Run Your Own Profitable Oil Refinery By Hedging 3 ETFs

From guest blogger Richard Bloch.....

Want to profit from high oil refining margins? You can almost run your own oil refinery, hedging your output through three ETFs that track crude oil, heating oil, and gasoline. At a very basic level, refining oil is easy to understand. You buy crude oil and refine it into various products. If you sell those products for more than the cost of the crude oil, you make a profit.

Although there are many nuances to this business - different grades of oil, seasonal demand patterns, and dozens of different refined products each with their own price - there's a simple way to approximate the profit margin for refining oil. It's called the "crack spread," which gets its name from the refining process itself because you "crack" complex crude hydrocarbon molecules into usable products.

There are several versions of this spread. One popular spread is called the 3:2:1 crack spread. Here's how it works. Three barrels of WTI crude oil yield one barrel of heating oil and two barrels of gasoline. But the easy way of calculating it is to divide by three. Assume that one barrel of crude oil (42 gallons) yields one-third of a barrel of heating oil (14 gallons) and two-thirds of a barrel of gasoline (28 gallons) as shown here:

Calculating the spread

Here how this 3:2:1 crack spread was priced as of Friday, February 3

WTI Crude oil: $97.84 per barrel

Heating oil: 3.114 per gallon x 14 gallons = $43.59

Gasoline: 2.914 per gallon x 28 gallons = $81.59

Total heating oil and gasoline revenues: $43.59 + $81.59 = $125.18

Less cost of crude oil: $97.84

NET PROFIT = $27.34

Is that a lot? Let's take a look at that spread over the past 18 months.

Yeah, that seems like a lot, but it's certainly not as much as it was in September.

Three ETFs to profit from the crack spread

When the spread is going up, you'd do well to be buying gasoline and heating oil, while simultaneously selling crude oil.

You can do this through trading three ETFs in the 3:2:1 ratio outlined above. These include

• US Heating Oil Fund (UHN)
• US Gasoline Fund (UGA)
• US Oil Fund (USO)

These ETFs hold nearby futures contracts, so if you think the spread is going to go up, you might go long the spread with the following trade:

Long the crack spread

• Buy $10,000 of UHN
• Buy $20,000 of UGA
• Sell $30,000 of USO

I would adjust this position monthly to maintain that 3:2:1 ratio.

If you think the spread is going down instead -- as it did in September last year, you'd benefit from shorting the spread with the opposite trade:

Short the crack spread

• Sell $10,000 of UHN
• Sell $20,000 of UGA
• Buy $30,000 of USO

Riding the crack spread for fun and profit

How would this approach have performed over the past year? Well we can certainly assume that none of us can pick an exact top or bottom. So let's look at the spread chart again and make some assumptions about where going long or short this spread might have made sense based on trends at the time.

On February 1, 2011 you note the spread is rising, so you buy $10,000 of UHN and $20,000 of UGA while shorting $30,000 of USO. You'd treat each month as a separate trade so you can maintain the 3:2:1 ratio.

On October 3, the spread is appears to be declining. Now you short the crack spread by buying crude oil and selling heating oil and gasoline, once again resetting your position each month to stay within the 3:2:1 ratio.

Finally, on January 3, 2012, you switch and go long the spread once again, closing position on February 1.

This table shows the results for each month's trade, the profit of each position, and the net results.

The months highlighted in yellow were trades for being long the spread. The ones in purple are months trading the spread from the short side.

Here's a chart showing the net profit of your positions throughout the year.

No it's not perfect, but when the spread is trending, you can make a fairly decent gain. The profits really rose as the spread switched direction in October.

If you prefer, you might be able to use options for the USO part of your spread. These options are fairly liquid, but there are no options for UHN, and UGA options are too thinly traded to be of much use.

You don't need to be in the oil business to capitalize on the crack spread. Easy? Well no, nothing in the oil market is easy, but this could be a pretty reliable ongoing trade if you follow the trend.

Disclosure:  Richard Bloch has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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ONG: Crude Oil Weekly Technical Outlook For Saturday February 4th

Here is the weekly call from the great staff at Oil N Gold.......

Crude oil dipped to as low as 95.44 last week but formed a temporary there and recovered. Initial bias is neutral this week first. On the downside, below 95.44 will bring another decline but after all, we'd we'd expect strong support from 92.52 cluster support (38.2% retracement of 74.95 to 103.74 at 92.74). to contain downside and bring rebound. Meanwhile above 101.29 will be the first signal that recent consolidative trading has finished and flip bias back to the upside for a test on 103.74 resistance.

In the bigger picture, pull back from 114.83 was completed at 74.95 already and medium term rally from 33.2 is not finished yet. We'd tentatively treat rise from 74.95 as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 92.52 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

CME Releases 2012 Product Expiration Calendar

If you are serious about trading energy stocks and products you need to post this in or on your calendar. One of the main reasons for failure for all newcomers to the commodity trading world is lack of understanding expiration dates.

Here you will find key trading information, including last trade and notice days as well as Exchange holidays, in the annual Energy Expiration Calendar published by CME Group.

CME Group offers the most extensive and liquid energy complex in the world, including Light Sweet Crude Oil (WTI), Natural Gas (Henry Hub), petroleum, and electricity products. Many of our contracts are benchmarks that set the price for these resources worldwide. From the world's largest industrial companies to financial institutions, our diverse universe of participants clear an average daily volume of 1.5 million energy contracts every day on CME Globex, through CME ClearPort or on our trading floor.

Here is the 2012 CME Energy Product Expiration Calendar

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Is The Double Top in For Crude Oil?

Only our longer term monthly Trade Triangle for crude oil remains positive on this market. The move today below the $98 support level puts this market in jeopardy of further weakness. A close below the $93.50 level seen on December 18th would confirm a double top pivot point formation, which would measure down to the $84 a barrel level.

We do remain longer term positive on this market, however it needs to move and close over resistance at $100 to get its upside momentum into high gear. With only our monthly Trade Triangle in positive mode, we expect we will see further market consolidation in crude oil. Long term traders should be long this market with appropriate money management stops.

March crude oil closed down $1.24 a barrel at $96.36 today. Prices closed nearer the session low today and hit another fresh six week low. Crude oil bulls are fading. Prices are in a four week old downtrend on the daily bar chart. The next near term upside price breakout objective for the crude oil bulls is producing a close above psychological technical resistance at $100.00 a barrel.

The gold market moved to its best levels since December 2nd, however it is at major resistance between the $1760 and $1800 levels. With our long term monthly Trade Triangle still in a negative mode, we cannot get excited about this market at the moment. We are not super bearish on this metal, however we just need further confirmation with the tools we know are successful in trading gold. Long term term traders should be in short positions in gold with appropriate money management stops. Intermediate term traders should be on the sidelines.

April gold futures closed up $9.40 an ounce at $1,758.90 today. Prices closed nearer the session high today and hit a fresh two month high. Gold managed gains today despite bearish “outside markets” that saw a firmer U.S. dollar index and sharply lower crude oil prices. Yet, gold rallied anyway on its technical strength. Gold bulls have the solid overall near term technical advantage and still have upside near term technical momentum on their side. A steep five week old uptrend is in place on the daily bar chart.

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Natural Gas Spot Prices Near 10 Year Lows Amid Warm Weather

 Natural gas prices have continued their downward trend this winter as a result of warmer than normal temperatures, ample natural gas in storage, and growing production. Population weighted heating degree days since November 1, 2011 are down 12% nationally from the 30 year average. Total working natural gas in underground storage in the lower 48 states was 3,098 Bcf for the week ending January 20, 21% above the storage levels from one year ago. Daily dry gas production averaged about 64.2 billion cubic feet per day (Bcfd) in January, up almost 10% from last January.

Click on the tab headers below to see charts highlighting factors affecting natural gas prices.

Spot Prices      Weather       Storage         Production       Weather Outlook        Futures Prices

Average spot natural gas prices for January were $2.68/MMBtu. Spot natural gas prices in January 2012 reached their lowest level in 10 years except for a 4-day period over the Labor Day weekend in 2009.


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Crude Oil Supply Gains Puts Crude Oil Bulls on Their Backs.....Again!

Crude oil futures tanked today after supplies spiked up by 4 + million barrels. This after the Bloomberg News Survey forecasted a 2.6 million barrel gain.

Crude oil for the past week and a half has lacked any real cohesive direction, in our opinion. With a Score of -55, it reflects a true trading range. We believe we are now at the lower levels of the trading range and would not be surprised to see a pop to the upside.

We still remain longer term positive on this market and expect to see it make some new highs soon, however it must move over resistance at $102 to get its upside momentum into high gear.

With our daily and monthly Trade Triangles in positive modes, we expect we will see further market consolidation in crude oil. Long term traders should be long this market with appropriate money management stops.

Crude oil closed lower on Wednesday and the low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If March renews January's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 101.39 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 101.39. Second resistance is the reaction high crossing at 102.24. First support is last Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

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

Global Natural Gas Production Doubled Between 1980 and 2010

Global dry natural gas production increased 110% between 1980 and 2010, from 53 trillion cubic feet (Tcf) in 1980 to 112 Tcf in 2010. The combined share of North America and the Former Soviet Union, the top two producing regions during the time period, fell from 72% in 1980 to 49% in 2010. While all regions increased natural gas production between 1980 and 2010, the Middle East grew most rapidly, increasing more than eleven fold.

Natural gas production in the United States has grown rapidly in the past several years. Rapid increases in U.S. natural gas production from shale gas formations resulted from widespread application of two key technologies: horizontal drilling and hydraulic fracturing.

Shale gas resources, which have recently provided a major boost to U.S. natural gas production, are also available in other regions of the world. An initial assessment of 48 shale gas basins in over 30 foreign countries includes 5,760 Tcf of technically recoverable shale gas resources.

Just click here for your FREE trend analysis of FCG, the Natural Gas ETF

Crude Oil Bulls Can't Seem to Take Advantage of Price Action Above $100

Crude oil closed down $0.42 a barrel at $98.35 today. Prices closed nearer the session low today and scored a bearish “outside day” down on the daily bar chart. Prices were pressured by a firmer U.S. dollar index today. Crude oil bulls have the overall near term technical advantage. However, the going does get tough for the bulls once prices move above the key $100.00 level.

Gold futures closed up $4.00 an ounce at $1,783.30 today. Prices closed near mid range today, hit a fresh seven week high and closed at a bullish monthly high close. Gold bulls still have the solid overall near term technical advantage and still have upside near term technical momentum. A steep four week old uptrend is in place on the daily bar chart.

Natural gas closed down 20.9 cents at $2.504 today. Prices closed nearer the session low today. Bulls faded today. Bears have the overall near term technical advantage. The next upside price breakout objective for the bulls is closing prices above major psychological resistance at $3.00.

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The Long Term Bull Market "E" Wave Count

I have to be honest that I am grappling with a few possible counts since the March 2009 Bull market commenced in terms of the big picture.

With Elliott Wave Analysis, you have to anticipate, monitor, and then adjust.  Most of the time I go with my instinct and then only adjust if it looks like I was way off the tracks.  The only time I tend to get way off the tracks is when I read too many opinions, so I’ve shut myself off from reading other’s opinions and below is my gut  right now:

I know I have labeled one option as the 1074 lows being primary wave 2, with primary wave 3 underway since (1074 to current).  However, I have to admit my instincts still tell me that the 1074 lows may have been primary wave 4, and we are in primary wave 5 up now.

Whether it was 2 or 4 is not super important short term because we would either be in a Primary 3 up or Primary 5 up now which is bullish either way.  However… if it’s a primary 5 up, then it changes the longer term pictures and also 5th waves can be difficult to assess.

There is another rule that says wave 3 can’t be the shortest of waves 1, 3 and 5 (All up waves).  Therefore, if we are in primary 5 up now from the 1074 lows then we can’t rally more than 360 points from the 1074 lows (Wave 3 was 360 points).

So here is the possible count if this is Primary 5 from the March 2009 lows with normal fibonacci relationships:

666 to 1221-  1

1221-1010- 2 (38% of 1)

1010-1370- 3 (61.8% of 1)

1370-1074- 4 (38% of 1-3)

1074-??? – 5 (Normally 50-61% of 1-3)

So if wave 5 cant  be longer than wave 3, and let’s say wave 5 is 50% of waves 1-3… that would put a top target at about 1426 on the SP 500 index.  That would make wave 5 just shorter than wave 3 following the rules and would complete 5 full waves.

So that is what I’m grappling with because if this is a primary wave 5 up from the Oct 2011 lows of Primary 4… then we would need to be on our toes for a bull market pivot top.  If its primary wave 3 up , then we have much further to stretch.

Right now, the evidence is leaning to this being primary 5 up… below is my chart and I will keep you updated.  The volume, MACD, and other indicators will help point the way.

Note how the volume has been declining on every primary wave rally 1, 3, and 5 so far.  Note how the MACD line uptrends on each primary wave rally as it is now…..Stay tuned.

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Crude Oil, Gold and Natural Gas All Start The Week Lower

Crude oil closed lower on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. March crude oil declined over Greece's debt and U.S. consumer spending stalled raising concerns that economic growth and fuel demand will decline. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted. If March renews January's decline, December's low crossing at 92.95 is the next downside target. First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is last Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

The Fed, the S&P 500, & Why Gold Is Shining Bright

Gold closed slightly lower due to light profit taking on Monday as it consolidates some of the rally off December's low. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends the rally off December's low, the 62% retracement level of the September-December decline crossing at 1772.28 is the next upside target. Closes below the 20 day moving average crossing at 1654.80 would confirm that a short term top has been posted. First resistance is today's high crossing at 1742.80. Second resistance is the 62% retracement level of the September-December decline crossing at 1772.80. First support is the 10 day moving average crossing at 1689.30. Second support is the 20 day moving average crossing at 1654.80.

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Natural gas closed lower on Monday as it consolidated some of the rally off last week's low. Stochastics and the RSI remain neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 2.770 are needed to confirm that a short term low has been posted. If March renews the multi year decline, monthly support crossing at 1.960 is the next downside target. First resistance is the 20 day moving average crossing at 2.770. Second resistance is January's high crossing at 3.153. First support is last Monday's low crossing at 2.289. Second support is monthly support crossing at 1.960.

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The Fed, the S&P 500, & Why Gold Is Shining Bright

Well here we are, caught between resistance in the S&P 500 around the 1,330 area and support around the 1,300 price level. My last two articles have discussed why I was expecting a top in the coming days and weeks ahead, but prices just continued to work higher.

One of the things that I pride myself in as a person who trades and writes about financial markets in public is that I am always honest. If I blow a call I fess up and admit it. When I have made mistakes in the past, I always try to learn something new from them and I discuss losing trades publicly with readers and members of my service.

This time is different. I honestly do not know if I am going to be right or wrong. The price action in the S&P 500 Thursday was certainly bearish short term, but a back test of 1,300 or possibly even 1,280 could give rise to a Phoenix. Granted, the Phoenix is nothing more than Ben Bernanke’s pet, but that is a topic for a different time.

I have scanned through my list of indicators which discuss sentiment based on momentum, put/call ratio, the advance/decline line, Bullish Percent Indicators, and several ratio based indicators and they are all SCREAMING that a top is near. The interesting thing about the previous statement is that it would have been true a week ago and mostly true two weeks ago, yet prices have continued to climb.

The daily chart of the S&P 500 Index demonstrates the recent price action that has continued to climb the “Wall of Worry” for several weeks:

S&P 500 Daily Chart

 

The culmination of the massive run higher for the S&P 500 was the dovish comments coming from Ben Bernanke during Wednesday’s press release and press conference.

The U.S. & European Central Banks are seemingly in a perpetual race to debase their underlying fiat currencies. The race will not end well. In fact, this type of situation smells like a Ponzi scheme where Ben Bernanke and Mario Draghi (ECB President) are the wizards behind the curtains. Their loose monetary policies and forced reflation are synthetic drugs that juice risk assets higher and ultimately Mr. Market will have his vengeance in due time.

At this point, it seems like Ben Bernanke will do anything to juice equity prices higher. I think his hope is that they will be able to artificially keep the game going until the recovery is on a more sound footing. However, when the entire recovery is predicated on cheap money and liquidity and is not supported by organic economic growth it just prolongs the inevitable disaster.

As an example, the daily chart of the Dow Jones Industrial Average is shown below. I would point out that that Dow came within 35 points (0.27%) from testing the 2011 highs. Furthermore, the Thursday high for the Dow was only 1,356 points (10.55%) from reaching the all-time 2007 October high.

Dow Jones Industrial Average Daily Chart

 

I have argued for quite some time that the economy and the stock market are two different things. If Bernanke and his cronies succeed in reflating the financial markets and the Dow reaches its October 2007 high in the near term, more retail investors will regard equity markets as being rigged.

Who could blame them for viewing financial markets as a giant rigged casino that stands to win while they continue to lose their hard earned capital? We all recognize that the current economy is nowhere near as strong as it was in 2007. But alas, the regular retail investor does not recognize that the stock market and the economy do not portray the same meaning.

One specific underlying catalyst that has gone largely unnoticed by most of the financial media during this sharp run higher in stocks is the total lack of volume associated with the march higher. The NYSE volume over the past 2 months has been putrid when compared to historical norms.

As a trader, I am forced to take risk through a variety of trade structures. However, the idea that a crash could be coming seems hard pressed as long as Big Bad Ben is at the wheel.

If the Russell 2000 drops 10%, I am convinced that Ben will be out making announcements that the Fed stands ready to intervene with all of the supposed tools they have at their disposal. Let’s be honest here, they really have one tool comprised of 3 separate functions which are all a mechanism to increase liquidity in the overall system. To express this liquidity, the following chart from the Federal Reserve shows the M2 money supply levels:

Current M2 Money Supply

 

The 3 functions are the printing of currency, the monetization of U.S. Treasury debt (QE, QE2, QE2.5, Operation Twist), and exceptionally low interest rates (ZIRP) near 0 for an “extended period of time (2014).” Since monetary easing is all that the Federal Reserve has done since the financial crisis began, it begs to reason that the Federal Reserve has no other solutions or tools available. If they did, they seemingly would have used them by now.

The first bubble they created due to loose monetary policy was the massive bubble in oil in 2008. Fast forward to the present, and they are currently supporting another bubble in U.S. Treasury obligations. The bubble that they will create in the future when the game finally ends will be in precious metals. The precious metals bubble will be building while the Federal Reserve and the U.S. Treasury attempt to keep the Treasury Bond bubble from bursting.

At this point in time, if we continue down this path stocks will not protect investors adequately from inflation should the Treasury bubble burst. I would argue that the central planning and monetary policy we have seen the past few years continues in the United States and Europe that gold, silver, and other precious metals are likely to begin their own bubble of potentially epic proportions.

As the weekly chart of gold futures illustrates below, gold has recently pulled back sharply and has broken out. I will likely be looking for any pullbacks in gold as buying opportunities as long as support holds.

Gold Weekly Chart

 

In closing, for longer term investors the stock market might have some serious short term juice as cheap money and artificially low interest rates should juice returns. However, eventually equities will start to underperform. At that point, gold will be in the final stages of its bubble and the term parabolic could likely be applied.

If central banks around the world continue to print money there are only a few places to hide. Precious metals and other commodities like oil will vastly outperform stocks in the long run if the Dollar continues to slide. The real question we should be asking is who will win the race to debase, Draghi or Bernanke?

By: Chris Vermeulen – Click here to get Chris' Free Weekly ETF Reports & Analysis
Co-Author: JW Jones – Click here to get J.W's Free Weekly Options Reports & Analysis

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Crude Oil, Gold and Natural Gas Market Commentary For Thursday January 26th

March crude oil closed higher on Thursday due to light short covering. Profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are still possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted. First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

How To Trade Market Sentiment

April gold closed higher on Thursday as it extends the rally off December's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If April extends the rally off December's low, the 62% retracement level of the September-December decline crossing at 1772.28 is the next upside target. Closes below the 20 day moving average crossing at 1636.60 would confirm that a short term top has been posted. First resistance is today's high crossing at 1734.50. Second resistance is the 62% retracement level of the September-December decline crossing at 1772.80. First support is the 10 day moving average crossing at 1670.50. Second support is the 20 day moving average crossing at 1636.60.

How to Use Money Management Stops Effectively

March natural gas closed lower on Thursday ending a three day short covering rally off Monday's low. Stochastics and the RSI are turned bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 2.807 are needed to confirm that a short term low has been posted. If March renews the multi-year decline, monthly support crossing at 1.960 is the next downside target. First resistance is the 20 day moving average crossing at 2.807. Second resistance is January's high crossing at 3.153. First support is Monday's low crossing at 2.289. Second support is monthly support crossing at 1.960.

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EIA: Domestic Supply of Liquid Fuels Projected to Increase, Resulting in Fewer Imports

U.S. dependence on imported liquids declines through 2035 in the 2012 Annual Energy Outlook (AEO2012) Reference case projection, primarily as a result of growth in domestic oil production, an increase in bio fuels use, and slower growth in consumption of transportation fuels. In this projection, net petroleum imports as a share of total U.S. liquid fuels supplied drop from 49% in 2010 to 36% in 2035.

Net petroleum imports are projected to make up a smaller share of total energy consumption in response to modest economic growth, increased efficiency, growing domestic oil production, and continued adoption of nonpetroleum liquids. Although not included in the Reference case, proposed fuel economy standards for future vehicles (model years 2017 through 2025) would further reduce projected liquids use and the need for imports.

Projections in the Annual Energy Outlook 2012 Reference case assume current laws and regulations remain generally unchanged throughout the projection period, thus serving as a starting point for analysis of energy policies. More highlights from the Reference case, as well as projections for several energy factors through 2035, are available in the AEO2012 Early Release Reference Case Overview and supporting materials.



Gold Appears to Break Out of it's Down Trend

Gold Appears to Break Out of it's Down Trend

The stock markets had a very solid session. Most charts shot higher after Apple beat estimates Tuesday night surging over 10%. This set the tone for stocks Wednesday. Also the FOMC said they would keep interest rates low until mid 2014 and projected a 2% inflation rate which took the market by surprise. Looking at the 10 minute intraday charts of gold, silver, oil, and the SP500 you would think it was the 4rth of July with everything shooting higher.

My gut feeling before the FOMC meeting was that there would be no QE3 announced. This I figured would trigger the dollar to rise which in turn would put pressure on stocks and commodities. But the low interest rates until mid 2014 was the wild card trumping that scenario.

Trading around FOMC meetings always brings a heightened level of uncertainty to traders and investors. The news is unpredictable making that much more of beast to try and out smart. I personally do not trade on any news because of the added risk involved.

Let’s take a quick look at gold and silver...

The Weekly Gold Chart:

Gold has started to break out of its down trend and if it can hold up into Friday’s close then it will be a very positive sign for the shiny metal. It is still mid week and a lot can happen, so let’s see how it holds up and go from there.

The Weekly Silver Chart:

Silver has some work to do before it’s back in an uptrend on the weekly chart. I would not be surprised to see it catch up with gold and run toward the $35 resistance level in the next couple days.

Mid-Week Trend Conclusion:

In short, gold is on the move and in the next few weeks I figure we will be getting involved. Silver I think will unfold a little different from a chart pattern point of view, but I do feel there will be a buying opportunity soon also.

Looking more broad based we are seeing the stock market continue to make new highs with solid volume behind it while Crude oil continues to tread water.

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Chris Vermeulen

Crude Oil Moves Higher on Federal Reserve Statement

Crude oil closed higher on Wednesday after Federal Reserve officials said the U.S. benchmark interest rate will stay low until at least 2014 to bolster growth and cut unemployment, boosting fuel demand. The high range close sets the stage for a steady to higher opening on Thursday.

But stochastics and the RSI are still neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

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Stalemate Between European Policy Makers Holds Crude Oil Bulls Back

March crude oil posted an inside day with a lower close on Tuesday. Today's setback was triggered by a stalemate between European policy makers and Greek bondholders over debt relief increased concern that the European credit crisis will spread. The low range close sets the stage for a steady to lower opening on Wednesday.

Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is Monday's low crossing at 97.40. Second support is December's low crossing at 92.95.

With a Chart Analysis Score of -60 today, this market has moved into a trading range. We are longer term positive on this market, however it must move over resistance at $104 to get its upside momentum into high gear. With only our monthly Trade Triangle in a positive mode, we expect we will see further market consolidation in crude oil. Long term traders should be long this market with appropriate money management stops.

Let's look at today's 50 Top Trending Stocks