Energy Sector Storm Brewing – Oil & Gas Stocks

Todays article comes from our trading partner Chris Vermeulen of The Gold & Oil Guy.com and if you have been following him this fall you know Chris has been cranking out the great calls. Today appears to be no different.....

Oil and gas along with their equities have been under performing for the most part of 2012 and they are still under heavy selling pressure.

I watch the oil futures chart very closely for price and volume action. And the one thing that is clear for oil is that big sellers are still unloading copious amounts of contracts which is keeping the price from moving higher. Oil is trading in a very large range and is trending its way back down the lower reversal zone currently. Once price reverses back up and starts heading towards the $100 and $105 levels it will trigger strong buying across the entire energy sector.

Crude Oil, Energy & Utility Sector Chart – Weekly Time Frame

The chart below shows the light crude oil price along with the energy and utilities sectors. The patterns on the chart are clearly pointing to higher prices but the price of oil must shows signs of strength before that will happen. Once XLE & XLU prices break above their upper resistance levels (blue dotted line) they should takeoff and provide double digit returns.

Looking at the XLU utilities sector above I am sure you noticed the steady rise in the price the last couple of years. This was a result in the low interest rates in bond price and a shift from investors looking for higher yields for their money. Utility stocks carry below average risk in the world of equities and pay out a steady and healthy dividend year after year. So this is where long term investment capital has/is being parked for the time being.

Utility Stock Sector – Deeper Look – 2 Hour Candle Chart Time Frame

Last week I covered utility stocks in detail showing you the Stage 1 – Accumulation base which they had formed. The chart below shows the recent price action on the 2 hour candle chart and recent run up. You can learn more about how to take advantage of this sector here.





Oil and Gas Services – Daily Time Frame

This chart shows a very bullish picture for the services along with its relative strength to oil (USO) at the bottom. While the sector looks a little overbought here on the short term chart, overall it’s pointing to much higher prices.





Energy Sector Conclusion:

In short, crude oil looks to be trading in a VERY large range without any sign a breakout above or below its channel lines for several months at the minimum. But if the lower channel line is reached and oil starts to trend up then these energy related sector ETFs should post some very large gains and should not be ignored.

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Chris Vermeulen

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Gold Should Be Nearing A Major Bottom

The recent rally in Gold took the metal from the 1620’s to roughly 1800 per ounce before the ensuing corrective action began. Back around October 20th we warned our readers about a likely “ wave 2” correction in Gold and we had several reasons for that warnings. One of the biggest concerns we had was that the sentiment surveys were running very hot at the time. The percentage of professional advisors polled that were bullish on GOLD was 88%, with 7% neutral and only 7% bearish. Elliott Wave Theory is the foundation of our work, though we are sure to mix in other clues and elements to “fact check” our reads. When you see sentiment readings that high, coupled with a $180 rally leading up to those readings, you can begin to look for clues of a top.

The other warning signal we noted was the MACD signal which had crossed south and was a topping warning signal to get out of GOLD for intermediate traders. At the time, we surmised that a “wave 2” correction in sentiment, and therefore price was required to work off the overbought conditions. The first level attacked the 1681 areas roughly and then a “B” wave rally to 1751 roughly ensued. Wave 2’s are made up of a 3 wave pattern, A down- B up- and C down to finish. It appears that GOLD is now in the final C wave down in sentiment to complete the correction pattern.

Clues for the “C” wave include the Goldman Sachs quasi-bearish 2013 GOLD forecast that came out today. In addition, the media attempting to explain the drop in GOLD as being related to stronger than expected economic indicators or fiscal cliff negotiations, neither of which make any sense at all.

We expect GOLD therefore to complete the C wave correction at 1631 or 1681 specifically. There are Fibonacci fractal relationships to the first leg down (The A wave) at those levels, and they tend to repeat themselves in terms of crowd behavior. At the 1681 level we have the C wave equal to 61.8% of the A wave amplitude. At 1631 we have a more traditional C wave equal to the A wave. In either event, look for a washout low in GOLD occurring at anytime near term, and for traders to start scaling in long.

Below is the GLD ETF chart showing the two most likely bottoms for the precious metal, one of which already qualifies as of today’s trading:

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Freeport-McMoRan to Acquire Plains Exploration and McMoRan Exploration

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Plains Exploration & Production Company (NYSE: PXP) and McMoRan Exploration Co. (NYSE: MMR) announced today that they have signed definitive merger agreements under which FCX will acquire PXP for approximately $6.9 billion in cash and stock and FCX will acquire MMR for approximately $3.4 billion in cash, or $2.1 billion net of 36 percent of the MMR interests currently owned by FCX and PXP. Upon closing, MMR shareholders will also receive a distribution of units in a royalty trust which will hold a 5 percent overriding royalty interest on future production in MMR’s existing shallow water ultra deep properties.

The combined company is expected to be a premier U.S. based natural resource company with an industry leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. FCX’s mineral assets include the world class Grasberg minerals district in Indonesia, the large-scale Morenci minerals district in North America, the Cerro Verde and El Abra operations in South America, the high potential Tenke Fungurume minerals district in the Democratic Republic of Congo (DRC) and a leading global molybdenum business.

The addition of a high quality, U.S. focused oil and gas resource base is expected to provide exposure to energy markets with positive fundamentals, strong margins and cash flows, exploration leverage and financially attractive long term investment opportunities. The combined company’s long lived resource base with commodities critical to the world’s economies provides enhanced opportunities to benefit from long term global economic growth. On a pro forma basis for 2013, approximately 74 percent of the combined company’s estimated EBITDA (equals operating income plus depreciation, depletion, and amortization) is expected to be generated from mining and 26 percent from oil and gas, with 48 percent of combined EBITDA from U.S. operations.

The oil and gas assets being acquired are located in attractive onshore and offshore U.S. geologic basins. PXP’s major assets include its established strong oil production facilities in California, a growing production profile in the onshore Eagle Ford trend in Texas, significant production facilities and growth potential in the Deepwater Gulf of Mexico and large onshore resources in the Haynesville natural gas trend in Louisiana. MMR is an industry leader in the emerging shallow water ultra deep gas trend with sizeable potential, located offshore in the shallow waters of the Gulf of Mexico and onshore in South Louisiana. The MMR portfolio is expected to provide a large, long-term and low cost source of natural gas production.

Here is the complete terms of the deal.....


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EIA: U.S. Monthly Crude Oil Production Reaches Highest Level Since 1998

U.S. crude oil production (including lease condensate) averaged almost 6.5 million barrels per day in September 2012, the highest volume in nearly 15 years. The last time the United States produced 6.5 million barrels per day or more of crude oil was in January 1998. Since September 2011, U.S. production has increased by more than 900,000 barrels per day. Most of that increase is due to production from oil bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing. The states with the largest increases are Texas and North Dakota.

From September 2011 to September 2012, Texas production increased by more than 500,000 barrels per day, and North Dakota production increased by more than 250,000 barrels per day. Texas's increase in production is largely from the Eagle Ford formation in South Texas and the Permian Basin in West Texas. North Dakota's increase in oil production comes from the Bakken formation in the Williston Basin. Increased production from smaller-volume producing states, such as Oklahoma, New Mexico, Wyoming, Colorado, and Utah, is also contributing to the rise in domestic crude oil production.

Source: U.S. Energy Information Administration, Petroleum Supply Monthly.

Don't miss this weeks most popular articles.....

Gold, Silver and Miners in Stage 1 Accumulation Mode

Is the SP 500 at a Crucial Cross Roads?

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Kinder Morgan Announces 2013 Financial Expectations

Kinder Morgan today announced its preliminary 2013 projections for Kinder Morgan, Inc. (NYSE: KMI), Kinder Morgan Energy Partners, L.P. (NYSE: KMP), Kinder Morgan Management, LLC (NYSE: KMR) and El Paso Pipeline Partners, L.P. (NYSE: EPB). Chairman and CEO Richard D. Kinder stated, “We anticipate strong growth in 2013 across the Kinder Morgan family of companies. KMI’s growth is driven primarily by its ownership of the general partners of KMP and EPB.

The majority of our assets resides at KMP and EPB. KMR is financially equivalent to KMP, but does not own any assets. Kinder Morgan primarily owns or operates a diversified portfolio of fee-based energy assets that generate substantial cash flow in virtually all types of market conditions. With our large footprint of midstream assets in North America, we are confident that Kinder Morgan is well positioned for future growth.”

KMI expects to declare dividends of $1.57 per share for 2013. This represents a 16 percent increase over KMI’s 2012 budget target of $1.35 per share and a 12 percent increase over the $1.40 per share of dividends it expects to declare for 2012. Growth at KMI in 2013 is expected to be driven by continued strong performance at KMP, along with contributions from EPB and the natural gas assets that KMI acquired in the El Paso Corporation transaction.

KMP expects to declare cash distributions of $5.28 per unit for 2013, a 6 percent increase over its 2012 budget target of $4.98 per unit, which it expects to meet. KMP’s 2013 budget projection includes the expected purchase (dropdowns) of 50 percent of El Paso Natural Gas Pipeline and a 50 percent stake in midstream assets from KMI, which would give KMP 100 percent ownership of these assets. (KMR also expects to declare distributions of $5.28 per share for 2013 and the distribution to KMR shareholders will be paid in the form of additional KMR shares.)

“We see exceptional growth opportunities across all of KMP’s business segments, including the need to build more midstream infrastructure to move or store oil, gas and liquids from the prolific shale plays in the U.S. and the oilsands in Alberta, along with increasing demand for export coal and CO2,” Kinder said.

Click here for more details on what KMP expects in 2013

Don't miss this weeks most popular articles.....

Gold, Silver and Miners in Stage 1 Accumulation Mode

Is the SP 500 at a Crucial Cross Roads?

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Is the SP 500 at a Crucial Cross Roads?

We had an interesting 131 point SP 500 decline from the summer fall highs of 1474 to the recent 1344 lows. Interesting because in the work that I do, we focus on crowd behavioral patterns, sentiment, and Elliott Wave Theory. There is no one technical analysis methodology that works all the time, so it’s important to incorporate other elements into your work to help with some clues. Let’s examine the crossroad we are at right now around 1420 on the SP 500 and why the next move may be a “tell” as they say in poker.

The correction from the 1474 highs can be read as a 3 wave correction, which in Elliott Wave Theory is corrective against the major trend, which so far has been up. 3 wave corrections serve to work off over zealousness of the crowd and above average bullish sentiment. To be sure, at the 1474 highs the sentiment surveys were running pretty hot and near 3 year highs, a flag that waved a warning sign for us. The correction though worked off that sentiment and at 1344 was in fact a Fibonacci 61.8% retracement of the rally from 1257-1474 that we witnessed this summer. These type of Fibonacci fractal retracements at 61.8% are common correction patterns in bull cycles.

What we need to see near term on this crossroad then is a clear cut rally over the 1424 area, which now is a 61.8% upwards retracement of the drop from 1474-1344. Why is that important to clear? Because 61.8% also is a common upwards retracement for a wave 2 counter-rally in a downward trend. Clearing that hurdle would indicate that the rally from the 1344 lows is more than just a counter-trend rally, and likely the confirmed start of a solid leg upwards towards highs for this bull market cycle.

This is why we like to draw these lines in the sands and let our subscribers be aware of what to watch and why. The above chart gives you an idea of where we are at in the current cycle. Consider joining us so we can help you with daily updates on the SP 500 and Gold, stop scratching your head and guessing as to the patterns in the markets today! Go to Market Trends Forecast.com and sign up for our free weekly reports.


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Gold, Silver and Miners in Stage 1 Accumulation Mode

We don’t hear much about gold and silver anymore on the news. This time last year you could not go 5 minutes without a TV or radio station talking about them. Why is this? Simple really, precious metals have been building a Stage 1 Basing Pattern for the last 12 months. This boring sideways trading range is how the market gets most of those long holders out of an investment before it starts another move up. The saying is “If the market doesn’t shake you out, it will wait you out”.

We all know time in money so the above statement makes a lot of sense doesn’t it? Instead of having your money sitting in an investment that has clearly displayed a large sideways range with month and possibly years before any significant breakout will occur, why would you want their money in it doing nothing? There are other opportunities which you could be putting your money into that could generate more gains until the precious metals sector sets up with a high probability trading pattern.

The good news is that gold, silver and precious metal miner stocks are forming a very large Stage 1 Accumulation pattern on the weekly chart. This points to a multi month rally in prices if they breakout above our resistance levels.

Gold & Gold Miner Stocks Weekly Analysis

The chart below shows a lot of analysis and to the untrained eye this may look messy and confusing, so take your time to review it. In short, what we are showing are sideways price patterns using the previous highs and lows for support and resistance levels. The analysis shows the shift in prices from bearish (down), to Neutral (sideways). The exciting part about this pattern is that a new bull market should emerge if our analysis is correct. Now, we are not talking about 5 -10% move here, we are talking about a multi month and possibly a year long rally in precious metals that could allow some individuals to retire early if played properly.

A break above our red dotted resistance lines should trigger aggressive buying in gold miners along with physical gold bullion.

In the past month we have been giving out some of my Stage 1 trading ideas which have generated some decent gains for those who follow along. All but one have generated gains with FSLR 12.5%, FB 12%, RIMM 54%, AAPL 5%, TLT 2.5%, XLU 1.5%, and KOL down -5.2%.

Silver & Silver Miner Stocks Weekly Analysis

This chart of silver and silver miner stocks (SIL), shows a very similar pattern to that of its big shiny sister (Yellow Gold). Silver carries a lot more risk because of its industrial usage. Also this commodity is thinly traded and can move very quickly on a daily basis compared to gold. Because of these quick price movements it has attracted a lot of speculative money which also has increased the volatility. More often than not silver will move 2-3 times more on a percentage bases than that of yellow gold.

Battle of the Miner ETFs Weekly Performance

This chart compares three precious metals miner ETFS (GDX – Gold Miners, SIL – Silver Miners, NUGT 3x Leveraged Gold Miners).

Silver miners have held up the best because the herd saw how big the move was a year ago and are front running the next potential rally. But, depending on how you read the charts and sentiment it may be pointing to the dormant gold miners for a bigger than expected rally. But debating which one will breakout and run the most is a conversation/debate of its own and even I can argue both sides. The safe play is that even if gold miners (GDX & GDXJ) underperform the silver miners (SIL), the NUGT which is 3x leveraged gold miners should be the same if not outperform silver miners.

Precious Metals & Miners Trading Conclusion

In short, we favor trading the miners over physical bullion simply because the charts show much more profit potential than if one was to buy the bullion exchange traded funds GLD and SLV.

The market seems to be setting up for some very large moves in 2013 and members of our trading newsletter should do very well. Be sure to join and follow along at The Gold & Oil Guy.com



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EIA: Canada is the leading supplier of crude oil to the United States

U.S. imports of Canadian crude oil rose to record levels during the first eight months of 2012, with Canada accounting for a growing share of total gross U.S. imports. The United States is importing more crude oil from Canada, even though the total amount of crude oil America buys from foreign suppliers is falling.

Canada is the largest supplier of foreign oil to the United States, followed by Saudi Arabia, Mexico, and Venezuela. Almost 99% of Canadian oil exports are sent to the U.S. market. Canada accounted for approximately 25% of U.S. crude oil imports in 2011, averaging 2.2 million barrels per day.



The importance of Canadian crude oil to U.S. refiners has increased in 2012, as Canada supplied the United States with a record of nearly 2.5 million barrels per day during January-August 2012, according to the latest oil trade data from EIA. At the same time, total U.S. crude oil imports fell from 8.9 million barrels per day in 2011 to 8.7 million barrels per day through August 2012. As a result, the share of Canadian oil as a percentage of total U.S. oil imports during the eight-month period increased to 28%.




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ONG: Crude Oil, Natural Gas and Gold Weekly Technical Outlook for Sunday Dec. 2nd

 It's time for this weeks call from the great staff at Oil N'Gold.com.......


Crude oil stayed in established range of 84.05/89.90 last week. The corrective nature of the price actions from 84.05 so far argues that that it's merely a consolidation pattern. That is, fall from 100.42 isn't over yet. Hence, while stronger recovery could be seen as the consolidation continues, we'd expect upside to be limited by 50% retracement of 100.42 to 84.05 at 92.24. ON the downside, break of 84.05 will now target 77.28 support.

In the bigger picture, current development suggests that price actions from 114.83 are a triangle consolidation pattern. Fall from 100.42 is likely the fifth and the last leg of such consolidation. Having said that, downside should be contained above 77.28 and bring an upside breakout eventually. Break of 110.55 will strongly suggest that whole rebound from 33.29 has resumed for 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. 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

The case for near term reversal is starting to build up in natural gas. Consider it just bounced off from medium term falling trendline, has bearish divergence condition seen in daily MACD. Nonetheless, break of 3.47 support is needed to confirm topping first. Otherwise, another rally would remain in favor to 4.0 psychological level. Sustained break of 3.47 will turn focus to 3.355. Break there should confirm near term reversal and should at least bring pull back to 2.575/3.277 support zone.

In the bigger picture, recent developments argued that medium term decline from 6.108 is completed at 1.902 already. It's bit early to confirm but bullish convergence condition in weekly MACD suggests that the down trend from 13.694 (2008 high) is possibly over too. Sustained break of the channel resistance (now at around 3.88) will set the stage for a test on 4.983 key resistance next. Meanwhile, break of 3.277 resistance turned support will argue that the rebound from 1.902 is over and the medium larger down trend is still in progress for a new low.

In the longer term picture, decisive break of 3.255 resistance was an important signal of long term bottoming reversal and should at least give a push to 4.983/6.108 resistance zone.

Nymex Natural Gas Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts

Gold's sharp at the end of the week suggests that corrective rebound from 1672.5 is possibly completed at 1755 already, on bearish divergence condition in 4 hours MACD. Initial focus in on 1704.5 minor support this week. Break will turn near term outlook bearish. In such case, whole decline from 1798 should be resuming for 61.8% retracement of 1526.7 to 1798.1 at 1630.4.

In the bigger picture, price actions from 1923.7 high are viewed as a medium term consolidation pattern. There is no indication that such consolidation is finished, and more range trading could be seen. In any case, downside of any falling leg should be contained by 1478.3/1577.4 support zone and bring rebound. Meanwhile, break of 1792.7/1804.4 resistance zone will argue that the long term up trend is possibly resuming for a new high above 1923.7.

In the long term picture, with 1478.3 support intact, there is no change in the long term bullish outlook in gold. While some more medium term consolidation cannot be ruled out, we'd anticipate an eventual break of 2000 psychological level in the long run

Comex Gold Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts
 

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Is $3.933 This Winter’s High in Natural Gas?

Stephen Schork of the Schork Report is giving us a free Nat Gas 101 today. Do you think the high is in on natural gas for 2012?........

CME natural gas has now faded the 2011-2012 Fibonacci 62% retracement at 3.806 (continuous contract). In the wake of last week’s holiday rally to 3.933 and Wednesday’s 3.626 low print, it behooves us to take a look at history.

As illustrated in today’s issue of The Schork Report, in fifteen of the last twenty two heating seasons, the winter high in the CME Henry Hub contract was posted in the fourth quarter. In other words, nearly 70% of the time the high on the CME was put in well before the coldest period of the winter (i.e. the fourth week following the solstice). Moreover, on average, since 1990 the winter’s high is posted on December 10th; with half of the highs occurring before November 30th.

Counter to intuition, we tend to see the highest price for consumption commodities, especially natural gas, in the approach to the season. This is because fear and uncertainty regarding the market’s ability to offset looming, unknown demand, is priced into the front end of the curve.

To this effect, we have to consider: (1) was last week’s holiday (i.e. thinly traded) spike to 3.933 this winter’s high in spot gas, and (2) is the table now set for a run at the Oct/Nov roll-gap at 3.046?

In this vein, current telltales suggest the market is softening. For example, over the last week the backwardation on the cross-seasonal Mar/Apr spread was halved to 1.7 cents. In other words, supply concerns for this winter’s gas are falling.

That’s not bullish.

To receive a complimentary copy of today’s FULL research note, request a complimentary trial at www.SchorkReport.com. Just put CME in the source code field.


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Playing the Long Term Trends in a Stock- ASPS Sample

Our trading partner David Banister must be in the holiday/giving spirit this week as he keeps cranking out the free trading advice....

How many times have you bought a stock and then a few weeks perhaps have gone by and you get frustrated with lack of real net movement? You see all kinds of other stocks moving every day and finally you give up, sell your stock and go chase another one. Inevitably what happens in many cases is you find out later that your instincts were right and your research was correct, as the stock you gave up on finally takes off leaving you frustrated.

Sometimes it helps to understand the long term picture of a stock cycle and try to determine where you may be at in the big picture. This way you may be more willing to sit on a stock a bit longer, understanding it may need some time to work off a prior large move to the upside. Stocks often consolidate in fibonacci periods of time, as those revolve mainly around sentiment related to the stock or the company itself. You can see big up moves that come out of nowhere and last for several weeks, and then many weeks of consolidation or mild decline. These are actually crowd behavioral movements playing out as sentiment swings from too bearish to overly bullish and back again.

In the sample below we outline ASPS, a strong growth company in the right sector at the right time. We can’t be sure that this stock will break out to the upside, but we do like the fundamentals and the catalysts ahead. At ATP we look for both technical and fundamental marriages as it were, and then do our best to time the entry and exits accordingly. ASPS plans to spin out two divisions as a stock dividend to shareholders in the next 30 days or so, and we think that will catalyze the shares as sentiment turns north.

In the meantime, the stock trades between 100 and 107 per share frustrating anyone who expects an immediate pop. Taking a look at a multi month chart with weekly views we can see that this actually has been consolidating for several weeks in a normal pattern. In this case the 20 week moving average line seems to be the bogey for this stock cycle for ASPS, and as we approach that line we may see a shift back north in sentiment. Should we be wrong, we will know if the stock breaks down materially from this crowd pattern in play now.



Above is the chart as of November 29th, let’s see how it plays out: Be sure to read our article about “Buying in the Trenches” as well. Disclosure: Our ATP service has recommended a long position in ASPS within the past few weeks.

Go to Active Trading Partners and subscribe by using coupon code AD499ATP in the coupon code field at the bottom of the sign up form. Sign up for quarterly and the discount will be applied at checkout, and you will get The Market Trend Forecast for free as well.


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What are the U.S. Dollar and Equities Market Relationships in the Near Term

The SP 500 is likely to pullback from a 66 point rally off the 1343 pivots. Those pivots were right at a Fibonacci fractal retracement of 61.8% of the Summer rally. That rally ran from 1267-1474 as we all know in hindsight, and the correction was a normal correction within a bull cycle.

Near term, we had a nice run to 1409 and met resistance there. We would expect a pullback to the 1384 areas on the SP 500, if not a bit lower in the coming days. The US Dollar is likely to get a bounce which will also pull down Precious Metals along with stocks near term.

We think this could be a opportunity to buy as we approach pivot pullback buy points, but of course we will monitor in the event the pullback becomes more dire than expected.

Below are charts of the US Dollar and The SP 500 Index and potential near term movements to monitor. Over at our we closed out long positions in NUGT ETF with nice gains yesterday as well as stocks with trading profits while we watch the pullback action.

From COT staff writer David Banister

Just click here to sign up for Banisters forecast service that gives you his daily updates and free weekly reports that will keep you on the right side of the markets.


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Are the Utilities Bottoming?.....It’s the Season to Own Utility Stocks

Over the past week we have been keeping our eye on several key sectors and stocks for potentially large end of year rallies to lock in more gains before 2013.

Our recent calls have been RIMM (up 54%), AAPL (up 5%), FB (up 8%) so it’s been a great month thus far. That being said there are three other plays that look amazing and one of them is the utilities sector.

Looking back 30 years clearly utilities have a tendency to rally going into year end. What makes this setup so exciting is that the Obama tax for 2013 has caused many investors to lock in capital gains along with dividend gains so the utility sector has recently been beaten.

We always like to cheer for the underdogs because they can make large moves quickly and this season its utility stocks.

30 Year Seasonality – Utilities Stocks



Utility Sector ETFs:

In the graph below we show the main utility ETFs for trading. Simple analysis clearly shows the selling momentum is slowing and where price should go if it can breakout above the red dotted resistance line. Exchange traded funds XLU, FXU, IDU, and DBU are the funds we found to be setting up.



Utilities Sector Trading Conclusion:

While we feel utilities are about start moving higher it is important to mention that the broad market is setting up for a 1-3 day pullback. If the stock market does pullback this week then we should see utilities pullback also. What we are looking for is a minor pullback in XLU with price holding up above $34 while the stock market pulls back.

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Dollar tell us Stocks are Likely to Pullback – Simple Analysis

The stock market is at a very critical pivot point which I feel will generate opportunities in December and for the first quarter of 2013.

Trading with the trend is not always an easy task. It is human nature to predict and jump to conclusions and usually it’s better to trade with the trend no matter what your emotions are telling you. The current trend is down and I stick with that until we are proven wrong.

If you carefully analyze the charts below you will understand where we are trading in the market and what the risks are at this point. The question is are in the middle of a trend reversal back up, or is this just a bounce within a down trend? Either way, any pullback this week should be aggressively managed to lock in gains and tighten stops because it could go either way and you do not want to be on the wrong side of the table.

The chart below shows the US dollar index 4 hour chart. It looks as though we should start to see a bounce this week and that should put pressure on stocks and commodities.

The SP500 (SPY etf) below that shows my analysis and key price levels. I took a short position on the SPY Friday afternoon as I feel a pullback is imminent. That being said, all I need is one big down day and I will be pulling money off the table to lock in gains and tighten my stop.

For a detailed educational lesson on stock market cycles read my mini course "The Golden Nugget That Makes Traders Wealthy Trading"



My trading charts make reading the market simple, quick and precise so if you want this type of analysis and trade ideas delivered to your inbox every day including my Pre-Market video analysis then join my newsletter here at The Gold & Oil Guy.com

Chris Vermeulen

Why the S&P 500 & Gold Rallied in the Face of Negative News

The amount of negative news that we have seen recently has been mind blowing. Europe is going into recession, Greece and several other countries are on the verge of bankruptcy, the Middle East is a powder keg, and the U.S. is facing a fiscal cliff. Shockingly for most retail traders, the past week has produced a very strong return for U.S. equity indexes as well as risk assets in general.

Retail investors often times consistently lose money because they focus on the financial media and all of the negative news that is out there. Trust me, as a longer term trader and investor, there is never an absence of negative news or potentially poor economic possibilities. This is not to say that markets cannot decline, investors just need to understand that markets are cyclical in nature and do not ever move in a straight line.

Based on what I was reading from most of the financial blogosphere recently, you would think that the entire world was about to end. A few blogs were calling for an all out collapse late last week or a possible crash this past Monday, November 19th. As is typically the case, the market prognosticators were wrong with the calls for a crash or an absolute collapse in financial markets.

Unlike those blogs, members of my service at the Traders Video Playbook were getting information indicating that we were expecting higher prices. At our service, we lay out regular videos covering a variety of underlying assets from the S&P 500 Index and oil futures, to gold and treasury futures. The focus is purely on analysis of various underlying assets across multiple time frames. We cover intraday time frames as well as daily and weekly swing time frames throughout the week with videos and written updates.

To put into perspective what we were seeing in the marketplace on Monday November 19th, the following charts were sent out to our members during intraday trading that day....Click here for "Why the S&P 500 & Gold Rallied in the Face of Negative News"

See you in the markets,

J.W. Jones

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Markets are Cyclical in Nature....Make sure you know these "Four Stages of Stocks"

Our good friend and trading partner Chris Vermeulen has put together an article detailing his classic economic theory that dissects the economic cycle into four distinct stages..... expansion, trough, decline and recovery. And he explains in detail why a stock is no different, and proceeds through these cycles.

Knowing this information is crucial to survival as this cycle happens on all time frames (1 minute chart all the way up to yearly charts). Harnessing this information for trade selection and timing greatly reduces the amount of trades you take, while focusing only on new leaders which have massive upside potential.

So take a few minutes and click here to read Markets are Cyclical in Nature....Make sure you know these "Four Stages of Stocks"

Natural Gas Trade Idea....Buying in the Trenches Pays Off

Recently we wrote about Natural Gas ETF UGAZ on the ATP Free Blog site as a sample of buying the dip or using the “cup with handle” dip buying for profits. Our November 11th article discussed waiting for a pullback to the 30-31 ranges on UGAZ and then going long for a reversal.

Within 48 hours the dip came into the buy range, and within a few days UGAZ ran to the $38 range for as much as a 24% reversal trade gain. Even now some 9 days later UGAZ trades around $36 per share for nice gains.

Another sample we had for subscribers was on November 7th in RIMM stock. We advised waiting for a pullback from 9.15 ranges to the 8.50-8.70 ranges. When the pullback came this is what we sent to subscribers:

ATP Active Trade Alert

RIMM- 8.64 has fallen as projected in to the 8.50-8.75 swing entry buy ranges.

This is an active trade meaning 1-5 days likely and a stop should be placed at 4-6% below your entry and NO LOWER than 8.00 for aggressive partners who take the trade.

Now on November 20th, about two weeks later, RIMM is trading near $10.00 per share. The stock fell to 8.14 during the market correction which was above the $8.00 stop and above a 6% stop loss range from entry. Partners who remained long would now be sitting on gains of 14%.

Consider joining our Swing Trading service we call Active Trading Partners and get education, advice, and on going daily updates. You will also receive our Market Trend Forecast service which covers Gold, Silver, and the SP 500 short and intermediate forecasts.

Go to ActiveTradingPartners.com and subscribe by using coupon code AD499ATP in the coupon code field at the bottom of the sign up form. Sign up for quarterly and the discount will be applied at checkout, and you will get The Market Trend Forecast for free as well.

Market at Risk of One More Leg Down in November

There is nobody better in the industry at predicting market sentiment then David Banister. And he was kind enough to share a call on the overall market before the holiday weekend. Here's why Banister thinks the bulls are in for another punch in the gut before the end of the year.....

The SP 500 declined a perfect 61.8% Fibonacci retracement of the summer rally from the 1267 lows to the 1474 highs. In our work we examine human behavioral patterns, sentiment, and Elliott Wave patterns to help with clues on market direction. To be sure, there is no such thing as a perfect technical analysis methodology, so we do our best to mix up a home cooked recipe for assistance in getting as close as we can to calling the pivots up and down.

In the near term, we notice the market has rallied out about 45 points off the 1344 pivot lows last week to around 1390 today. This retracement marks a normal 38.2% Fibonacci recovery of the most recent wave 3 decline to 1344. Typically, this is a wave 4 mini-bullish pattern as washout lows get bought and then shorts cover fueling the rally a bit higher. However, this is often when another sledgehammer comes out of left field and knocks the market down in what we would call a “Wave 5” decline to new lows on the downtrend.

Investors should watch both the 20 day moving average which is declining and around 1392 or so, and the 1388-1392 38% Fibonacci retracement areas for resistance. Only a strong close over 1392 can eliminate the potential for one more leg down to the 1316 areas on the SP 500 before the month of November comes to a close. With that said, we expect a rally in December for the markets and hope to see this barrier taken out soon, but would advise traders to tread with caution until such time.




Click here to get Banisters calls in advance!

Stunning Accuracy of key tops and bottoms, rallies and corrections in silver, gold and the SP 500 with 3-5 weekly updates. Includes regular daily forecast updates on the markets and precious metals that are outside the box.


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Keep Your Eye On Trends & Reversals..... SPY, RIMM, KOL

Today our trading partner Chris Vermeulen gives us some trades to keep an eye on....

The equities market technically still has another day of positive momentum behind it and with a short holiday week higher prices are favored.

This morning in the video I mentioned how oil continues to look untradible because of the sharp news related swings and lack of clear chart patterns. Yesterday it rallied over 2% and today is back down 2%.… Steer clear of this beast…

SP500 (broad market) continues to grind sideways/higher today. Volume is very light which bodes well for lower prices in the coming days. I would love to see a Pop-N-Drop tomorrow which is when the index gaps higher at the open into a resistance zone at which point we would be looking to get short (buy the SDS).

Research In Motion shares hit our first resistance level after being upgraded this morning…. Buy the rumor sell the news…? If you are long taking some money off the table here is smart play and to move your stop to break even or better.

Coal sector is looking tasty today and we may take a long position in KOL, but I will update if I do so.

Chris Vermeulen

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Did Speculators Bail Too Soon on Natural Gas?

From Stephen Schork of The Schork Report....

Last Wednesday, Thursday and Friday spot CME natural gas futures tested the 2011-2012 Fibonacci 62% retracement at 3.806 (continuous contract), and each time the market closed its session below 3.800.

The bull’s latest rallying cry is last Thursday’s weekly storage update in which the EIA reported the first delivery of gas for the winter. However, as noted in the The Schork Report on Friday, a delivery at this point of the season is not unprecedented.

Be that as it may, after natural gas prices troughed in late August and peaked in the middle of October, open interest for the CME futures had declined by around 5%. Thus, the market has set ammo aside that can be (and perhaps already is) employed to push the market higher.

From the perspective of the term structure, the contango on the balance of winter strip to next summer narrowed from minus 0.111/Dth to minus 0.060/Dth last week. What’s more, as illustrated in today’s issue of the The Schork Report, weather for two-thirds of the country favor the bulls through the end of this month.

Did Speculators bail too soon on natural gas?

Per Friday’s CFTC report, the futures position in CME gas for producers rose by 5.4% to 40,101 net shorts. Over the last two months the short position held by producers has doubled. On the other side of the ring, the futures position in CME gas for speculators narrowed for a fourth straight week. As of last Tuesday, money manager’s length fell by 5% or 5,999 contracts, while their shorts dropped by 2½% or 3,936 contracts. As a result, their net position in the market has morphed from 43,045 longs (which was their 11th longest position recorded since the CFTC began disaggregating the data in 2006) to 2,583 shorts.

As far as this week’s technicals on the CME go, bids through last week's 3.830 high print clear a path towards $4 and our 4.005 weekly inflection point. Above here we will look for momentum towards our 4.220 upper limit. On the other hand, offers through last week's 3.650 midpoint alerts to follow through weakness towards our 3.575 lower inflection point. Offers below here clear a path towards our 3.360 weekly limit.

To receive a complimentary copy of today’s FULL research note, request a complimentary trial at www.SchorkReport.com. Please put CME in the source code field.

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