Oil futures face volatile Monday

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Oil futures face volatile Monday

Iraq rejects UN plan to end export limits

By Cecily Fraser, CBS MarketWatch Last Update: 2:32 PM ET Dec 18, 1999 Agriculture Outlook Futures News

NEW YORK (CBS.MW) -- Oil futures could face a volatile session Monday after Iraq rejected a UN plan Saturday that would have removed caps on oil exports in exchange for a resumption of weapons inspections.

The markets were mixed Friday as players squared away positions in January crude ahead of Monday's contract expiration.

Iraq formally rejected the UN plan saying it didn't meet Baghdad's "legitimate demand for the lifting of sanctions."

The resolution passed 11-0 -- with the four abstentions by Russia, France, China and Malaysia. It would have removed the $5.26 billion limit on the amount of oil Baghdad can sell over six months through the U.N. oil-for-food deal..

January crude closed down 9 cents to $26.74 a barrel on the New York Mercantile Exchange. January unleaded gasoline rose 0.11 cents to 73.41 cents a gallon and January heating oil rose 0.35 cents to 69.10 cents a gallon. See latest commodity prices.

The weakness in crude spilled over to oil services stocks as well. The Philadelphia Oil Services Index (OSX: news, msgs) slid 1.3 percent, led by Wetherford International (WFT: news, msgs).

Link at

http://cbs.marketwatch.com/news/current/futures.htx?source=htx/http2_mw

-- Andy (2000EOD@prodigy.net), December 20, 1999

Answers

We don't plan on selling any oil because we need it for our second war on Kuwait Jan 1.

-- I want Kuwait (Saddam@IRAQ.WAR), December 20, 1999.

I knew he was going to say that. I just knew it. And you can bet he will too if given half an opportunity. Looks like he'll get that opportunity too. Maybe that explains why the Gulf Arabs have been less friendly to the USA for the past 2 years...they knew way back that they wouldn't make it for rollover so better be nice to Saddam while they could and hope he might play nice and be a good boy.

Hey guys...this UN report is only gonna make the oil market more riled up in the last few days. I suspect that indeed, things will get more VOLATILE.

I notice on the oil price charts and the oscillators that several oscillators are signalling a major movement of some sort is coming. Gee, I wonder what direction that might be going??? Well, the Directional Movement Index oscillator with ADX line is indicating a "wide open throttle" ahead on the latest rounds of upward pricing. It's been open throttle since about $21/22 dollars a bbl a few weeks ago. LONG TERM she's been wide open since about $12.00 bbl way back earlier in the year.

We've also seen, if I remember my oscillator readings correctly, (and I may not have it straight)... but the fast and slow stochastics were returning to bullish signals after a recent pullback...Also, Momentum was swinging over, with many others having moved from negative to neutral. Keep in mind these oscillators that are based on the latest short term pricing can change on a moments notice in the opposite direction so you have to watch oscillators constantly waiting for a signal to move out. Oscillators don't tell what price will be ahead when a signal to bail comes...it just happens. However, straight charting would suggest a $30.00 price tag MIGHT just occur before year end. In other words, there seems to be 'room' in the formation for such a move to occur without creating an unhealthy formation, that might signal an end to the bull run. I don't see it going any higher technically without more major upsetting news to hit the markets prior to rollover.

Of course, this coulda, woulda, shoulda, for the Gold market, but boys and girls, don't hold your breath for the gold market... and don't look now, but for a change things are looking up again for Gold on a technical basis. Yep, that's right. The oscillator we call Wilder's Directional Movement Index with ADX (Advance/Decline Line Avg) is NOW signalling a new "buy" signal indicating a major run to the upside. See my link below to a chart with the DMI/ADX and note the bottom instructions I give for setting a chart. I say this because when the "+" line (in the color blue)advances in numerical value above the "minus" or " - " line (in red) and the ADX line (in grey) is below the numerical value of 20... (oh and both the red and blue lines must be below 25 in value when the crossover occurs)... then we have a valid signal...and it is confirmed after the crossover when the rising blue or red line reaches above 30. We have this occuring now on this oscillator. If you look at the oscillator graph which is in the bottom section below the main Price "bar" chart on daily price bars... you will see the prior history of the DMI pricing and see how VERY accurate it really is. You'll see short minor cross overs that don't amount to anything because the crossovers were un confirmed or the crossovers happened to high, indicating "choppy" market ahead. These patterns apply to most types of commodities and even stocks in some if not most cases. However, few people pay attention to this stochastic because it is so complicated to look at. (you're eyes could 'cross-over', Nyuk, Nyuk)

Anyway... bottom line is that Gold is looking its healthiest in the oscillator signals since it's initial signal to buy was given way back in mid September... if you pull up the old Gold chart for the October of 1999 and look at the DMI/ADX pattern you'll see how clear and wide open that "buy" signal really was. You'll also note that it tells you when to "short"... I didn't give the rules for when to get out cause I've not really seen any...other than waiting til the short signal comes...which is usually long after the price peak in the run. I usually wait til the blue line advances into the upper ranges of the chart in the 70s or 80s and then bail out figuring it ain't worth the chance that the sucker might bounce up there and the price go on into further orbit. No, I take my money and run. (except when I get greedy and stupid.) This current signal in gold is looking like that last one in September and the "buy" signal is now being given. I don't see it showing any signs of choppiness. Of course, I rely on other oscillators besides this one. Not all are signalling a buy...but then most of these are not as reliable, but some are more "conservative" and never let you buy and profit on much of any move. So keep that in mind also.

Anyway... for those of you who want to learn some of the secrets of the big boys... cause this is how the big boys and those computer programs trade... take notes here.

The big boys and the big computer trading programs will rely on this DMI/ADX type of oscillator as one of their 'key' elements they use to decide on when to buy and when to short a market. If you want to make money like the big boys learn how they do it. This applies especially to commodities, but not necessarily all stocks. (though stocks are acting more like commodities every day).

There are many software programs that you can get that will enable you to program in Price charts for any commodity (or stock) and for any month. The Link I'm going to give is for commodities only and it is a website that provides on line futures trading. They have a free 30 day trial program with no obligations to buy anything but after wards they want a monthly subscription to their "charting" programs.

The website is Futuresource. It is at www.futuresource.com You will see where it say in a little top at the box where it says "become a free member"... click on that and follow the directions to registration.

Now... once you're a member go to the "charts" section and you'll get this URL:

http://www.futuresource.com/reg/cgi-bin/chart

You won't get there without registration though.

Now, once there you'll see a form for chart parameters.

See the "symbol" box? If you want gold, click for "Gold-Comex" Then what month do you want to see? Currently the 'power' month for gold...the current month with the most contract volumes...right now its February, 2000. Until a couple of weeks ago it was December 1999 contracts but Dec. is about to expire and everyone has bailed except for those wanting to take possession of their gold.

Now...continuing to fill the form out...You've got "gold-comex" You've clicked for month "Feb" and the year "2000". NOW...for

"Type" -- click on "bar" because you want a bar chart for prices. Then click on "period" which means the period of time that each little up and down line represents. Periods of time can be a line for a whole days price range, or a whole week for a line or a whole month, or it can be an hour or half hour or 15 minutes or 5 minutes or 1 minute or you can have a "tick" chart where you see patterns based upon each trade (that will cross your eyes for sure). There's also perpetual and variable...but don't worry about those, I've already confused you enough as it is. JUST CLICK ON "DAILY" for the period selection.

NOW NEXT: Look at the term "Study" ... THIS IS THE GOOD STUFF HERE... This is the "PAYOFF" part. This will list a variety of study options. Most of these are what we call "oscillators" which are logarythms that are measuring the price movements looking for patterns and or strenths and weaknesses in price patterns in both value of $$ and on time basis too. So...for our purposes of showing the DMI/ADX...here's how

Go to "study" click on and look for the following:

"Wilder's Dir Mvmnt Index-ADI (14,1,1,1)"

Click on that and select it. then you will see a box that says parameters with little open blocks underneath the "Study" box that now shows the Wilder Dir Mvmnt Index-ADI ... Note that those boxes are for those numbers to go into in that order, so box 1 gets the 14 and each other box gets a 1. This sets the parameter for the DMI or Directional Movement Index. (btw a guy named Wilder invented this hence the name "Wilder's DMI" for short.)

So now your almost set. Finally you note the bottom two boxes. "Density" and "size"... I prefer setting them to LARGE so the chart looks larger and easier to see and read.

And there ya go... just go to the top of that form and look for the grey button that says "get chart" and away weeee goooo. It will take a little while to download and set the chart. It will come up as 2 separate boxes for charts. First one is the "price" bar-chart where each up and down line and in the daily case it means each of those lines represents the price range for a day's transactions. You'll see that in the case of the Feb 2000 contract it started trading in August of 1998 on this chart..although there are no lines just dots. that is because no one was doing much trading in those months. The Feb contract didn't start getting much price action until last May so most of your oscillator activity will be based upon price action since May.

Note the lower box is the 'study' or oscillator box. You'll note in this lower box, in its upper left hand corner you will find the CURRENT numerical value of each of the 3 lines. Also, you'll note on the side of the graph certain numbers 20, 40, 60. This is a freebie and cramped for space so it won't give a full oscillator range which is zero to 100... a percent graph range... 100 is tops. The key is signals come when there is a crossing of the blue/red lines and the first color to reach above 30 indicates a buy/or short signal is given (blue=buy or go long and red=short or 'sell short') BUT there is the caveat that the 'gray' line must be below 20 and the crossing of the two colors must occur below 20 to get correct signal. If crossing occurs above 20 you get a non-confirmation and it means 'choppy' and erratic trading ahead. The rule is when the advancing line reaches the 80 zone consider getting out of the trade and taking your profits home with you for awhile and wait for the next signal. It might take weeks or months to see another good signal again. They don't happen all that often, not the good low-risk ones that have lots of elbow room to maneuver for beginners.

Well, this post has gone on long enough...and I've now shared with you the "secret family recipe" of the brokers and gurus on Wall Street OH, btw, that will be $5,000.00 please. Yup some folks would charge that much for teaching this kind of information in seminars...some times more $$$ than that. Course it is in person and hands on with computers etc. and theory explained and yada yada yada to waste time to justify the high price. Gotta pay for that plane ticket and the hotel/conference room ya know...plus they just won't do it for free.

SO...there you have it...that's one of the prime tools the big boys use to trade the commodities and for some even the stocks. This whole approach is called "Technical Analysis" ... Guys like Andy have been coming in here talking about "did you hear this" or "that" blah, blah, well, that is called "Fundamental Analysis" and trades based upon the Fundamentals of news, PR releases, etc are called Fundamental trading. IF your trading is based upon the charts etc and not on news at all just the charts... that is called "Technical" trading. Each have merits, but the Technical takes out the emotion that can cause errors. That's why I became a "technicals" trader many years ago. It's much safer, (well sortof).

And with that I take my leave. There's no need for me to poke my nose here commenting any more on the markets. You have the tools and the knowledge, now go use them for yourself and the betterment of all mankind. :-)



-- Dick Moody (dickmoody@yahoo.com), December 20, 1999.


I almost forgot... if you want to track Crude oil... Go to symbol and look for "Crude oil--NYMEX". Then Feb 2000 contract as they're already about to roll out of Jan soon. (yeah, its a little different than most of the other commodities, those d--n Texans. :-)

-- Dick Moody (dickmoody@yahoo.com), December 20, 1999.

Thanks to both Dick and Andy.. I recall that several weeks ago that one newscaster predicted prices to go up dramatically in the last week of the year because most people would attempt to prepare ffor y2k then.

-- y2k dave (xsdaa111@hotmail.com), December 20, 1999.

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