Weekend Post

Hello All,

Upon request from certain friends and clients, I spent a bit more time on the Crude Oil market.  So, WTI will be the primary offering here.

Last week's Silver, Gold and WTI commentary all suggested lower prices for the week which is what we saw.  I didn't realize it was going to be a contrived IEA oil release designed to torpedo the Brent Crude market that accomplished the feat.  But, whatever it takes ....

In regard to that "surprise" release, it's worth pointing out that  NOBODY is BIGGER than "the market."  NOBODY.  EVER.  It's possible to affect oil prices in the very near term, but in the longer run, prices will go to where they're supposed to go, regardless of Government interference.  So, my "gut" reaction is to fade the short term government action.  Hopefully this "gut feeling" didn't prejudice the wave counts.

Now, if the U.S. Government really wanted to lower oil prices longer term they would .... eh ... maybe save that discussion for another day....

S&P 500

We had suggested that 1295 was serious resistance.  The S&P did print 1298 before collapsing, so I suppose I got that resistance point incorrect.  The whipsaw/violent price action suggests triangular activity in the week ahead.  The S&P 500 looks like a "NO TRADE" for this week.  Let someone else get "chewed up."   First and second levels of resistance will be 1284 and 1299.  First and second levels of support are 1263 and 1258.

Silver

One should not be holding speculative long silver trades at this point.  The bias is for lower or sideways price action.  It looks like a small scale "five wave" move was completed between 36.77 and 34.15, so perhaps we get some kind of early week recovery before heading lower.  First and second levels of resistance in the week ahead will be $35.50 and $36.20.  I would attempt to sell in front of those point and use $36.25 for a "stop" on new shorts.

Gold

This was a real train wreck last week.  Short term traders were advised that we would see lower prices and that $1500 was achievable.  It happened quickly as Gold went from $1560 to $1498 in the blink of an eye.  The yellow metal showed no signs of "bottoming" action, so wouldn't even think about dabbling into longs yet.  There is support at $1,487, so new shorts that piled on should pay attention to that level.  In other words, if you're short and you're doing "high fives" with your Lind-Waldock commodity trading buddies, and the market hits $1,487 and then bounces sharply .... go ahead and exit those shorts.


WTI Commentary 26JUN11


Addendum:

With all the "Pot" talk last week, I thought I'd share a few good videos.

Here's Milton Friedman on "Drugs."  You can criticize Friedman for some of his ideas about monetary policy and the Fed, but he's definitely a "clear thinker" when it comes Social policies and individual freedoms.




Then there's this good TED video on "how" we might regulate drugs.  The speaker is a little bit nervous but he's got some great ideas and perspective on the subject: