Saturday, March 26, 2011

Market Snapshot - Market Breadth

This is one hell of a chart! If you like this chart be sure to Tweet it, Share it, and add to Facebook! If I don't get the support I can't waste time posting killer charts unless you pay me! See bottom of post to vote please and be sure to subscribe to this blog for future updates.

In this chart we have our clear out-performer for the week Crude Oil (SEE TOP WINDOW OF CHART). Secondly I liked EUR-USD, 3rd the DJ30, and worst was the US dollar even though it did modestly recover. It was however US Dollar weakness that lead to strong Crude, Gold, Euro, and just about everything else enjoyed the long term US Dollar weakness.

In metals (SEE 2ND WINDOW DOWN) Silver outperformed Gold. Copper outperformed Platinum and the USDX again was the driving force behind it all. Fundamentally the Libya conflict, Political turmoil, A weak economy with high inflation, and the Nuclear Event drove up hard assets like commodities. Despite all that equities managed to soar while commodities prices remained elevated.

For equities... (SEE 3RD WINDOW DOWN) The DJ30 (Dow Jones Index) outperformed the FTSE100. The FTSE100 outperformed the DAX30 and the NIKKEI225 managed to stay in the pack. Over all equities performed very well across the board.

Crude Oil outperformed Brent Crude Oil while the USDX and USDCHF were weak causing an elevated move for OIL markets. Fundamentally the Libyan crisis / war was a bullish factor for Oil.

Monday, March 21, 2011

Trends in Crude Oil Historical Chart

This is price history of notable tops and bottoms in Crude Oil on a 4hr time-frame beginning on 12/14/2009 to 3/16/2011. I've come to the conclusion that there are 4 primary fundamental factors in deciding the price of crude oil:
1) The Middle East
2) The Middle East
3) The Middle East
4) The US dollar policy

Ok so that wasn't very comprehensive but in looking at the biggest factor it was always situations in the middle east. Demand, forecast, analyst opinion, crude oil inventory, and the state of the economy could all be thrown out the book. The only thing that was consistent was factors that had to do with the middle east, more factors to do with the middle east, yet more factors to do with the middle east and the US dollar policy.

What I found very interesting is when ever there was a surge in Crude Oil analyst would make predictions of $100+ crude. While yes that's easy to say now as we are above $100 but often when they made those claims crude oil would correct to the downside and sometimes immediately afterwords. Had you followed their recommendation you would likely have abandoned the trade or faced margin calls. Unless you had very deep pocket you would not have seen $100 crude. Of course if you did the opposite it would have been very profitable in the short term.

(If there are problems viewing picture go to this link: click here.)

The analyst proved to be wrong most of the time. Some long term calls were right but it seemed these calls (on long side) were at market tops most of the time. The news was very deceptive and reasserts my position to only use charts to determine market trends and but be wary of major market events that cause volatility.

Many (actually most) news events were contrarian indicators. Using the news can be utilized if knowing what to look for.