Oil Price Charts – Technical view

Below is purely a technical analysis of price. Geopolitical issues of which there are many around oil can and may at this time play havoc with the price action.. nonetheless this below is the represents the path of least resistance.

Long term

Beautiful up trending chart. In force the last few years. Price wants to move to where the stops are ie around 87 or slightly below.. another test of this sort of level is likely from which she will face price discovery and tests to build for the new up move most likely.

http://www.flickr.com/photos/65045749@N04/5923426766/lightbox/

Medium term

Breakdown of the uptrend on the daily around 2 weeks ago. Nice rebound from over sold levels beyond the 200 day ma and so breaking the down trend catching stops. The down trend still in force as price moved up to the 50. The recent uptrend looks in danger to me with more weakness to follow most likely.

http://www.flickr.com/photos/65045749@N04/5922889305/#/photos/65045749@N04/5922889305/lightbox/

Short term

The volume based short term chart is showing great cross currents.. catching stops above and below the price action on thursday and friday’s action as price popped up into the recent range bound area and then downwards breaking the recent uptrend. This is tricky but my own bias here is pointing south due to rejection of thursday’s move and the break of up trend.

http://www.flickr.com/photos/65045749@N04/5922916011/#/photos/65045749@N04/5922916011/lightbox/

Rich

Energy – Financial Sense & Data

Good interview, imo, with Chris Nelder on energy covering the key issues.

The energy sector is a high yielding sector at present. It is very likely, imo, that we get a dip in the next 6 months due to the worsening world wide data.

Post this energy stocks should rapidly reach new highs as fundamentally we have a big problem in terms of energy demand supply and monetary wise we will see the continued flite from fiat currencies. Geo politically prices could really shift to a new paradigm, imo.

Personally i would hold the core or 80% of the core. I would remove the leverage for the next 6 months or so from energy and buy any 10 to 20% dips. Option calls way out of the money, long dated are worth a bet, imo due to the trio of issues as above.

http://www.netcastdaily.com/broadcast/fsn2011-0708-1.asx

Barons link:

http://online.barrons.com/article/SB50001424053111903617204576411791590055646.html?mod=BOL_rt_popview#articleTabs_panel_article%3D1

And Goldman’s questioning the unlimited Saudi production

http://www.firstenercastfinancial.com/news/story/43827-goldman-queries-saudi-capacity-pump-extra-oil-12

In spite of Opec agreeing not to pump more the Saudi’s broke ranks in june, confirming they upped production.. it seems the US and European strategic stores may not be enough as Saudi Arabia are still under immense pressure to pump more.

http://www.livemint.com/2011/06/10164405/Saudi-offers-Asian-refiners-mo.html

The pressure for more oil continues to come from – Asia.  Brent at nearly 116 usds p.b. signifies the sustained pressure. China continues to add to her stores.

http://www.reuters.com/article/2011/06/09/us-opec-asia-supply-idUSTRE7581U120110609

Rich

p.s. brent to nymex differential in a key indicator of where the demand is at present.

http://www.reuters.com/article/2011/07/08/markets-energy-crude-brent-idUSN1E7670S320110708

UK oil and natgas production declining significantlywhich helps to explain the recent UK U-turns on energy taxes and British Gas’s recent announcement.

http://peakoilupdate.blogspot.com/2011/07/huge-decline-in-uk-oil-and-gas.html

Rich

Morgan Stanley on USDA Corn Crop Estimates

The data shows the USDA is consistent. They consistently over estimated corn supplies and stock projections. They are 100% consistent in this respect. The USDA stunned the markets, at least momentarily, by their latest corn estimates a week or so ago. More and more participants have called this data into question, now inc MS. I’ve been following farmers websites and their views on the nos. Amongst the farming community their is almost uniform disbelief in the nos. They are reporting poor conditions for corn this year which is greatly at odds with the USDA. Il’ll post some links on this shortly as its a very interesting and explosive story given the wildly different perspectives on the coming harvest.

http://www.bloomberg.com/news/2011-07-08/corn-crop-stunner-for-morgan-stanley-means-u-s-is-overestimating-supply.html

 

Rich

 

China Raises Rates, can’t sell Bonds, Trade Surplus Widens

Having narrowed recently, the trade surplus is widening again. Why? According to China’s own data she has been using stores of food and metals. Copper imports are slightly up from the prior month (but remember the prior month was very low for copper imports due to draining her stores – note copx price very high again – see below on copper). China creates surpluses so rapidly she needs to add significantly to stores to avoid a rising surplus.

China is struggling with inflation. On the latest data 6.4% annually. (Slightly surpassing even the UK’s inflation rate). China is caught between accumulating ever debasing USD reserves, inflation and being called a currency manipulator. She desires and needs real assets for her USDs but she doesn’t want to see domestic inflation take off. A difficult balancing act therefore and underlines why the Chinese have been diversifying into the euro of late in spite of the issues in euro land.

http://www.bloomberg.com/news/2011-07-10/china-s-june-trade-surplus-reaches-22-27-billion-customs-bureau-says.html
Interestingly the world’s largest creditor nation can’t sell her government debt in bond auctions.. In this paradoxical world the largest debtor nation of the world sees well oversubscribed debt auctions..

http://gulfnews.com/business/banking/china-debt-sale-fails-for-third-time-this-year-1.835372

Copper perspective

http://www.bloomberg.com/news/2011-07-10/china-june-copper-imports-rise-first-time-in-three-months.html

And the big news last week was China’s latest rate rise a week or so after their premiere stated they had ‘crushed’ inflation

http://uk.reuters.com/article/2011/07/07/china-economy-rates-idUKL3E7I705F20110707

rich

Gold News

Switzerland is soon to examine re-linking the chf to gold from initiatives by the SVP party. Switzerland lost her gold backed chf in may 2000 following a very close referendum on the issue. This allowed the Swiss banks to expand very rapidly after this date. Swiss banks have lent across the world thereafter creating chf loans as well as euro loans  through their banking franchises. This has created a new role for the Swiss Banks in the world economy. It is a significant shift from the old ‘custodian’ Swiss bank model. The Swiss banks are now active speculator/players in world debt markets with the upside and downside implications this brings. The Swiss banks have been big winners from the sovereign bond bailouts as well as fed and ecb cash for asset programs.

http://www.marketwatch.com/story/swiss-parliament-to-discuss-gold-franc-2011-07-07

Greece follows many economies to play catch up on the commodities and pm mining trends.

http://uk.reuters.com/article/2011/07/08/european-goldfields-permit-idUKATH00623920110708

 

 

‘My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was not the main reason I loved the market’ – Jess Livermore 1920s

The words capital and synthesis hopefully capture the very best aspects of why and how we collaborate and work together to enhanced mutual benefit.

History wise, www.capitalsynthesis.com has evolved very naturally from various investor forums including the gsk board to the mcx boards. We have all grown over the years as both people and investors. We have lived and traded through various cycles of booms and busts over the last few decades. We all bring our own unique specializations to the discussions. I suspect we have written millions of words over the years around the issues of capital synthesis. Nothing stands still. It is right that we more effectively share a common resource to reference the past & present to assist us all in understanding likely future scenarios and trends
Enough of the history and vision – there is work to do..

Onwards.