WTI Crude Oil- Short Position

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West Texas Intermediate Crude Oil had a volatile 10 days, after touching $99 a barrel- it dropped to $92.50 post FOMC, nearly testing it's 200 day moving average. Then rallying to a $98 intraday high this Friday, where ITZ entered a half-position in Proshares UltraShort Crude Oil ETF (SCO) @ $35.80.; it closed Friday @ $36.45 -  ITZ raised the stop to $36.20.

The move in crude has in part been driven by gold investors shifting money out of the precious metal, as it dropped, breaking the $1,200 an ounce level. Although the Weekly EIA showed no change in inventory levels for the week, the fact that crude held and that gold/silver plummeted was a bullish factor.

ITZ has noted over the past few weeks that gold, as per Commitment of Traders (COT) report was in a 'Bottoming Phase'- with commercial hedgers decreasing their short positions & large traders their long positions. So most people that are going to sell have sold... basically washed out. ITZ suggested entering silver via Silver Wheaton (SLW) on June 25th Link 

The near term view is that those have shifted money towards crude, will begin re-entering gold and silver. ITZ is looking at the Gold:WTI Crude Ratio, as well as the Crude Oil COT and Oil Futures Contango (OILZ) Link

Is Silver Wheaton A Buy?

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Those that follow ITZ on Twitter or on this blog, know that Silver Wheaton (SLW) is a favorite in the silver market. Having the highest margins, due to the fact that it doesn't mine, but simply enters into long-term silver purchase agreements with other actual miners. In the past year this has avoided the a 10% rise in mining costs.

Silver Wheaton fundamentals: Forward P/E 12.27, 5 year EPS growth of 20%, ROE of 18% & long term debt-to-equity ratio of 0.

Further Downside In Market Correction

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Federal Reserve Chairman Ben Bernanke took a major overhang off this market and reduced the uncertainty for investors moving forward, giving them more clarity on Fed policy through the end of the year. Bottom line means we'll see some near term downside, ITZ continues to see the 200ma- 1500 area being tested. But longer term stocks will be the place to be as the economy continues to improve and earnings rise.

Last month ITZ called for a decline in the $SPX & $COMPQ towards their respective 200 day moving averages LINK

Crude Oil Observations

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Just a few crude oil observations--

WTI Crude Oil Nears Pivotal Level

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WTI Crude Oil is knocking on $97 level...will it break higher or head lower? The Federal Reserve meets next week, will the continue with QE or taper? ITZ has called for a market correction, $SPX to decline to it's 200ma around 1,500 level.

WTI crude oil to around the $90 a barrel area, having entered Proshares Ultra Short Crude ETF (SCO) with two (1/4) positions @ $37.25 & $36.50. Next entry level $36, came close today. Here's a daily SCO chart, you can see a Head & Shoulders pattern with $36 neckline. ITZ will add to position @ $36 & set a $35 stop level on the entire position. SCO Chart

API & EIA inventory reports this week showed that there is more than adequate supply of crude oil.

Early this week, monthly forecasts from the Organization of the Petroleum Exporting Countries and the EIA gave a more pessimistic picture of the oil market. The EIA said Tuesday in its short-term energy outlook it expected the growth of oil demand in China, the world's second-biggest oil consumer, to slow to 4.1% this year, a drop from the 4.4% growth projected last month. OPEC modestly lowered its forecast for global oil-demand growth this year. Read Story

ITZ Weekend Review

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Stocks rose with the dollar and bond yields, as traders viewed the May jobs report as strong enough to signal continuing economic growth, but not so strong as to push the Fed toward a wind down of easing. The markets have been fixated on when the Fed will begin to slow down its bond purchases, and there's been a lot of volatile trading as Fed officials discussed "tapering" purchases in the past several weeks.

 *Note... We'll have three more employment numbers before the Fed meets in September.

Greenspan: Taper Now, Even If Economy Isn't Ready --- "The sooner we come to grips with this excessive level of assets on the balance sheet of the Federal Reserve—that everybody agrees is excessive—the better,"

Dollar-Yen Shake-Out Could Just Be the Start: A day after the U.S. dollar suffered its largest one-day fall in three years against the yen, strategists say the wild currency moves may be far from over and much is dependent on Friday's key U.S. jobs report. READ

 Economic growth in China slowed in May according to government reports released over the weekend. READ

'Hindenburg Omen' Revisited

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The 'Hindenburg Omen': Bear Signal Scares Market Read

Three years ago ITZ touched upon this signal READ

As of Friday...all five criteria have been met.

Below are the current Charts

#1 The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.

#2 The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 69.

#3 The NYSE 10 Week moving average is rising.

#4 The McClellan Oscillator is negative on that same day.

#5 New 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.