June 7, 2011
Crude Oil tumbles ahead of OPEC Meeting, Gold continues to rise on Global Economic fears and weak dollar
Crude Oil Futures continue to trade sluggishly lower this morning as traders appear to be sitting on the sidelines waiting for this week’s OPEC Meeting in Vienna on Thursday. There are concerns that OPEC will be talking about increasing output quotas of crude oil, even as prices have been dropping on lack of demand. If you recall, our manufacturing section, among other things, have been slowing down considerably and this has flooded the market with excessive amounts of Crude Oil. I would expect to see traders taking precautions ahead of the meeting tomorrow by trading selectively today.
In other news this morning, Gold continues to climb on debt fears in Europe, Economy woes in the US, and inflationary fears everywhere from printing too much money. With a strong down trend on the dollar index and these fears likely to continue, we will expect Gold to stay net long for the short term.
We don’t have much news this morning to worry about. We have a late add today, 10:00am Economic optimism will be the only major news this morning. We also have Ben Bernanke scheduled to speak today at 345pm EST, which will likely have traders sitting on hands late this morning waiting for his news, so I don’t expect to see a ‘golden lunch’ Like Monday, I will be looking to make profit early, and then watch volume slow down as people exit the market before the 345pm speech.
Let’s review the charts I’m watching today…
The dollar index is trading at the lows of its major price wedge (see DX 89Range) which means I’m expecting 1 of three scenarios today. Price may rise up off the lows (high %), it may trade sideways, or it may break new lows and test the support below us at 72.860. The dollar correlation is very simple, and I will be using that at all times in my trading.
| DX 89Range |
The short term dollar trend is down, even as we trade in a sideways range this week you can see strong bearish signals from the chart patterns. You can see the larger bear price channel, as well as the short term aggressive bear channel early this morning. All signs point to dollar dropping, which will be used today when we trade other markets such as Gold, Crude, Euro and Russell.
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| DX 13Range (Faster) |
Crude Oil 07-11 continues to drop ahead of OPEC’s meeting tomorrow, where many traders expect a possible increase in output, which would drive prices down even further. This will create an interesting dynamic to this market.
| Crude Oil 07-11 89Range |
Remember, the most commonly-known information is often the WORST we can use to make trades, the markets often price this information into the CURRENT price, so trying to short the CL 07-11 assuming the news you will likely be late. I will be trading carefully, looking to sell into resistance as price rises looking for short term price reversals, rather than selling new lows trying to catch a breakout.
