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Red's Gold, Silver and Crude Oil Report Gold, Silver, Oil Report NYSE:USO, NYSE:SLV, NYSE:GLD


Red's Weekly Report on Gold, Silver and Crude Oil Charts by Omega Research

9 January 2011 Paul A. Ebeling, Jnr. The Overall Fundamentals Commodities started Y 2011 on a rocky path, as prices were set by the USD's strength and macroeconomic developments. Earlier in the week, the US economic data released were encouraging, spurring speculations that the US Fed's Quantitative Easing (QE-2) measures might be limited this year. US ISM manufacturing index added +0.4 points to 57 in December. While the reading was expected, strength from 'New Orders' and 'production' components boosted optimism on US recovery. New Orders rose to 60.9 from 56.6 in November and production rose to 60.7 from 55 in November. The report set a positive tone for growth in manufacturing sector in the near-term. ISM services index released on Thursday improved to 57.1 in December, consensus: 55.6, from 55 in the prior month. The services sector represents around 90% of the US economy and the surge of the ISM reading to the higher level since May 2006 sent the market an indication that the US recovery is gathering momentum. Gold and Silver Gold price slumped last week as USD rallied. The benchmark Comex contract fell to as low as 1352.7 before settling at 1368.5, down -3.70% on the week. The impact of positive US economic data on Gold was easy to understand. Improvement in US growth outlook reduces the need for the Fed to extend QE after the 600B+ assetpurchase program ends in June 2011. Note: QE is money-printing in nature and triggers inflationary concerns in the long-term. One of the reasons that investors fled to gold last year was to hedge against inflation to be fueled by QE. If the need for further QE is diminished, demand for Gold will be lower and investors will prefer for higher-yield assets. Gold recovered in NY session Friday after less-than-expected US payroll growth in December. The metal was also supported by US Fed Chairman Ben Bernanke's testimony before the US Senators. Bernanke said it could take "4 to 5 more yrs for the job market to normalize fully".


He went on to defend the asset-purchase program announced in November, saying that he believes it will spur employment and bolster the economic recovery. The Fed Chairman made no indication that the program may end early, disappointing some investors who thought recent economic data and tax extension may reduce the need for more QE-2+. A further correction in Gold, Silver, and PGMs, cannot be ruled out. Players seemed busy liquidating Longs established late last year. Crude Oil WTI Crude Oil price rose to a 27-month high of 92.58 Monday as strong manufacturing data fueled optimism on Oil demand. The price fluctuated and settled at 88.03, down -3.67% on the week Friday. WTI's discount to Brent Crude widened last week as Cushing stocks climbed. Apart from Brent, WTI is also trading at wider discounts to other benchmarks such as Light Louisiana Crude and Mars. Meanwhile, WTI time-spreads widened, intensifying the contago situation in the front end. Trans Canada, Canada's biggest pipeline operator, has begun filling the Cushing Extension of its Keystone Crude Oil pipeline system which is expected to complete early this year. The extension could bring a significant volume of Canadian Crude to Cushing, where WTI Crude is stored. A number of factors will come alive to affect WTI Crude in coming months. Enbridge said earlier in the week that it plans to shut its Line 6-B for 2 separate maintenance periods for as much as 5 days each in February and March. That may help lowering Canadian Oil imports to Cushing. Cushing stocks dropped -3.5 mmb when the 6-B pipeline suspended operation in July-September 2010 due to a leak. On the other hand, if 6-A pipeline remains full and Crude Oil piled up near Chicago, WTI may lose attractiveness to other cheaper alternatives. The Overall Technicals Comex Gold (GC) There is still no confirmation of reversal in Gold in here, it is pressing 55 days EMA, now at 1372.8, but staying above 1361.6, the Key support. The upside momentum has slowed with Bearish divergence in daily MACD. So, for now I am staying Neutral and on he alert for a sign of a trend reversal. A clear break of 1361.6, the Key support, will be the 1st alert for a medium term reversal, and deeper fall should come on to 1329, Key support, for the confirm. Before that happens, Gold could have another rise to 1450/62, the Fibo cluster projection level, before Topping out.


The Big Picture: again, the rise from 1155.6 is treated as the 5th wave of the 5 wave sequence from 1044.5, which should also be 5th wave of the rally from 681, the Y 2008 low. Note: Gold is close to two important projection target, 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 and 100% projection of 253 to 1033.9 from 681 at 1462, and as noted above, Gold's upside momentum is clearly slowing with Bearish divergence in daily MACD and RSI. So, a reversal should be imminent sooner or later. A clear Break of 1315.8, Key support, signals that 1424.3 is an important Top and Gold should have started a medium term correction that may dip back into 1044.5/1227.5 support Zone at least. Say tuned...


Comex Silver (SI) The recent break of 28.81, Key support, and he near term rising trend line augurs that Silver has made a short term Top at 31.72 on a Bearish divergence condition in daily MACD. Intra-day bias is cautiously on the Southside now, and a deeper decline should be seen towards 55 days EMA, now at 27.65. On the Upside: a clear break of 31.72, Key resistance, is needed to confirm a resume of the rally resumption. So, now the feeling is neutral on the expectations of some more consolidations. The Big Picture: Silver's up-trend line is intact. this rally from 8.4 is treated as resumption of the rise from the Y 2001 low of 4.01. Silver should target 161.8% projection of 4.01, he Y 2001 low, to 21.44, the Y 2008 high, from 8.4 the Y 2008 low, to 36.6 next. On the Downside: a clear break of 24.98 support is needed as the 1st signal for a medium term reversal. Barring that my outlook is Bullish on Silver. Say tuned...


Nymex Crude Oil (CL) My work shows that a temporary Top formed at 92.58, and more consolidations should be come on, but I believe that rally should continue as long as 86.83, the Key support, holds. A break above 92.58 should extend the rally from 70.76 to 100% projection of 70.76 to 88.63 from 80.06 at 97.93. But a clear break of 86.83, the Key support, will augur that a short term Top is formed with the Bearish divergence condition in 4 hours MACD. I will also be the 1st alert that rise from 70.76 is done, and will turn outlook Bearish into the support. The Big Picture: the medium term rise from 33.2 is still in progress, and the rally is treated as the 2nd wave of the consolidation pattern that started at 147.27. 50% retracement of 147.27 to 33.2 at 90.24 is already met, and there is no sign of reversal yet. A further rise could still be seen to 61.8% retracement at 103.70 and higher. On the Downside: a clear break of 80.06, the Key support, is needed to be the 1st sign of medium term reversal, and break of 64.23, Key support, is needed to confirm this action. Barring that I remain Bullish on Crude Oil. Stay tuned...


Have a great week, and stay tuned. Paul A. Ebeling, Jnr. aka The RedRoadmaster I am the Co-Founder of www.livetradingnews.com and www.ebeling-heffernan.com. Please check out www.paulebeling.com, www.RedRoadmaster.com and www.bull-penny-stocks.com. Also, you can follow me on Google News and Blogs. You can contact me at Redroadmaster@aol.com Disclaimer: The foregoing is commentary for informational purposes only. It is designed to help the reader learn the fine art of technical analysis. Links are provided to articles and stories referenced in this Report. Some statements and expressions are the points of view and/or opinions of Red Roadmaster™, aka Paul A. Ebeling, Jr. and the contributors. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. I am not licensed or registered in the securities industry. The information presented herein has been obtained from readily available sources believed to be reliable, but its accuracy is not guaranteed. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. I do not receive compensation in any manner from any of the companies that are discussed in this Report. Please feel free to print and/or send The Red Roadmaster’s Technical Report on the US Major Market Indices ™ to your friends and associates, no permission is necessary. ©2002/2010 Paul A. Ebeling, Jnr.


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Gold, Silver, Oil Report NYSE:USO, NYSE:SLV, NYSE:GLD  

SPDR Gold Trust (ETF), NYSE:GLD, iShares Silver Trust (ETF), NYSE:SLV, United States Oil Fund LP (ETF), NYSE:USO Commodities started Y 2011...

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