Energy and Metals Charts

Below we highlight our trading range charts for oil, natural gas, gold and silver.  The green shading in each chart represents two standard deviations above and below the commodity's 50-day moving average.  When prices move above the green shading, they are considered overbought (and vice versa for oversold).

As shown in the first chart below, oil is currently trading right at the top of its trading range.  Its up-trend remains strong and seemingly unbreakable.  But natural gas has bucked the energy up-trend in recent weeks and moved lower.  As shown in its chart, it is trading right in the middle of its trading range and anything lower than current levels will risk breaking its up-trend.

click to enlarge

When we look at the ratio of oil to natural gas over the long term, the recent divergence between the two is nothing out of the ordinary.  When the line is rising, oil is outperforming natural gas.  Over the last few months, natural gas outperformed oil, but oil has simply been making a comeback in recent weeks.

As the dollar has fallen to new lows again, it's not surprising to see gold and silver at overbought levels and testing its highs from earlier this year.  While the two commodities could see a pullback in the very short-term, it's increasingly likely that those highs will once again be broken.

Comments

[KAMAL AGRAWAL]

IT IS QUITE AMAZING TO READ THE ARTICLE . IT IS VERY MUCH REALISTIC AND EYE OPENER

[FeverBuster]

I do not understand how a futures market of commodities can be charted in a way that provides overbought or oversold ranges since it is a complete different way of trading in relation to common stock buying and selling. To me your tying to fit a square peg into a round hole.

[phdinsuntanning]

the past behavior does not guarantee future performance :::

[coastalpirate]

You can get an idea from charts when a bubble is being created, like oil running up in the midst of a global slowdown and credit crisis, the chart looks like everyone is pouring money in because it is the only thing left going up. Also where is the commentary today? Oil goes down 7 bucks a barrel and there are no articles all day, would someone venture if this is a pop ??????

[FeverBuster]

Regarding $7 drop:

"Investors hope that lower energy prices could help revive the flagging economy". Source: Yahoo

Oil is going to have to drop down below $100 to have any impact on the economy. But every bit helps. It will not last though, Iran will just launch another missile, or someone in Nigeria that has a gun will get mad, or maybe someone will spill a barrel of oil somewhere. You know that these type of things can really cause disruption of oil flow that will have devastating effects on the supply.

[Cash_and_Fetal]

Your Analysis would only hold true if we were trading in FAIR AND OPEN markets....this market is the worst, most unfair, manipulated market EVER...even worse than Enron....

If you didn't believe me with my first teaser....trying reading these articles...

About ICE,IntercontinentalEx... Inc.


Ice, Ice Baby Part 1
www.star-telegram.com/...

Ice, Ice Baby Part 2
www.star-telegram.com/...


Here are some teaser quotes:


When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of
Morgan Stanley,
Goldman Sachs,
British Petroleum,
Deutsche Bank,
Dean Witter,
Royal Dutch Shell,
SG Investment Bank and
Totalfina.

In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an "exempt commercial market" under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, "Both markets operate outside of any CFTC oversight."

www.star-telegram.com/...
We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?

Oil Movements tracks every tanker at sea, from both OPEC and non-OPEC oil countries, along with their cargoes’ final destinations. Anne O’Shea responded immediately to my request with their report dated May 8, 2008. Just so you will know, oil shipments are up from a year ago in almost every class, including Middle East oil in transit and Non-OPEC in Transit. The only class of oil shipment that has declined is covered on page 3 of that report. That chart is labeled, "4-Week Changes in Westbound Oil at Sea."

That’s right, shipments of oil headed west have shown serious declines during the month of April, down 800,000 barrels per day in the week before the publication of the report


This is EXACTLY what Enron did when it's Electricity Manipulation, Turning off power grids to falsely inflate demand on other grids....

[Emerald]

China has beeen building up oil reserves for the olympics, in case of some supply disruption in August

[Diyg]

The thing that is really troubling about the international oil market is that any wild Iranian or corrupt Israeli official can make an off-the-wall statement about going to war and oil prices go wild. This is unprecedented power over the markets by irresponsible and unaccountable nitwits!