IEA threatens OPEC; Rollover Fears in the Euro have Gold Rising; Traders prepare for Home Prices & Manufacturing Data this morning

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News overnight has OPEC and the IEA back in the spotlight. If you recall last week IEA authorized the release of Oil Reserves to help drive more supply into the crude oil market, and overnight we hear news from the IEA that they are leaving the door wide open for more of these ‘strategic’ releases… this might just get interesting. OPEC wants to control the world’s crude oil supply, and its been 50 years since anyone has tried to stand in its way.

We also read that fears are now mounting as the ‘rollover plan’ for the Greek debt appears to be stalling in the ECB. News last night has Gold rising this morning as these fears of rising debt levels (without a viable solution) will drive investors to seek shelter from the ‘storm’. Gold has been trading in a narrow range, and this news should drive some volatility into this market….finally!

Looking forward at the economic news this morning we have a lot to watch…

We begin the morning with Case Schiller Home Price Index at 9:00am est., which will be on the minds of traders watching the strong decline in home prices and growth in the sector.

We’ve been watching all of the major indicators of the economy deteriorate as the ‘bailout’ money runs dry…jobs…manufacturing…inflation..and here is the chart of home prices. Certainly traders are expecting lower numbers today, so beware the market has already priced these lower readings in.

Home Prices SchoolOfTrade.com

We then have very important Consumer Confidence and Richmond Fed Manufacturing Index both at 10:00am est this morning. We have seen dropping manufacturing numbers in the past 90 days, telling us more info that this economy is slowing down…look at this illustration on this chart. Look at the previous LOWS from 2009…that’s a big drop from the double-top (failure?) at the highs this last 2.5 years. Easy to see we could take a big tumble in this sector really soon.

Richmond Fed Manf Data SchoolOfTrade.com

Im always watching the Fed Manufacturing Surveys very closely for the correlation to crude oil and we will look for clues from today’s news to trade tomorrow’s crude oil inventories number on Wednesday. Consumer confidence is a big mover of the US Dollar Index and that will move Gold Futures, so keep an eye on the news around this time of the morning.

We look forward to a Golden Lunch later this morning, but as always we will have to see how volume looks and go from there after the European Close at 1130am EST.

The US Dollar Index is right in the middle of the larger trading range off the 89range chart, so expect sloppy price action around this area of the chart. Swing traders and position traders will love the 89range, but day traders need something faster, so we look at the 13range chart below to see the short term bear price channel has turned into a sideways range.

Us Dollar Index 89Range SchoolOfTrade.com

US Dollar Index 13Range SchoolOfTrade.com

Notice the overhead resistance at 76.00 the highs of the bear channel will likely be a major turning point for the dollar. Watch and see if the US Dollar Index can break the highs of the channel, if not expect the lows to be tested again around 75.595. If we break through the highs of this channel you can then expect another test of the highs at 76.500. We will use the simple dollar index correlation along with our entry rules this morning.

Crude Oil futures continue to look for direction this morning, and we can easily see us in the middle of the strong bearish price channel, moving towards the range highs of 91.46. This is a sideways range inside of a bear channel so we know the bias is the short side (for now) and we will look to trade inside the range as much as we can, being weary of the fake-out breakouts that these type of markets show us. Look to sell at resistance for starters, and we will review our plan of attack with our trade room members this morning.

Crude Oil 89Range SchoolOfTrade.com

Gold Futures look almost the same from Monday morning, trading at the lows of the major price wedge, clearly trading sideways in a narrow range looking for something to give it some confidence up or down…just give us something! We will buy the lows, sell the highs, avoid the middle, and beware the fake-out breakout on this type of market this morning. We almost need to have an un-expected move to break this free and get it moving…we shall see!