The Overall Fundamentals

Gold and Silver

The Gold and Silver markets waffled around both sides of unchanged throughout the trade session today and for some Gold and Silver traders the action of the last 36 hrs has created more questions than answers, especially when one attempts to determine the current focus of the Gold trade.

Weaker equities seemed to prompt weakness in gold and that would seem to suggest that gold is somewhat back to a physical commodity market track.

However, there have been times this week where Gold and prices seemed to be falling back into a flight to quality mode off the EuroZone crisis.

Some modest recovery action in the USD might have prompted some selling action in gold today but the currency impact on gold lately has been somewhat suspect

Gold futures posted a decline of 0.4% to settle at 1647 oz, and Silver shed 1.9% to end at 31.28 oz.

Crude Oil

Total Crude Oil and petroleum products stocks slumped -10.92 mmb to 1062.24 mmb in the week ended October 14.

Crude stockpile declined -4.73 mmb to 332.90 mmb as all PADDs recorded stock-builds. Cushing stock climbed +0.47 mmb to 31.09 mmb. Utilization rate dropped -1.1% to 83.1%.

Gasoline inventory plunged -3.32 mmb to 206.27 mmb as demand contracted -4.57% to 8.60M bpd, production rose +4.48% to 9.31M bpd and imports climbed for the first time in 4 weeks, by +9.57% to 0.46M bpd. Distillate inventory slipped -4.27 mmb to 149.74 mmb as demand climbed +2.83% to 4.18M bpd. Production dropped -0.79% while production declined -8.55% during the week.

WTI Crude Oil price jumped to as high as 89.51 after the report. However gains were pared shortly. Market sentiment has been firm for the day with Wall Street advancing as driven by strong financial sector.


The Overall Technicals

Comex Gold (GC)

Gold dipped sharply over night but managed to hold above 1627.6, the minor support, and recovered.

Intra-day bias is neutral in here, and outlook is unchanged.

The 1705.4 Double Top Neckline is intact, so outlook remains Bearish and the decline from 1923.7 is expected to resume sooner or later.

A break below 1627.6 will be the 1st signal of decline resumption and will turn the bias to the Southside for 1535 and then 1500,,the psych mark. But, a clear break of 1705.4 will argue that fall from 1923.7 may be finished, and will bring stronger rise towards the old high.

The Big Picture: this action indicates to me that Gold has made a medium term Top at 1923.7, ahead of long term projection level of 161.8% projection of 253 to 1033.9 from 681 at 1945.6 and 2000, the psych mark. The fall from 1923.7 is deep, but Gold is still holding inside long term rising channel from 681 and above 55 weeks EMA at 1513.3. That being the case, I am not too bearish in Gold in here. The Strong support is anticipated at 1478.3/1577.4 support Zone and will contain any downside, initially, and bring on are bound.

Note: a sustained break of 1478.3 will strongly suggest that the long term up-trend has reversed. Stay tuned...

Comex Silver (SI)


Silver dipped through 30.71, the minor support, briefly and recovered. The development suggests that sideway pattern from 33.58 is unfolding.

Intra-day bias remains Neutral and more consolidative trading could be seen.

On the Upside: a break above 33.58 will extend the rebound from 26.15 and should target 38.76/44.275 resistance Zone.

On the Downside: a break of 28.435 will turn my outlook Bearish, and would likely extend the steep fall from 49.82 for another low below 26.15.

The Big Picture: I am treating price actions from 49.82 as correction to the up-trend from Y 2008 low of 8.4. Silver drew Strong support from 26.30 and 100% projection at 26.27 despite a brief break, thus retaining this POV, there is still prospect of another high above 50, the psych mark. But, a clear break of 26.30 will argue that Silver is correcting the whole up trend from Y 2001 low of 4.01. In that case, a deeper decline will be seen through 21.44, the Key resistance turned support. Stay tuned...

Nymex Crude Oil (CL)


Crude Oil's rebound from 74.95 extended to 89.03 so far, and further rise could still be seen. I continue to expect upside to be limited by 90.52, the Key resistance; 38.2% retracement of 114.83 to 74.95 at 90.18, and bring resumption of the decline from 114.83.

A break below 85.55, the minor support, will turn bias back to the Southside for retesting 74.95, the low, first.

Note: a clear break of 90.52 will argue that Crude Oil has completed a Double Bottom reversal pattern at 75.71 and 74.95 and will bring on a stronger rise through 100.62, the Key resistance.

The Big Picture: the medium term rebound from 33.2 is treated as the 2nd leg of consolidation pattern from 147.24 and should have finished at 114.83. This decline should target the next Key cluster support at 64.23; 61.8% retracement of 33.2 to 114.83 at 64.38 next. A clear break there break will show the way to retest 33.2, the low.

Note; the fall from 114.83 is not displaying an impulsive structure yet. A break of 90.52 will argue that price actions from 114.83 could merely be forming a sideway consolidation pattern, and rise from 33.2 might still extend beyond 114.83 before completion. Stay tuned...


Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.