March Crude Oil is up 37 cents at $74.30 per barrel this morning as I write.  The included chart shows that crude oil is still involved in a steep correction to the downside and has begun a mini bounce in that price slide.  For now, I would expect that after a short term bounce in crude oil prices, the slide will again resume and March Crude Oil should test down into the $70.00 area or lower.  The directional movement indicators are bearish and the ADX line is rising.  If the technical picture changes then I will change my attitude.  We will continue to keep our current positions for now.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90 and short 2 March Crude Oil ($64.00 strike) put options from $1.65 each for an overall credit of 40 cents or $400 gross.

Followers should also be 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 63 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 6.7 cents at $5.51 this morning as I write.  The included chart shows that natural gas has been rising sharply lately.  The current cold weather spell and hopes that manufacturing demand will begin to pick up is helping to support natural gas prices.  I would suggest that when this current cold weather spell moderates, that we will see natural gas prices set back, possibly sharply again.  The fact is that there is 800 billion cubic feet of excess supply that needs to be worked off just go get supplies back to normal.  That is going to take a couple months of much below temperatures, consistently, to accomplish, in my opinion.  Either way, I see this as a sharp rally within an ongoing bear market.  The directional movement indicators are bullish and believe it or not, the ADX line is beginning to rise which is trying to confirm that there is strength behind this bull move.  That will be taken into consideration as time goes on.  The problem is that not all of my other technical indicators are bullish yet and we haven’t even taken out a previous weekly important high yet either.  The key resistance overhead eventually will be the weekly highs in the $6.20 area.  If natural gas prices can continue to rally and take out those $6.20 highs, that would truly be impressive.  For now, I recommend standing aside in natural gas.  I suspect that there will be more tests down towards the lows again following this current cold weather spell.

 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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Take a look at the included weekly longer term chart of Crude Oil.  The drawn red line shows the uptrend line since February, that was broken to the downside a week and a half ago.  Technically, this could be the beginning of trouble for the uptrend in crude oil since earlier this year.  What we always try to determine in technical analysis is if this major trend line break just means that the angle of ascent in crude oil is beginning to change to a slower long term rise, or if this is a major trend change.

Notice also that I drew a blue trend line that connects the July and October lows.  Crude Oil prices are now trading just below that trend line right now and right on top of the 40 week exponential moving average.  On top of this, the bottom chart shows that the weekly directional movement indicators have crossed to the bear side as the red line is above the green line.  This is not good news if you are a bull.  The ADX line is meandering sideways which could be showing a lack of momentum on this downswing.  That, and the fact that prices haven’t closed below the 40 week moving average yet, is the only good news technically.  Fundamentalists are all long term bullish crude oil as they expect world demand to continue to rise over time.  This may be true, but the chart is showing, at least, intermediate term, a negative outlook unless crude oil prices can hold and reverse from here.  Stay tuned.

 Could we be in for some surprises going in to 2010?  Those may include:  (and this is a contrarians dream by the way):

  Could the US Dollar could be making an important bottom?

1.  Has the Euro made an important top?
2. Has gold made an important top?
3. Is the stock market about to rally much higher than we expect?
4. Has crude oil topped out?

 This all goes contrary to current thinking lately, but we have to pay attention to what the charts say as we go along.  None of the things listed above have happened yet, but they may be developing.  These markets are headed for some important decision points, long term, over the next month or so, in my opinion, technically.

 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 50 cents at $73.96 per barrel this morning as I write.  The included chart shows that March crude oil is bouncing from its recent sharp selloff.  Prices are still below the 5 day moving average.  A close above the 5 day average may help crude oil rally further up into the recent range.  The directional movement indicators are bearish and the ADX line is rising, suggesting that more downside should be expected in crude oil.  The longer term weekly charts which I will put out later, suggest that crude oil is near a critical support level that needs to hold for the secular bull market to hold together.  Otherwise, prices could fall a lot further.  For now, I like the positions that we already have on.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90 and short 2 March Crude Oil ($64.00 strike) put options from $1.65 each for an overall credit of 40 cents or $400 gross.

Followers should also be 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 64 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 6.7 cents at $5.504 this morning as I write.  Natural gas prices are still being held up by this massive cold front over much of the nation that is expected to linger around for at least another week to ten days.  These lower than normal temperatures are helping to draw on supplies as, I am sure, we will see evidence at this Thursday’s supply report.  Keep in mind that the is about 800 billion cubic feet of excess gas that needs to be worked off.  Technically speaking, March natural gas has had a near term sharp short covering rally off the contract lows.  The previous important weekly high, basis March, is at $6.242.  If March can manage to rally and close above that level, then we will again have our first higher high.  After that time, we would be looking to try to buy the price dips.  If prices fail before reaching the $6.24 area and roll over, then watch out for a retest of the contract lows later.  For now, I recommend standing aside in natural gas.  I would liquidate long positions on this rally if you happen to be long.

 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 20.6 cents at $5.48 this morning as I write.  The rally apparently is being spurred on by Exxon’s acquisition of XTO energy today.  XTO has a lot of natural gas reserves and natural gas prospects.  I guess that means that the market is just now finding out that Exxon is committed to natural gas.  That is interesting since the news media has reported over the last several months that Exxon was making big investments into natural gas, so why is this acquisition a big surprise?  All this means to me is that more natural gas supply is coming to the market.  That is the last thing we need to support natural gas prices.  Anyway, the natural gas market is rallying on the news.  I am not interested in committing to a long term position in natural gas until prices begin to make higher highs and higher lows.  Prices haven’t even made a higher high yet.  The directional movement indicators are bullish but the ADX line is flat.  The longer term trend is down.  I recommend standing aside in natural gas 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 down 8 cents at $73.60 per barrel this morning as I write.  The included chart shows that crude oil is still involved in a fairly steep decline in price this past week after it fell away from the previous consolidation pattern.  The next good support level for March Crude Oil will come in at the uptrend line coming up from the July lows.  That price level today comes in near $71.00.  Below that we could be looking at the two previous price lows in the $67.00 and then the $64.00 price areas.  The directional movement indicators are bearish and the ADX line is rising suggesting trend strength in this down move.  I recommend holding on to 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 and short 2 March Crude Oil ($64.00 strike) put options from $1.65 each for an overall credit of 40 cents or $400 gross.

Followers should also be 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 68 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 1.7 cents at $5.40 this morning as I write.  The included chart shows that March Natural Gas has run right into the blue 90 day exponential moving average and stalled for now.  The rally that began last Friday is happening because of the severe cold weather in the northern states of the US.  That cold weather spell is expected to last into December 22^nd according to weather forecasters, before temperatures moderate.  I believe that for natural gas to sustain a consistent longer term rally, the weather will need to stay well below normal for the next couple of months, which I think is next to impossible.  We shall see.  All I know is that supplies of natural gas are about 800 billion cubic feet too high.  The directional movement indicators are bullish but the ADX line continues to fall showing a lack of trend strength.  The view here is that this is just a rally in a bear market.  Until I see some proof that this market wants to start making higher highs and higher lows, natural gas is still in a long term bear market.  Continue to stand aside and take liquidate long positions in this rally if you are long.

 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 35 cents per barrel at $74.27 this morning following a sharp fall of over $2.00 yesterday.  The included chart shows this sharp price break from yesterday.  You can see that once prices fell out of the flagging consolidation, that prices gained downward momentum.  I would expect prices to fall back towards the major uptrend line coming up from the July price lows.  That line comes in today near $71.00.  The directional movement indicators are bearish and the ADX line is rising suggesting a strong trend to the downside, at least for now.  Yesterday, we bought the March $69.00/$64.00 ratio put spread 1*2 for an average credit of 40 cents or a $400 gross credit.  These options expire on February 17^th.  This ratio put spread means that if March Crude Oil doesn’t make it down to $69.00 buy the expiration date, then the options will expire worthless and we will keep the $400 gross credit.  If, at expiration, March Crude closes at $64.00, then the potential gain could be $5000 gross, the difference between the strike prices.  The risk on this trade is if March Crude Oil falls all the way down toward the $64.00 price level too soon before a lot of time value has had a chance to erode.  If prices do fall too far too fast, then we would be force to liquidate the trade or adjust the options in some way.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90 and short 2 March Crude Oil ($64.00 strike) put options from $1.65 each for an overall credit of 40 cents or $400 gross.

Followers should also be 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 69 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 4.1 cents at $5.045 this morning as I write.  The included chart shows that after a few sharp rally days off of the contract lows, natural gas yesterday fell sharply despite the frigid cold weather in most of the northern states.  The reason for this pull back in my mind is that traders know that it is going to take a couple of months of much below temperatures to alleviate the oversupply problem that exists in natural gas.  I fully expect to see natural gas prices fall back to their contract lows once again.  At that time I will see what the chart looks like and if it is worth a buy for the longer run.  Until then, I recommend standing aside and anyone who has long positions should liquidate into any of these short term price spurts.

 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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