly stronger than expected. But the look of the price actions are still corrective, thus, favoring it's merely a consolidation. Hence, while further recovery could still be seen as long as 83.20 minor support holds, we'd expect upside to be limited below 100.62 resistance and bring resumption of fall from 114.83 eventually. Below 83.20 minor support will flip bias back to the downside for retesting 75.71 low first.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. However, break of 100.62 resistance will indicate that fall from 114.83 has completed after meeting missing 100% projection target. The corrective structure of such decline in turn argues that rise from 33.2 is still in progress for another high above 114.83.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

J.W. Jones: What The Social Mood is Saying About the S&P 500

Social mood is absolutely horrible right now. In my experience as a trader I do not recall a similar time frame in my life. Social mood has deteriorated to the point that it would not surprise me to see two grown men come to blows over a fantasy football draft. Oh wait, that happens every year!

In all seriousness, the world seems to be getting more dangerous every day. At this point I think even Mother Earth is socially frustrated as she wreaks havoc all over the world. Earthquakes, droughts, wild fires, famine, hurricanes and the list goes on and on. Politics are as divisive as any time in recent history and the rhetoric is just excruciating. So what does all of this negativity mean for financial markets?

It means that every article is under the microscope and anyone who opposes the view of the writer or speaker reacts with vitriolic commentary that many could conceivable call “hate mail.” People are hurting badly from both an economic and social perspective. You can bet that the current social malaise is going to impact financial markets and I would argue that it already has.

August was a poor month for most investors as the equity indices took a nosedive and sold off sharply. I warned members of my service incessantly to reduce risk ahead of the selloff and I sat in cash as markets were crushed. I received countless emails telling me I was essentially an idiot and Mr. Market was going to kick my backside. Initially they were right, but time proved my analysis prescient.

August was the single best month I have had for members at my service at Options Trading Signals.com. I only placed 3 trades in the entire month. Two SPY trades that were directionally biased to the long side and both produced outstanding profits. I also utilized a time decay strategy for a GLD position which worked out quite well. By the end of the month of August all 3 positions were closed and the gross gain based on maximum risk was over 100%. If a trader risked a maximum of $1,000 on each trade taken at the end of August the trader’s account would have grown to around $2,000.

One of the guys I trade with got his ETF newsletter subscribers in at the bottom for a quick 4.5% bounce then shorted a week later using the SDS inverse etf to catching another 6% on the way down… So as you can see there are many ways to play market volatility

So what is going to happen next? The funny thing is not a lot has changed since my most recent article I

posted back on August 28^th. The following chart below still holds sway in terms of overhead resistance for the S&P 500:

In the same article I wrote the following statement:

“In the short to intermediate term, I believe we will see higher prices and a test of the key S&P       1,220 area or possibly a re-test of the key S&P 1,250 price level which corresponds with the     March 2011 pivot lows. Additional resistance would come in around the 1,260 – 1.270 area which marks the neckline of the recent head and shoulders pattern which triggered the selloff in the S&P 500.”

Unlike many financial writers, I am a trader first and a writer second. I put my money where my mouth was and took a trade that got long based on the analysis I provided readers and members of my service. The following price chart illustrates the resistance level that held the S&P 500′s first attempt to rally:

Those of you who do not believe that technical analysis works are wrong. While technical analysis should not be the only metric used to enter or exit positions, basic support and resistance levels can help traders take profits at appropriate times. In addition, laying out longer term support and resistance levels give traders the ability to place trades in a step or tiered system. Essentially, once a trader has identified support and resistance levels the trade can sell into resistance and add to his/her position near support. Technical analysis provides great exit and entry points for astute traders.

My viewpoint of the S&P 500 has not changed much since August 28^th. I think we will continue to see choppy price action and a retest of the 1,220 level is likely, if not probable. If the SPX 1,220 price level gives way to higher prices a retest of the March pivot lows will be the next resistance point. The March pivot lows correspond directly with the SPX 1,250 price level and the 50 period moving average will be flirting nearby.

If prices continue to work higher the neckline of the head and shoulders pattern which produced the selloff in early August will be tested. The point that readers should take from this is that overhead resistance is extreme at this point. The following chart below illustrates the key resistance levels and the current rising channel on the daily chart.

While it may sound a bit confusing, higher prices in the near term will likely be bearish in the intermediate to longer term. In my previous article, I commented that I believed we had likely entered the next phase of the bear market and I still believe that. At this point in time I am just waiting for the price action to confirm my suspicions.

The first confirmation that the bear market will have returned would be a lower high on the daily and weekly time frame. The final confirmation would occur if prices rollover and breakdown below the August lows. If the August lows are taken out on a daily and/or weekly close an all-out rush to the exits is possible. Ultimately I believe that risk is increasing to the downside if prices keep working higher.

Right now I’m expecting higher prices unless the ascending trendline of the channel is penetrated on a daily or weekly close. Otherwise, the bullish churn higher will continue. The chart below illustrates the key support levels that if broken could lead to additional downside.

I am expecting to see a test of the 1,250 area before the end of September. It is entirely possible to see a test of the neckline as well which would help suck in retail investors who are scared they are going to miss the move back up. A rally that is contained around the SPX 1,250 – 1,275 price levels could result in a sharp sell off.

All eyes are on the key 1,220 price level to the upside and the August lows. A breakout in either direction could result in a big move. If I had to guess, the thrust higher will end in late September or the early part of October, but I would be remiss not to mention that one headline out of Europe could derail my entire thesis.

The two single largest threats to a stock market advance stem from Europe. The European sovereign debt crisis is one key issue that could alter the marketplace by its own merit. A more silent concern for U.S. equity markets is the impact the European situation will have on the U.S. Dollar.

Subscribers of OTS pocketed over 100% return in August alone! So don't wait, Sign up now at Options Trading Signals.com for a 24 hour 66% off coupon.

Adam Hewison: The Markets Voted and it's No Confidence In Obama

It would appear that President Obama’s speech last night was not well received looking at the financial markets this morning.

Readers of this report know that we rely on our Trade Triangle technology for trends, and not what a government official has to say and this includes the president of the United States. I learned over the years that the markets generally tell you what they’re going to do. Price action alone is the greatest truth you can see in the marketplace. Price action is what determines trends, price action is what determines traders actions.

Many newbie traders think there must be some mystical power that drives the markets. The truth is, the market is driven by people who believe prices are you going to go higher or go lower. It is that simple, however, most investors tend to over think the market.

Now I understand that there are folks out there that would disagree with that statement and say that the fundamentals, i.e. supply and demand, earnings etc. etc. is what drives the markets. Yes, there is a certain truth to that, but the other part of the equation is the psychology of the market. Market sentiment or psyche can really play havoc on the fundamentals and that is why price action alone is the best market analyst in the world.

As we go into this weekend with the 10th anniversary of 9/11 looming over everyone’s head It’s important to look at how the markets are closing for the week.

We consider how a market closes for the week to be very important. Did the market make or lose ground for the week? Which way is the monthly Trade Triangles? Did the market close in the direction of the major trend? All of these thoughts are reflected for the most part in the weekly closing price of any market. That’s why we concentrate and bring to you our weekend updates, which allows you to see the big picture and not the minutia of every tick.

Let's look at Crude Oils price action........

The Crude Oil market once again backed off from the $90 a barrel level which we have talked about as being resistance for this market. The Williams % R is setting up for a negative divergence to the downside. Crude Oil reversed itself from the top of its Donchian trading channel yesterday. The monthly Trade Triangle is still negative for this market. We look for Crude Oil to continue to move in a sideways pattern much like it did for most of August. The longer term monthly Trade Triangle must be given more weight than either the daily or weekly Trade Triangles.

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

Check out todays video that covers all 6 markets that Adam follows.....

Unlimited access to this and other trading videos FREE! Click Here!

Sharon Epperson: Where is Commodities Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks ahead to where oil and precious metals are likely headed next week.

Obamas "More Debt" Speech and Fridays Oil Numbers

It's looks like traders view President Obamas new "stimulus" plan, yes we'll say it, for just what it is, more debt. Crude oil traded lower in Thursday evenings overnight session consolidating some of Wednesday's rally putting oil into overbought territory.Oil prices are diverging but are neutral to bullish signaling that sideways to higher prices are possible near term. If October extends the rebound off August's low, the May-July downtrend line crossing near 92.45 is the next upside target.

If the oil bulls expect to maintain any of this momentum they will need to defend 83.20, And closes below Tuesday's low crossing at 83.20 would confirm that the rally off August's low has ended. If October renews the decline off May's high, the 75% retracement level of the 2009-2011 rally crossing at 71.73 is the next downside target.

First resistance is Wednesday's high crossing at 90.48. Second resistance is the May-July downtrend line crossing near 92.45. First support is Tuesday's low crossing at 83.20. Second support is the reaction low crossing at 82.95. Crude oil pivot point for Fridays trading is 89.23.