Next Monday, May 31^st, it is Memorial Day Holiday.  All US futures market pits will be closed including the stock market.  There will be some limited computer trading until 10:30am Monday morning in equity indexes, and until noon Monday in currencies, interest rates.  The volume should be very small.  Today, the pits for trading in currencies and interest rates will close at noon.  All these times listed are Central Standard time.  I will be leaving town at 11:00 AM TODAY just for the weekend, and will be back in the office Tuesday morning, June 1^st.  So, if you have orders that you just have to have done after I leave today, please enter you orders straight to the Chicago trading desk.  I would imagine that volume will be very light today as many traders among others will be traveling.

 August Crude Oil is down 27 cents at $75.35 per barrel after reaching $76.79 overnight.  The included chart shows that crude oil is in a sharp short covering rally.  So far, we have seen a $21 per barrel drop and a 6 ½ barrel short covering rally. That is about a 31% correction of the down trend, which is very close to a normal Fibonacci correction.  The directional movement indicators are still bearish but narrowing and the ADX line has rolled over.  This ADX rollover could be suggesting that the lows are in and that we are going to see an extended period of back and forth choppy sideways volatile trade for the next few weeks.  We won’t know until crude oil comes back down and tries to retest back towards the lows again, which should be soon.  Volatility should remain high and make it very difficult to trade.  I recommend standing aside.  Those who dare to trade better be very nimble and be ready to take a lot of overnight price risk.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Crude Oil is up 45 cents at $80.48 per barrel this morning as I write.  The included chart shows that March Crude Oil continues to stay well supported and is testing the light blue down trend line coming down from the October/November consolidation pattern.  The directional movement indicators are bullish and the ADX line is still edging lower to sideways.  With no other news to go on, I would suspect that the near term support for crude oil is because of the citizen protests going on in Iran as some think that a revolution is near for that country.   Reality versus what we hope for may be two different things.  So far, not one barrel of crude oil has been affected by the riots in Iran.  I recommend holding our current positions and not doing anything new today ahead of the holiday.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90

Short 2 March Crude Oil ($64.00 strike) put options from $1.65 each.

Long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

 March Crude Oil options expire in 48 days.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Natural Gas is up 5.6 cents at $5.741 this morning as I write, following yesterday’s 13 cent drop.  The included chart shows that March Natural Gas is showing that $6.00 is becoming a strong resistance point for price rallies.  The natural gas market has probably discounted all the cold weather news and near term cold weather forecasts already into its price.  The directional movement indicators are still bullish but beginning to narrow and the ADX line is beginning to rollover to the downside.  This is not good news for the would be bulls.  I believe that the only thing in the near term that will save natural gas prices from falling is if weather forecasters come in over the weekend and forecast colder than normal temperatures well beyond January 10^th.  So far, this rally in natural gas from contract lows has stalled in the $6.00 area, about 24 cent shy of the highs made in late October.  This should be very disappointing to the bulls considering the extra cold temperatures that have been experienced over the last couple of weeks.  Remember, that the definition of a classic bull market is one that is making higher highs and higher lows.  So far, the current rally hasn’t even reached the first important weekly high, which is in the $6.25 area.  Bear markets are markets where prices are making lower highs and lower lows in price which is still the case here.  This is only a rally in a bear market until proven otherwise.  The other negative is the fact that all the further out delivery months starting in 2012 are trading within penny’s of their contract lows.  Those far out delivery months have not participated in this near term rally whatsoever.  I recommend standing aside for now in natural gas.  As bearish as I sound, I still believe that natural gas is in the beginning process of building a long term secular bottom in prices.  So, on the next selloff, I will be looking, once again, to attempt to position longer term positions in natural gas.  I just need to get the right set up on the technical picture first.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Natural Gas is down 1.8 cents at $5.796 this morning as I write.  The included chart shows that March natural gas is still involved in a near term uptrend, although prices have been stalling up here in the $6.00 area, about 20 cents shy of the October highs.  Cold weather is and has been the driver of this current rally.  The cold weather is expected to hang around through January 10^th according to forecasters.  Natural gas prices are starting to act like they have already discounted that weather forecast.  Also, keep in mind that cold weather alone won’t hold up the natural gas market.  We will need to see temperatures that are below the normally cold temperatures for this time of the year to really dig into the oversupplied natural gas market.  Normally seasonally cold temperatures won’t cut it.  It is also interesting to note that the far out delivery months, a couple years out, are all within about 10 cents of their contract lows, giving more confirmation that this current near term rally is only cold weather driven.  For a long term trend to develop, we need to see industrial demand rise and production fall off a bit further.  As mentioned yesterday, I expect prices to fall again but not necessarily make any new lows.  This will all be a part of a long term basing process in natural gas that may take weeks or months to complete.  For now, stand aside.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Crude Oil is up 23 cents at $79.68 this morning as I write.  The included chart shows the impressive near term rally that has occurred in crude oil recently to get prices back up into the consolidation areas that were formed back in October and November.  The next important resistance area will be the down trend line, marked in light blue on the chart.  That line comes in today at about $80.30 to $80.40.  The directional movement indicators are now bullish but the ADX line is still falling.  The excuse for the rally yesterday centered around the citizen turmoil in Iran on top of cold weather.  That citizen turmoil in Iran has not affected one barrel of crude oil, but psychology and emotion rule especially during holiday weeks when the trading volumes are light.  If Crude oil price stall right up in here and begin to roll over, I may want to add to put spreads or bearish trade ideas on the next directional movement bearish cross over.  Stay tuned.  I will have to see how the chart sets up in that event first.  On the other hand, if prices can manage to close past the down trend line, especially at the end of a week, then I would have to begin looking for bullish trade ideas on the next price dip.  In other words, this is a critical pivot point area on the charts in my opinion.  I recommend holding our current positions.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90

Short 2 March Crude Oil ($64.00 strike) put options from $1.65 each.

Long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

March Crude Oil options expire in 50 days.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Natural Gas is down 5.1 cents at $5.910 this morning as I write.  The included chart shows that natural gas is still involved in a near term up trend because of all the current cold weather forecasts.  The thing that I insist on, that traders need to be careful of in this scenario is the fact that there is still about 700 billion cubic feet of excess natural gas that needs to be run off just to get back to normal supply levels.  This will require the weather to remain much colder than normal for the next couple of months which is unheard of in any year that I can ever remember.  Remember that normal temperatures for places like Chicago will become in the 20’s, so for extra natural gas to be used, temperatures will have to consistently be in the single digits to teens consistently pretty soon to make any difference.  That would be a tall order for any winter time.  Regardless of what I think, we still have to go by what the charts say.  Right now, the directional movement indicators are bullish and the ADX line continues to rise.  The weekly charts are also starting to show some bullish life.  The next resistance levels to be concerned with are the November highs in the $6.20 area, just ahead.  That $6.20 area is also the last important weekly high that was made in the ongoing longer term bear market.  A weekly close over the $6.20 area would be the first instance where the natural gas market would be making a higher high, which is the first sign of a new long term bull market taking shape.  If prices fail up here, shy of the $6.20 area and then roll back down again, then nothing has changed, and we would still be in a secular longer term bear market.  My prediction is that in the really big picture, ever since Natural gas hit the all important long term support in September down around $2.40, prices hit bottom for the bear market.  I believe that these months past September are the beginning stages of a long term support base being built that will eventually be what supports the next long term secular bull move that may last for a few years.  Therefore, I think that it will be import to watch the next big selloff in natural gas for signs of a bottom being formed to accumulate long term bullish positions.  This will be a multi-month process, so patience will be required.  Stand aside for now.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Crude Oil is up 59 cents at $79.25 per barrel this morning as I write.  The included chart shows the impressive rally off the recent lows in crude oil.  Even the directional movement indicators are close crossing back to the bull side.  The chart shows a light blue trend line coming down over the highs that were made during October and November, that comes in today near $80.30.  A close over $80.30, especially at week’s end would be very impressive and probably warrant a new long trade.  Until then, I would be watching for a place to sell.  For now, hold on to current positions.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90

Short 2 March Crude Oil ($64.00 strike) put options from $1.65 each.

Long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

 March Crude Oil options expire in 51 days.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Natural Gas is up 18.6 cents at $5.872 this morning as I write.  Prices are higher today as some forecasters are predicting that more wintry weather is ahead into the middle part of January.  It is interesting to note that most of the delivery months out two years or more are all within 10 cents of their contract lows.  So, near term prices are concerned about near term cold weather.  Longer term markets still see an over burdensome supply situation into the future.  I believe that the longer term contracts won’t enter into a long term bull move until it becomes more clear that Congress will pass an energy bill that includes incentives for natural gas use, industrial demand picks up and the amount of supply coming online slow down.  Longer term players know that until these things happen, this current cold wave will need to show much below normal temperatures for the next couple months consistently to work off 700 billion extra cubic feet of supply in the pipelines to simply get back to normal supplies.  That is a tall order for the weather to pull off.  Regardless of those fundamentals, I can’t ignore what the charts are saying.  Right now, the weekly charts are looking more and more bullish in their shape.  The daily chart is trading and struggling with the 200 day moving average and still about 30 cents below the November price highs.  A close above the November price highs would begin to change the cycle from lower highs and lower lows to our first new weekly higher high in a low time.  That would be the first sign of a market attempting to put in a long term low.  We shall watch and see.  For now, stand aside.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

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March Crude Oil is down 41 cents at $76.84 this morning as I write.  The included chart shows that yesterday, March Crude Oil had a very strong rally on a larger than expected draw down in crude oil inventories for the past week, though many believe that this was artificial because of all the fog in the Houston ship channel last week, that prevented many oil tankers from reaching port to offload their inventory.  If this is true, we should see supply adjustments in the next couple of weekly reports.  Technically, March Crude Oil rallied right up to the back side of the previous market breakdown below the two month consolidation and right to the 40 day moving average.  If I am right, prices should begin to stall up here, like they are today, and then erode back towards the $70.00 area.  I will be watching that pull back for clues and patterns that develop suggesting when the next trend will occur.  Until then, hold on to current positions.  HAPPY HOLIDAYS!!

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90

Short 2 March Crude Oil ($64.00 strike) put options from $1.65 each.

Long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

 March Crude Oil options expire in 55 days.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

Continue Reading

March Natural Gas is up 4.4 cents this morning at $5.896 as I write.  The heavy winter storm coming across the Midwest today and tomorrow is helping to hold near term contracts of natural gas up for now.  It is interesting to note that the two year and further out contracts were testing back towards their contract lows yesterday.  What does this tell us?  I think that the current price action in natural gas is telling us that the below normal temperatures are giving natural gas a near term boost, but the market knows that the is and probably will be a very very large inventory overhand.  For now, stand aside in natural gas.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.

Continue Reading