Has Gold Embraced it’s Fibonacci Number and Began to Base Out?

Is it safe to start buying Gold Stocks yet?

Yesterday the gold market pulled back into a perfect 61.8% Fibonacci retracement. We expect this market to begin to regroup around current levels between $1600 and $1620. With a trading score of -90 the gold market is in a strong downward trend. Look for resistance to come in between $1680 and the $1700 level. With all three of our Trade Triangles negative for gold we expect this market to remain on the defensive. Long term and intermediate term traders should be in short positions in gold with appropriate money management

But despite that gold [April contract] posted an inside day with a higher close on Thursday as it consolidated some of the decline off February's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term.

If April extends the decline off February's high, the 75% retracement level of the December-February rally crossing at 1592.70 is the next downside target. Closes above Monday's high crossing at 1682.80 would confirm that a short term low has been posted.

First resistance is Monday's high crossing at 1682.80. Second resistance is the reaction high crossing at 1696.90. First support is Wednesday's low crossing at 1612.30. Second support is the 75% retracement level of the December-February rally crossing at 1592.70.

We show you where we think this precious metal is headed in today’s video.

Is it safe to start buying Gold Stocks yet?

From guest blogger David A Banister- Active Trading Partners.com

One of the most common questions I field from my forecast and trading subscribers is can we buy Gold stocks yet? We have seen Gold consolidating and correcting following a 34 fibonacci month rally that I discussed last fall was going to top out around 1900 per ounce. This type of rally went from October of 2008 to August of 2011 and we saw Gold rally from $680 to $1900 per ounce during that time.

In order to work off the bullish sentiment that was at parabolic extremes, Gold is required to spend a reasonable amount of time in relation to the prior 34 month move to wash out the sentiment and create a strong pivot bottom. While this continues, the Gold stock index has taken it on the chin as money rotates out and into other hot areas like Technology and the Internet 2.0 social media boom. To wit, the GDX ETF peaked out last fall around 67 and current trades under 47 as of this writing.

However, there may be a silver lining developing in those dark mining stock clouds very soon. It does appear that we are in the 5^th and final wave of this pessimistic decline in Gold stocks per my GDX ETF chart below. A typical bottoming pattern ends after 5 clear waves have taken place, and in this case I have targets between $43-$47 per GDX share for a likely pivot low in Gold stocks. Contrarian investors may do well to begin picking the better names in the sector and “scaling in” over the next short period of time.

Gold itself has recently corrected from 1793 per ounce to 1620 in the last several weeks. This has spooked the crowd out of Gold and put further pressure on the Gold mining stocks as well. Should Gold hold the $1620’s area and rebound past $1691 you will see the Gold stocks take off just ahead of that and from these 43-46 levels on the GDX ETF provide very strong returns to investors with the iron stomachs.

The best way to make money long term in the market and to grow your capital is to develop a method where you can define your risk levels within reason near the apex of a downside move, and then scale into that final apex and catch the rally on the upside. This is difficult to do but at my ATP service we have developed a strong methodology that takes advantage of “herd behavioral characteristics” and takes advantage of typical panic selling and panic buying to do just the opposite. We have not yet bought into the Gold Stock sector but I assume fairly soon we will be dipping our toes in the water while others have all rushed out of the sector right near the apex lows.

Take a look at Davids MRM method

Consider joining us for 90 days trial period and play along.  We provide all the alerts in real time via Email and internet posting. We provide daily updates on all positions and 24/7 Email access to me for any questions.Learn more and sign up at Active Trading Partner.com

Did a “bearish divergence” yesterday signal a top for the equity markets?

Crude Oil pulls back....is this a buying opportunity? We analyze where this energy market is headed.

Gold crashes....no surprise for MarketClub members. We show you where we think this precious metal is headed in today’s video.

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Cushing Crude Oil Inventories Rising in 2012

Crude oil inventories at the Cushing, Oklahoma storage hub, the delivery point for the NYMEX light sweet crude oil futures contract, are up by 12.0 million barrels (43%) between January 13, 2012 and March 30, 2012. This was the largest increase in inventories over an 11 week period since 2009. The inventory builds can be partly attributed to the emptying of the Seaway Pipeline, which ran from the Houston area to Cushing, in advance of its reversal. While Cushing inventories are now approaching the record levels of 2011, the amount of available storage capacity at Cushing is much greater now than it was a year ago, relieving some of the pressure on demand for incremental storage capacity.



 Historically, the Seaway Pipeline delivered crude oil from the U.S. Gulf Coast to Cushing, where it then moved to the refineries connected by pipeline to the storage hub. In November 2011, Enbridge Inc. acquired a 50% share in the pipeline from ConocoPhillips; at this time, Enbridge and joint owner Enterprise Product Partners announced they would reverse the direction of the pipeline to flow from Cushing to the Gulf Coast. Currently, the pipeline is expected to deliver 150,000 barrels per day (bbl/d) from Cushing to the Gulf Coast beginning in June 2012. The companies plan to expand Seaway's capacity to 400,000 bbl/d in 2013 and to 850,000 bbl/d in 2014.

In early March, approximately 2.2 million barrels from the Seaway pipeline was emptied into Cushing storage in order to prepare for the pipeline's reversal. This accounts for about 20% of the build in inventories during this period. However, even without the emptying of Seaway, inventory builds over the past months have been particularly steep compared to the five year average. As of January 13, Cushing inventories stood at 28.3 million barrels, slightly below their seasonal five year average. After the 12.0 million barrel increase, inventories were almost 11 million barrels above their average level, the largest such variation to average since June 2011. This is largely due to flows into Cushing as a result of increasing production in the mid-continent region.


Don't miss today's 50 Top Trending Stocks

Sale of Provident Energy to Pembina Pipeline is Complete

Long time COT [Crude Oil Trader] fund favorite Provident [ticker PVX] has made way for the recent sale to Pembina Pipeline, ticker PBA. Pembina announced on January 16, 2012 that it has entered into an agreement with Provident Energy for Pembina to acquire all of the issued and outstanding common shares of Provident by way of a plan of arrangement under the Business Corporations Act (Alberta) to create an integrated company that will be a leading player in the North American energy infrastructure sector. The acquisition closed as of April 2, 2012.

What does this mean for Provident owners? From MarketWatch, U.S. listed shares of Provident Energy Ltd. rallied 22% to $11.38 on Tuesday after Pembina Pipeline Corp. said it would buy Provident in a deal valued at about $3.1 billion. Calgary based Pembina said it expects it'll be able to increase its cash flow per share, increase dividends and reduce its dividend payout ratio, after it closes the acquisition. The deal, which was announced on Monday, will create a leading North American energy infrastructure company, the companies said.

As of this evening new Pembina stock holders will continue to receive a cool 5.54% dividend on a monthly basis.

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Tuesday’s Market Video Game Plan for Metals, Crude Oil & SP500

The next few trading sessions should be interesting with precious metals on the verge of a rally which should get the attention of traders and investors once again. If we can get investors to start looking at gold and silver again instead of high dividend paying stocks we will see gold hit $1800 an silver $37.

The SP500 has been pulling back and looks about ready to bounce going into the afternoon.

I recorded my morning analysis explaining what to expect in the market this week and the key support and resistance levels.

Watch Video Analysis at The Technical Trader.com

Chris Vermeulen

What do you follow, the fundamentals....the charts....or both?

Why is it that the fundamentals don’t match the charts? The stock market is a forward looking instrument. It forecasts how businesses are going to be months into the future. You only have to look back in the first quarter of 2009 to see how the fundamentals looked terrible, yet the charts pointed to better days ahead. What do you follow, the fundamentals or the charts, or both?

And what do both tell us when looking at this crude oil market. We believe the low seen yesterday on the May contract around the $102 area is going to be an important support level for this market. We are looking for the May contract to continue to consolidate around current levels and eventually move up to the $108 area, where it should find resistance.

We continue to like the long term chart formation which we believe will eventually push this market higher. We are still looking for crude oil to make its lows probably somewhere in the April-May period and then we expect that the downside pressure in this market to come to an end. Long term traders should remain long this market with appropriate money management stops.

Tuesdays action finished up with crude oil [May contract] closing lower due to profit taking as it consolidated some of Monday's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are turning neutral hinting that a low might be in or is near.

Closes above the reaction high crossing at 108.70 are needed to confirm that a short term low has been posted. If May renews last week's decline, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target.

First resistance is the broken October-February uptrend line crossing near 106.27. Second resistance is the reaction high crossing at 108.70. First support is Monday's low crossing at 102.06. Second support is the 38% retracement level of the October-March rally crossing at 97.84.

Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500

Is Crude Oil Reversing off our Fibonacci Target?

Using 3X ETF $NUGT to Trade Gold and our Momentum Reversal Method

Crude oil [May contract] closed higher on Monday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends last week's decline, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target. Closes above the reaction high crossing at 108.70 are needed to confirm that a short term low has been posted.

First resistance is the broken October-February uptrend line crossing near 105.95. Second resistance is the reaction high crossing at 108.70. First support is today's low crossing at 102.06. Second support is the 38% retracement level of the October-March rally crossing at 97.84.

We continue to like the long term chart formation in crude oil, which we believe will eventually push this market higher until early April. We are looking for crude oil to make its highs probably somewhere in the April-May period. With a score of -60, this commodity is currently in a trading range.

With our monthly Trade Triangle in a positive mode, we expect that the downside pressure in this market has come to an end. Long term traders should remain long this market with appropriate money management stops.

Precious Metals – Silver, Gold, Gold Miner Stocks On The Rise?

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Precious Metals – Silver, Gold, Gold Miner Stocks On The Rise?

The past couple months investors have been focusing on the equities market. And rightly so with stocks running higher and higher. Unfortunately most money managers and hedge funds are under performing or negative for the first quarter simply because of the way prices have advanced. New money has not been able to get involved unless some serious trading rules have been bent/broken (buying into an overbought market and chasing prices higher). This type of market is when aggressive/novice traders make a killing cause they cannot do anything wrong, but 9 times out of 10 that money is given back once the market starts trading sideways or reverses.

While everyone is currently focusing on stocks, its important to research areas of the market which are out of favor. The sector I like at the moment is precious metals. Gold and silver have been under pressure for several months falling out of the spot light which they once held for so long. After reviewing the charts it looks as though gold, silver and gold miner stocks are set to move higher for a few weeks or longer.

Below are the charts of gold and silver charts. Each candle stick is 4 hours allowing us to look back 1-2 months while still being able to see all the intraday price action (pivot highs, pivot lows, volume spikes and price patterns).

The 4 hour chart is one time frame most traders overlook but from my experience I find it to be the best one for spotting day trades, momentum trades and swing trades which pack a powerful and quick punch.

As you can see below with the annotated charts gold, silver and gold miner stocks are setting up for higher prices over the next 2-3 weeks. That being said we may see a couple days of weakness first before they start moving up again.

4 Hour Momentum Chart of Gold:

4 Hour Momentum Chart of Silver:

Daily Chart of Gold Miner Stocks:

Gold miner stocks have been under performing precious metals for over a year already. Looking at the daily chart we are starting to see signs that gold miner stocks could move up sharply at the trade down at support, oversold and with price/volume action signaling a possible bottom.

Daily Chart of US Dollar Index:

The US Dollar index has formed a possible large Head & Shoulders pattern meaning the dollar could fall sharply any day. The size of this chart pattern indicates that if the dollar breaks down below its support neckline the we should expect the dollar to fall for 2-3 weeks before finding support.

Keep in mind that a falling dollar typically means higher stock and commodity prices. If this senario plays out then we should see the market top late April which falls inline with the saying “Sell In May and Go Away”.

Precious Metals Conclusion:

Looking forward 2-3 weeks precious metals seem to be setting up for higher prices as we go into earning season and May. Overall the market is close to a top so it could be a bumpy ride as the market works on forming a top in April.

Chris Vermeulen
The Gold and Oil Guy.com

Why Our Momentum Reversal Method Works

After a few years of testing with both ETF’s and then individual stocks, we rolled out our MRM (momentum reversal method) platform at my ATP subscription service in November 2011.  This is now beginning to get alot of attention in the trading community as in addition to the ATP service, I have shared some of the real time MRM type plays online with some very top notch traders.

In essence, my work revolves around crowd psychology or what I call “Crowd Behavior”.  If there is one thing in the stock markets that never changes, it’s how crowds react to news, events, and also how they over react more importantly.  My MRM system helps to define where the crowd may be over reacting on the upside and also obviously the downside of a move in a security.  Knowing roughly where that upside and downside exhaustion point may be, can obviously be a huge tool in a traders tool box.

Let’s be honest, the Holy Grail of investing and or position trading would be to buy low and sell high as often as possible with as few mistakes as possible right?  The ATP MRM crowd based timing method is what that aims to do, a lofty goal but one we feel we are achieving on a regular basis.  The major problem most investors have is selling out of a position at the extreme areas of “Pain”, where your emotions take over and you cant take the paper loss any longer and you sell.  The other issue is chasing stocks higher because the adrenaline and excitement of owning a stock that is rushing higher is too hard to pass up.

Both of those investor psychology based decisions are made in panic buy and panic sell modes.  That leads to a recipe for disaster for a trading account over time.  Instead, what we want to do is the opposite right? We want to calmly buy shares in a stock that has become oversold due to emotional responses from the crowd, and sell into a huge rally where the crowd has become overly exuberant.  What if you could do that on a regular basis all the time with cool and calm nerves of steel?

Our MRM trading system at ATP allows us as best as we can to cooly and calmly enter into oversold stocks right near the apex of the lows, and then quietly exit into the rush as the stock reverses back to the upside.

Recent examples include the ETF NUGT.  This is a 300% leveraged ETF to the Gold Stock Index.  Now we all know the Gold Stocks have been under severe pressure of late as the GDX ETF has cratered from its highs over the last many months.  My MRM system though kept us out of the gold stocks, until very recently when we saw the idea entry point for a swing.  Based on the GDX falling into the 49 and below level, my MRM targets said we were at an extreme emotional bottom using my 1 day, 3 day, and weekly crowd indicators.  We therefore entered calmly into NUGT at 15.61, and within 48 hours we saw that ETF rally to 17.81!  We sold at 16.80 and 17.10 for 1/2 and 1/2 tranches to pocket 7-10% gains inside of 2 days.   

The move from 15.61 to 17.81 was a 14% move inside of 48 hours!!  We also knew to sell into that rally because just a few short days later the NUGT had fallen all the way back to 15.30 per share.  My MRM method then said 15.31 was another entry buy, and 24 hours later NUGT was up another 7%!  So in the span of 6 trading days, MRM gave out an 8.5% blended return, and then followed it up with another 7% return.  Thats 15.5% of return with low downside risk in 6 trading days on just one ETF position!

We usually apply this type of work to MRM Positions that we actually intend to position ourselves in weeks not days.  However, if we do get extreme moves in a short period of time, we always look to trim back some of those profits in the position.  The samples above are what I call “Active Trades” at my ATP service, these are intended to days not weeks in holding period.  Keep in mind alot of our work is in an Active MRM portfolio where again, we are holding swing positions for weeks and not days, so it does not require as much daily work by our partners.

Some additional recent samples include CVV which we entered twice for profits inside of a few months.  We banked 13-16% gains on one swing, waited weeks and entered again.  The stock actually dropped below our MRM entry and we held on knowing that it was likely bottoming out amidst panic emotional selling at 10.66 per share.  A few weeks later our patience paid off as the stock rose to 13.80 per share.  Most traders would have taken the loss below $11 per share, and missed the reversal back up for 25% or more.  When you take a loss that way, you must then replace that position with another trade that gains 25% or more in this case.  MRM helps to avoid panic selling, and often to take advantage of panic drops in a stock to buy more.

Consider joining us for 90 days trial period and play along.  We provide all the alerts in real time via Email and internet posting. We provide daily updates on all positions and 24/7 Email access to me for any questions. Learn more and sign up at The Active Trading Partners.com

ONG: Crude Oil Weekly Technical Outlook For Sunday April 1st

Crude oil dropped to as low as 102.13 last week as correction from 110.55 extended. Deeper fall could be seen initially this week but downside is expected to be contained by 61.8% retracement of 95.44 to 110.55 at 101.21 and bring rebound. Above 108.25 will indicate that such correction is finished and rally from 74.95 should then be resuming for 114.83 key resistance. However, sustained break of 101.21 fibo level will dampen this bullish view and turn focus back to 95.44 support.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated 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 95.44 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

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

Option Trading: A Basic Explanation of Debit Spreads

Welcome back to the world of options. My reality exists in three dimensions and far more combinations of potential positions than does the one-dimensional world of the stock trader.

The view from my turret is ruled by the three primal forces of options — time to expiration, price of the underlying, and implied volatility. Consider for a moment the fact that each of these factors can independently impact a given option.

Multiply this by several available expiration dates and strike prices; add in the fact that individual option positions can include a variety of short and long positions at different strikes and expirations, and the potential combinations that make up an option position in a single underlying can approach a very large number.

For those traders first beginning to navigate this unfamiliar world, I think it is important to understand trade selection is manageable. There are certain families of trades that are unified by similar characteristics.

It is important to become familiar with the various trade constructions available to the knowledgeable options trader. Grouping the potential trades into related groups dramatically reduces the number of trade setups you must consider before entering a new trade.

If you are familiar with the various trade constructions, it makes discussion of a specific family member whom we may consider for employment in a trade far easier to understand.

Description of the family characteristics will take a little time, but it forms the framework on which we can hang the individual trades we will discuss in future postings.

I want readers to begin to become familiar with these patterns because it is these families of multi-legged option trades that we will return to on a regular basis to consistently perform for us.

Let me begin discussion of the various families by pointing out the redheaded stepchild of the trade constructions available. This family member, the single-legged position of being long either a put or call, is not completely without utility.

The reason for its seldom use is that for the knowledgeable options trader, this position rarely represents the best risk / reward structure given the variety of available trade constructions.

One basic and important family is that of the vertical spread. We will return several times to this family not only because of its utility in its basic form, but also because these spreads form the basic building blocks for more advanced spreads such as butterflies and iron condors.

The basic vertical spread is constructed by both buying and selling an option of the same type, either puts or calls, within the same expiration series. This is a directional spread with one breakeven point that reaches maximum profitability at expiration or when the spread has moved deep in-the-money.

It has a defined maximum profit and defined maximum loss when established. The spread is used to trade directionally in a capital efficient manner and largely neutralizes impacts of changes in implied volatility.

There are four individual vertical spread family members — the call debit spread, the call credit spread, the put debit spread, and the put credit spread. Each has its distinct and defining construction pattern. These are not the only names by which these spreads are known. Trying to keep independent option traders confined to a single set of terminologies is like trying to herd cats — it is not going to happen.

For this reason, the additional confusing and duplicative names for these spreads include bull call spread, bear call spread, bear put spread, and bull put spread. To make matters even more confusing, traders often refer to “buying a call spread” or “selling a put spread.” This multiplicity of names for the same trade structure is mightily confusing to those getting used to my world.

I am a visual learner and find that a picture is worth well more than the often cited thousand words. When I review in my mind the various option families available to use in trade construction, I think of the characteristic family portrait of each as displayed in the profit and loss, or P&L, curve.

Attached below is the first in our series of family portraits, but remember within this framework is abundant room for individual variation.

This particular example is a call debit spread, a bullish position in Apple (AAPL).

We will see trades displayed in this format with many variations as we meet the different families. The solid red line represents the profit or loss at expiration. The dotted line represents the P&L curve today and the dashed line the curve halfway to options expiration from today.

In future articles I will discuss other trade constructions that are regularly employed by experienced option traders. Until then, be sure to manage your risk accordingly.

In 2012 subscribers of my options trading newsletter have won 12 out of 13 trades. That’s a 92% win rate,  pocketing serious gains with the trades focusing only on low risk credit spread options strategies.

If you are looking for a simple one trade per week trading style then be sure to join Option Trading Signals.com today with our 14 Day Trial

J.W. Jones

Looks Like Crude Oil Has Posted a Top in the Market

Crude oil closed sharply lower [May contract] on Thursday and below trading range support crossing at 104.90 following yesterday's bearish stocks report. Today's downside breakout of the aforementioned trading range and the October-February uptrend line confirm that a top has been posted. The low range close sets the stage for a steady to lower opening on Friday.

Stochastics and the RSI are turning bearish again signaling that sideways to lower prices are possible near term. If May extends today's decline, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target. Closes above the reaction high crossing at 108.70 would confirm that a short term low has been posted.

First resistance is the reaction high crossing at 108.70. Second resistance is March's high crossing at 110.95. First support is today's low crossing at 102.13. Second support is the 38% retracement level of the October-March rally crossing at 97.84.


Don't miss today's "50 Top Trending Stocks"

Current Gold & Crude Oil Trading Patterns Unfolding

The past two months we have seen all the focus from traders and investors be on the equities market. And rightly so and stocks run higher and higher. But there are two commodities that look ready to explode being gold and oil (actually three if you count silver).

Below are the charts of gold futures and crude oil 4 hour charts. Each candle stick is 4 hours allows us to look back 1-2 months while still being able to see all the intraday price action (pivot highs, pivot lows, strong volume spikes and if they were buyers or sellers…).

The 4 hour chart is one time frame most traders overlook but from my experience I find it to be the best one for spotting day trades, momentum trades and swing trades which pack a powerful yes quick punch.

As you can see below with the annotated charts both gold and silver are setting up for higher prices in the next 1-2 weeks from a technical point of view. That being said we may see a couple days of weakness first before they start moving up again.

4 Hour Momentum Charts of Gold & Oil:

By: Chris Vermeulen catch all of Chris videos and post at the Gold & Oil Guy.com

Crude Oil Closes Above $107, Bulls Maintain a Near Term Advantage

Crude oil [May contract] closed up $0.22 a barrel at $107.25 today. Prices closed near mid range today in more quiet trading. Trading has been choppy on the charts. Prices have been trading sideways at higher price levels for the past month. Crude oil bulls have the overall near term technical advantage.

Natural gas [May contract] closed down 2.4 cents at $2.295 today. Prices closed near mid-range today and hit a fresh contract low. The bears have the solid overall near term technical advantage. There are no early clues to suggest a market low is close at hand.

Gold futures [April contract] closed down $1.30 an ounce at $1,684.30 today. Prices closed nearer the session low today and did hit another fresh two week high early on. Bulls and bears are on a level near term technical playing field as the bulls have gained some fresh upside technical momentum recently.

Time to review the "Secrets of the 52 Week High Rule"

Nearly 69% of U.S. Crude Oil Imports Originated From Five Countries in 2011

 The amount of crude oil the United States imported from its top five foreign suppliers—Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria—increased slightly during 2011, even though total U.S. crude oil imports fell to their lowest level in 12 years. As a result, the crude oil from these five countries accounted for a bigger share of overall U.S. crude oil imports, nearly 69%, or just over 6.1 million barrels per day (bbl/d).

Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria have consistently been America's five largest crude oil suppliers, although their rankings varied from year to year. However, U.S. purchases of crude oil in 2011 increased from Canada and Saudi Arabia and declined from Mexico, Venezuela, and Nigeria, according to final trade data from EIA's February 2012 Company Level Imports report.

Combined crude oil imports from the five countries increased by less than 1% during 2011 to 6.1 million bbl/d. At the same time, total U.S. imports fell about 3%, or 0.3 million bbl/d, to 8.9 million bbl/d. That marked the lowest annual level of crude oil imports for the United States since 1999.

The combination of lower total U.S. crude oil imports and higher crude oil shipments from the top five foreign suppliers boosted their market share to about 69% of all U.S. crude oil imports during 2011, compared to 66% in 2010.


 Highlights from the U.S. top crude oil importing countries in 2011 included:

• Canada. Crude oil imports averaged a record 2.2 million bbl/d, up 12% from the year before, and topped 2 million bbl/d for the first time because more oil is now being transported by rail.
• Saudi Arabia. Crude oil imports averaged 1.2 million bbl/d, up 10% from the year before, and were the highest level since 2008.
• Mexico. Crude oil imports of 1.1 million bbl/d were down 4.5% from the year before and the second lowest since 1995, reflecting the steady decline in Mexico's crude oil production and rising domestic fuel demand.
• Venezuela. Crude oil imports of 0.9 million bbl/d were down 5% from the year before and the lowest since 1992.
• Nigeria. Crude oil imports of 0.8 million bbl/d were down 22% from the year before and the lowest since 2002, due in part to civilian unrest that disrupted the country's crude oil production.

Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500

Is Crude Oil Ready to Break Out into the Next Trading Range?

Crude oil [May contract] closed higher on Monday while extending the trading range of the past five weeks. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term.

If May renews this winter's rally, the 2011 high crossing at 113.75 is the next upside target. Closes below the reaction low crossing at 104.29 would confirm a downside breakout of a five week old trading range.

First resistance is this month's high crossing at 110.95. Second resistance is the 2011 high crossing at 113.75. First support is the reaction low crossing at 104.29. Second support is the reaction low crossing at 98.38.


Check out today's 50 Top Trending Stocks

The Federal Reserve, Gold, the S&P 500, & the Retail Mindset

The recent rally has been breathtaking, however the majority of investors have missed out on a large portion of these gains as significant levels of cash have been either moved to bond funds or taken out of equity markets consistently during this rally. Let’s face it, financial markets around the world are not what they once were.

U.S. equity markets in particular are manipulated by high frequency trading which is wreaking havoc in the marketplace in terms of potential short term volatility expansions and “flash crashes” that can be isolated to one underlying stock.

In addition to the high frequency trading robots, the Federal Reserve is equally involved in the direct manipulation of financial markets through record easing adjustments. The Federal Reserve has unleashed massive amounts of liquidity while keeping interest rates incredibly low which has produced an environment where the risk-on attitude permeates the landscape.

As a basic example of the failure of recent Federal Reserve policies and their impact generally on the valuation of various underlying assets, I submit for consideration to readers a 20 year price chart of the U.S. Dollar Index.

 20 Year U.S. Dollar Index Chart

It boggles the mind to consider that Chairman Bernanke routinely denies that the Federal Reserve has failed to maintainwhat he calls “price stability.” When looking at the chart of the valuation of the U.S. Dollar against a basket of foreign currencies, most 5^th graders if given the context would proclaim that the Federal Reserve has failed in their objective to maintain price stability.

As time passes and the financial crisis moves further into the rear view mirror, average Americans have varied views about the economy, the stock market, and trust in their government. For most Americans, the stock market does not make sense because they view the stock market and the economy as the same thing. Sophisticated investors understand that stocks and the economy are two totally separate issues, particularly with the amount of manipulation that has been taken place since 2007.

This manipulation has not gone unnoticed by the average American. Now more than ever regular people are not only distrustful of domestic financial markets, but they do not trust Wall Street, and for good reason. In light of this, data compiled during the recent uptrend suggests that retail investors have been pulling money out of equities for weeks even though prices continue to move higher. The chart shown below courtesy of ZeroHedge.com illustrates the recent trend.

U.S. Domestic Mutual Fund Flows

The chart above shows the price of SPY represented as the black line and equity fund inflows/outflows as the red area. As can be seen above, retail investors have been pulling massive amounts of capital out of equity based mutual funds over the past few months as equity prices have rallied. The retail crowd, commonly referred to as sheep or courtesy of Goldman Sachs “muppets,” are selling into the rally.

So why is the retail crowd selling? They do not believe that this rally will last because the real world around them is arguing in the face of everything that this rally stands for. Gasoline prices are crippling the lower and middle classes further reducing their disposable income. Higher food and energy prices paired with job scarcity and serious concerns have begun to mount.

The average retail investor believes the game is rigged at this point and the everyday investor is only helping Wall Street bankers fund their lavish lifestyles. Ultimately, the retail crowd likelybelieves that the only way to win the game is to simply not play.

Will time prove the supposed sheep wrong? Statistically one would think so, but in this case the retail folks may just be right. Headwinds surround the global macroeconomic landscape. Europe is moving into a recession which is being exacerbated by austerity measures. Data came out yesterday (Thursday) that the PMI in several European countries and China contracted. Ireland missed growth targets and central banks around the world continue to print unprecedented levels of fiat currency as if printing money and creating more debt will solve a debt problem.

All of these issues are concerns, but ultimately price is the final arbiter in the world of flickering ticks. From these eyes there are two possible outcomes for the price action in the S&P 500. The first outcome which I believe is more likely is a test of the 2011 highs which results in a snap-back rally that takes us deeper into the 1,420 – 1,440 resistance zone. The chart below demonstrates the bullish potential outcome.

SPX Bullish Outcome

Price action at some point will backtest the 2011 highs and the reaction at that point will be critical. Generally speaking price action does not break a key support or resistance level on the first attempt. Usually the 2^nd or 3^rd attempt will result in a break of a key support / resistance level.

In this case, a test in coming days would likely result in a bounce and reversion to the previous trend. A possible, albeit unlikely outcome would be a break below the 2011 support zone which would then come close to triggering a trend change. The daily chart below demonstrates the bearish potential outcome.

SPX Bearish Outcome

I do firmly believe that the U.S. Dollar Index will hold clues about the future for the price action of equities. According to cycle analysis, the Dollar should come into is daily cycle low sometime in the next few weeks, if not sooner.

From that low, we should see another move higher for the Dollar Index which I anticipate will test the recent highs near 81. The daily chart of the U.S. Dollar Index futures is shown below.

U.S. Dollar Index Futures Daily Chart

If my expectations are somewhat accurate, the short term weakness in the Dollar will assist stocks and risk assets in a move above recent highs. In the case of the S&P 500, a move to key resistance at 1,420 – 1,450 could occur.

Readers should keep in mind that weakness could be disguised as just a consolidation near the 20 period moving average which has occurred in the past when analyzing the Dollar Index. However, I would not rule out one more leg lower before the Dollar finds a bottom.

Gold, silver, and the miners have been under selling pressure for some time and are likely due for a bounce to the upside. The weakness in the Dollar discussed above would allow precious metals and miners to work off some of the short term oversold conditions that we are seeing presently. The daily chart of gold futures is shown below.

Gold Futures Daily Chart

After a move higher into or around the $1,700 / ounce price level for gold, I believe that another leg lower will be quite likely.

Conclusion

Readers should be mindful that the 1^st Quarter will end on March 30^th for financial markets. Window dressing and portfolio painting are likely to occur next week. I would not be at all surprised to see the tape painted to the upside during the final week of March after this brief pullback that we witnessed on Thursday and Friday morning.

Money managers want to show off their returns while demonstrating ownership of key names that drove performance during the quarter such as AAPL. I expect the price action on Friday and the rest of next week to have relatively light volume and a bias to the upside.

Barring any major financial news or geopolitical event, I do not expect to see price action work below the 2011 highs in the near term. The possibility cannot be totally ruled out, but it would seemingly be a rare occurrence to see a major support level break down on the first back test attempt. We may see lower prices early next week, but if the 2011 highs hold the bulls remain in control in the short term.

The real question readers should ask themselves is if prices do extend higher and we reach my target resistance zone for the S&P 500, will the retail crowd jump in and push prices higher, or will the banks be trading with each other as a major top forms? In coming days and weeks we should find out once and for all just who the real muppets truly are.

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Rigzone: Building On Stability, 2012's Offshore Outlook Appears Bright

The total number of offshore rigs under contract has shown a high degree of stability over the past eight months. Contracted floaters, rigs capable of deepwater drilling, have not budged relative to the fourth quarter's average. Contracted jackups have fallen by 5 rigs versus the fourth quarter. But both jackups and floaters are in better shape than the third quarter. Looking ahead, oil field service companies like Schlumberger and Transocean recently made comments that hinted of further strengthening in the offshore markets both globally and in the Gulf of Mexico.

Schlumberger's 4Q11 Conference Call – "We anticipate a continued recovery in the deepwater Gulf of Mexico with strong demand for high-value technologies. In the international markets, we expect 2012 rig count to be up around 10 percent versus 2011, driven by strong offshore activity in West Africa, the North Sea and Brazil…"

Transocean's 4Q11 Conference Call – "While the global economic uncertainty still lingers, our major customers' capital spending budget for 2012 pertains a year-on-year increase averaging around 12 percent to 15 percent."

Worldwide utilization for the mobile offshore drilling fleet has averaged 72.3 percent over the last 12 months. Most recently, utilization was 72.5 percent spanning the entire global fleet. Utilization has been holding steady between a range of 71 to 73 percent since setting a recent low of 69 percent back in February 2011.

Looking at absolute numbers, the count for offshore rigs is up 35 rigs (+11 drillships, +16 jackups, and +8 semisubs) to 560 rigs contracted globally over the past 12 months. On a net basis, the entire fleet of marketed rigs has grown to 772 rigs throughout the globe, up 37 (+17 drillships, +6 jackups, +14 semisubs) rigs versus one year ago.

Currently, there are 60 drillships working (from a global fleet of 78), implying 77 percent utilization. Semisubs number 163 contracted from a total of 213 rigs, also approximately 77 percent utilization. Globally, the jackup segment, the largest of the three groups, has had a dampening effect on the overall utilization with 337 under contract out of a total fleet of 481 rigs or utilization of 70 percent.

We continue to see a mending and recovery for offshore rig usage, in the Gulf of Mexico (GOM), nearly two years after the Macondo oil spill. However, we would note that there are still 13 fewer rigs working in the region relative to levels prior to the incident. Currently, 89 (10 drillships, 59 jackups, 20 semisubs) rigs are under contract in the region with a combined utilization of 62 percent. Rigs situated in U.S. waters of the GOM comprise 71 percent (100 percent of drillships, 63 percent of jackups, and 80 percent of semisubs) of the mix in the region. The rest of the rigs (i.e. 26 rigs) are in Mexico's territorial waters.

Posted courtesy of Rigzone.Com

Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500