MichelGJulien

After 6 days of below average volatility, crude oil came back with a vengeance today squeezing shorts mercilessly until most of their juice had been extracted. At one point after lunchtime we were up more than $2.70 from the low of the session. Considering the average of the last 13 days was a mere $1.29, you can imagine the devastation that such a move brought onto a growing (lately) number of bears. Will bears get the upper hand back soon? Hmm... not sure, at least not until $105 is tested in my opinion. Of course the fundamentals are all on the bears' side but like I was mentioning yesterday evening in a chat with one of my fellow crude oil traders: "When everybody's leaning on the same side of the boat, it is time to be a contrarian". Today's huge move proved that saying right (again). In a strong trend, market almost never retraces more than to the 15-20% Fib Today was inventories (EIA) data day. The number that came out at +5, 5 million bbl. was negative for the price of oil, at least if one still believe that fundamentals do matter. Half an hour before the release of the data, crude's price started to really take off. That prompted me to tweet: "Did someone leak the report"? Do you think that when 10:30am came and that the worse than expected data finally hit the tape that the market reversed to the downside to reflect the fundamentals? Tough luck guys, because it just kept going higher with even more velocity. If that doesn't prove that in this "new normal" environment fundamentals do not matter anymore, I don't know what will. I took 3 trades today: 1. Short 101.75 at 9:31am, exit 101.65 at 9:33am for a +10 ticks profit. 2. Long 102.33 at 10:06am, exit 102.45 at 10:12am for a +12 ticks profit. 3. Long 102.46 at 10:32am, exit 102.80 at 10:33am for a +34 ticks profit. Result: +56 ticks today More articles on my blog Follow my live calls on my Twitter stream

Hi, I have been a traders laboratory contributors for the oil market for some time now and I will start a crude oil (WTI futures) live trading room on November 4, 2013. If you would like more info, please visit my blog here or follow my live calls on my Twitter stream. I do not trade gold though. Take care, Michel

Busy day for me today outside of trading, so I really do not have a lot of time to write a good article so I'll do my best to keep it short and straight to the point. All the juicy action took place right after the pit close yesterday and we (daytime traders) were left again with crumbs during today's pit session. One of my followers on stocktwits asked me: "Seems like to catch the big moves, you have to trade at night, no"? To which I answered: "Been that way lately because of Syria situation imo. Not always like that. But for me a good night sleep is worth many ticks". Anyway that gives you an idea of the frustration that prevails right now among traders during the pit time. Overall, there was a $3 plus waterfall from yesterday's high. A sizeable move that should continue to progress downward tonight and tomorrow. I declare the war premium because of Syria officially priced out of the market now, so unless things change drastically on the geopolitical front, we can forget about this whole thing and get back to business as usual. For tomorrow, I expect that the 106 level will be put to test. If it yields, God bless the longs. We are on track for 106 tomorrow I managed to take 3 trades today: 1. Short 106.88 at 10:40, exit 106.75 at 10:46 for a +13 ticks profit. 2. Long 106.55 at 11:08, exit 106.55 at 11:15 for a breakeven trade. 3. Short 107.08 at 11:40, exit 106.98 at 11:44 for a +10 ticks profit. Result: +23 ticks today. More articles on my blog Follow my live calls on my Twitter stream

Yes, unless you have a strategy to take advantage of the high volatility, it's better to stay on the sidelines

It had been quite a while since I had aligned 2 consecutive days without a single trade. That speaks volumes about my degree of discomfort towards this news driven only crude oil market. Everything was about Syria this week and that made for a very bad trading environment with lots of volatility but no real conviction in either direction. In short, the worst of both worlds. John Kerry's Friday afternoon press conference did not clarify things really besides saying that Assad was guilty and that the credibility of the USA as the policeman of the world is at stake. I'm afraid all that is going to happen now is that we will get stuck with this uncertain thing hanging over our heads for a few more days/weeks...shit! With war drums hardly beating anymore, we're likely to revisit the 105 area Back to the market, it opened this morning at 108.17, outside yesterday's range and value area. The 2 gaps to be filled stood at 108.52 and 105.79. Only the one at 108.52 got filled. Right from the start it looked like this was probably going to be another chop chop session, with the end of the month books squaring, a 3-day weekend and of course Syria. And Lord was it choppy, especially after Kerry. Initial balance came in at 43 ticks this morning or 42% below its 10-day average. That's very much below average. That prompted me to tweet: "We are likely to get increased volatility later on". And of course as I said, we did. Technically, the charts haven't changed that much today. One observation: the $2-$3 "war premium" seems to be gone. In fact, we are more or less back to the price level we had prior to the beginning of the war escalation (constituted of jawboning more than anything else so far). Next week, volatility should be something to behold as well, so enjoy the long weekend! I didn't take any trade today. Results: +56 ticks this week, +430 ticks in August and +1723 ticks since May 1st. More articles on my blog Or on my Tweeter stream

Personally, I think we will revisit 105 on WTI (110-111 on Brent) before the end of next week, especially if the US doesn't strike syria next week. Even if they do bomb them, impact will be limited cause already priced in IMO. Michel

Besides the usual 1h30-2h00pm ramp by the algos designed to lure everybody into thinking something's finally happening, trading the crude oil market today was like watching paint dry. At around 11h30am I tweeted: "Here's the wti market recent electro-cardiogram... declared dead"! Without any significant news from the Middle-East, a 3-day weekend coming and the end of the month tomorrow, a lot of traders' books are going to be flattened, therefore there cannot be any real conviction in the market. Talking about the situation in the Middle-East and Syria, it looks more and more likely that the Obama administration will have to down tone its official assurance that the Assad regime indeed used chemical weapons a couple of weeks ago, therefore crossing the proverbial US red line. Will it change the outcome of what's to come? Don't know, but it could temper the US retaliation actions and consequently influence the actual "war premium" reflected in the price of crude oil. Interesting times we are living in. We are probably going to range trade between 106 and 110 for a little while The market opened this morning at 109.56, below and slightly outside of yesterday's range and value area. Open gaps were located above at 110.07 and below at 109. As of this writing, only the one at 110.07 had been filled. The initial balance came in at 68 ticks this morning, or 12% below its 10-day average. With an average like this, volatility can usually rise suddenly to break the prevailing tight trading range. Without surprise, it took the usual suspects (algos) high frequency strategy to break the rut and filled the open gap. Once the operation was completed, price came back down (at edition time, I should add it came crashing down in the last 5 minutes). Free markets you said? For tomorrow, it's a tough call as virtually anything can happen overnight. One thing is relatively clear for me right now, the uptrend is not as strong as it looks. Be careful. By the way, I didn't take any trade today. More articles on my blog Or on my Tweeter stream

Yes QM could be interesting for medium term position depending on account size and not scalping as you rightly said. All my results are posted every trading day on my blog.

Thank you! I trade 1 contract normally, but sometimes I go up to 3. It all depends on my degree of conviction about the market direction. Michel G Julien

If the overnight session was a real snoozer, the pit session was its complete opposite. The third Friday of the month (futures contracts rollover, options expiration, etc...) is always a minefield for traders. And today was no exception. My forecast from yesterday that price should probably go down to the 20 SMA level at 105.89 didn't even come close. The lowest the price went was 106.56, a level quickly (and strongly I should add) rejected by traders. The roller coaster ride started at 9:55 when a bad consumer confidence number produced a huge spike to the upside. Tough luck for me, I had opened a short position not even 10 minutes before the release. I really didn't see that one coming, but I should have (always check your economic events calendar, folks). A strong close today could lead to a new high on Monday After the big spike, price went as high as 108.17 before starting to retrace, slowly at first, then a little faster. That prompted me to tweet: "For some reasons, this break of the 108 level has not convinced me yet of its sustainability". Three minutes later crude oil dropped $1 a barrel. I told you, hectic. Now about technical: the market opened at 107.43 right in the middle of yesterday's range and value area. An hour into the pit session, the initial balance came in at 75 ticks, i.e. 10% below its 10-day average. Nothing unusual here that could have led to believe that the market would become after that a real nuthouse for the rest of the day. Thanks God we only have one Friday like that every month. For what is more likely to happen Monday, my crystal ball is pretty foggy right now. My "feeling" is that the uptrend is not over yet, but a little correction before a new high is reached wouldn't surprise me and would even be "healthy". Wait and see. I took 3 trades today: 1. Short 107.34 at 9:46, exit 107.74 at 9:53 for a -40 ticks loss. 2. Long 107.74 at 9:53, exit 107.74 at 10:25 for a breakeven trade. 3. Long 107.94 at 11:01, exit 108.04 at 11:18 for a +10 ticks profit. Results: -30 ticks today, +96 ticks this week. More articles on my blog Or on my Tweeter stream

You know that a market is over extended to the upside when bullish news tend to produce the opposite reaction that would "normally" be expected. This morning the DOE data came out at -2.812MM (draws), when the market expected -1.5MM, compared to last week +1.32MM. Inventories are slowly coming down so in theory, this should be bullish for WTI. But according to the COT, there are so many large speculators still long that, like I said yesterday, longs are taking advantage of higher prices to unload as many contracts as possible. That's why I believe we will not see 110, at least not before this imbalance between longs and shorts reach some sort of equilibrium. Also, in my opinion, this type of environment will produce a lot of choppy market action over the next few days. This will not be a market for the faint of heart for sure. Looks like we're about to fill the August 1 gap at 107.87 Technically, the market opened at 106.38 i.e. within yesterday's range but outside of value area. Yesterday's gap stood at 106.77 and was filled right after the DOE inventories data release. The initial balance came in at 55 ticks this morning, i.e. 32% below its 10-day average. This result prompted me to tweet: "More volatility to come later maybe". And boy did we get some more after the DOE release. Typically, I do not like to get into a position before the DOE data. I had bad experiences in the past so now my motto is: "better safe than sorry". I know it's boring. But that's the way trading goes sometimes. It's not always rainbows and unicorns. So, to recap, besides all the excitement, we have been basically range trading between 105 and 107 since Sunday evening. A confirmed breakout outside this range will be significant and should be followed, not faded. In the meantime, my charts are kind of messy. I took 1 trade today: 1. Long 106.89 at 14:05, exit 107.00 at 14:10 for a +11 ticks profit. Result: +11 ticks today. More articles on my blog Or on my Tweeter stream

Again, my scenario from Friday afternoon has played out very well today. I said back then that we should come down a bit from where we closed Friday (106.01) to 104.80/105, and then up we'd go. That's exactly what happened during the pit session. The session low was at 105.02. Pretty close! The market opened at 105.68 this morning, well within Friday's range and value area. From the open we went down directly to, first, test the high volume level at 105.40, then the "do-or-die" support area at 104.86/105.02. The initial balance came in at 53 ticks today, i.e. 33% below its 10-day average. Therefore the volatility was below average. I noticed something recently. When the initial balance range is substantially below its 10-day average (e.g. <30%), the rest of the pit session tends to be the opposite way, i.e. more volatile. Something to watch in the coming days to determine if this is becoming a reliable pattern. Going back to what happened during the pit session, there was a very strong rejection of 105.02 by the market when the price came down to test that level. That prompted me to tweet: "Told u last Friday we were gonna be in for some volatility this week". As a matter of fact, I have the feeling that those kind of knee-jerk reactions are going to be more frequent from now on. Once Friday's gap at 106.01 was filled, price kept going up until it reached a high of 106.46. I entered a short trade at that level seeing some kind of an extreme in this move. Again, I tweeted: "Today we had an "open-rejection-reverse" type of opening. Normally, extremes do not hold on such days. So 106.46 may be HOD". And it was indeed HOD. Not sure though that it is going to hold. The trend has now started to shift from bearish to bullish on the 4hr chart, so we could have more upside in store during the overnight session and/or tomorrow. Trade accordingly. More upside could be in the cards tomorrow for WTI crude oil I took 4 trades today: 1. Short 105.25 at 10:00, exit 105.40 at 10:11 for a -15 ticks loss. 2. Long 105.75 at 11:28, exit 105.95 at 11:34 for a +20 ticks profit. 3. Short 106.44 at 12:24, exit 106.21 at 12:28 for a +23 ticks profit. 4. Short 105.89 at 13:37, exit 105.89 at 13:50 for a breakeven trade. Result: +28 ticks today. More articles on my blog Or on my Tweeter stream

Guys, Goldman Sachs has a long history of misleading the market to achieve its short term objectives. If they say buy, it's because they want to get out of their longs. So they are selling all the way while creating the impression they recommend buying. That's what my post was all about. Judging by some of the comments I read here, I think I wasn't very clear. I'll try harder for my next post. :-) Michel

A few minutes after the open of the pit session (unintended timing for sure) ZeroHedge tweeted on its stream that Goldman Sachs had just issued a statement regarding the oil market that went like this: "Oil price risks skewed to the upside". That's it! Seven words. But coming from Goldman, there's really never anything that is "unintended". Of course, like magic, the market started to rally substantially. In fact, it never really retraced for the rest of the pit session, closing almost $2.50 from the open price. My guess is they had some pretty massive longs to cover and needed a "little push" to the upside. How convenient! Of course, I can't be 100% sure of what I'm saying but, hey, this wouldn't be the first time such a thing happen. Especially considering the COT large speculators heavy net long position of late. Those positions have to be unwinded at some point, right? Anyway, for today, forget about ebb and flow as the market was rather unidirectional. Shorts didn't stand a chance to win anything of value in this type of environment. They had to run for the hills instead. The market opened at 103.76, a tiny bit above and outside of yesterday's range and value area, and as I said started immediately to go up and never looked back. All of the major resistances including yesterday's gap at 104.37, Wednesday's VPOC at the 104.82/98 level and 105.75 (a main resistance area of prior sessions), were all blown to pieces by the Goldman train. An hour into the pit session, the volatility was already high with the initial balance registring at 127 ticks. A big 33% above its 10-day average. Talking about volatility, I think we are going to get a lot more in the course of next week because the market stands at a very important junction again, where it either blows through the roof (the Goldman call) or correct more than it had over the last 3 weeks (my take). In any case, I like to trade when the market is volatile as it gives me more opportunities to find good long and short entry setups. After a retest of 108, we may drop to 100 longer term I took 2 trades today: 1. Long 104.34 at 9:21, exit 104.55 at 9:26 for a +21 ticks profit. 2. Short 105.75 at 11:55, exit 105.50 at 12:07 for a +25 ticks profit. Results: +46 ticks today, +193 ticks this week. Have a nice weekend! More articles on my blog Or on my Tweeter stream

Same here, IB is the best "online" broker imo. But you have to know what you're doing though. They will not take you by the hand. Michel

Bob, Yep, all you mentioned is 100% correct. Michel

I hate to look like I am bragging about my "talent" as an analyst, but my forecast from yesterday was again spot on today. Last night when I mentioned that there was a huge volume area at 104.50, granted we break below 105 again, I could not have been more right. The only thing is that it took almost the entire session before my prediction materialized. In fact, we had to wait until the last hour of the pit session before the 104.90/105 area finally gave way, sending the market down to the 104.15/20 level. When I got to my computer this morning, I noticed that the market had spent roughly the last 24 hours stuck between 105.00/70. Therefore, from my point of view, breakouts outside this zone were going to be significant. The market opened at 105.15, which was inside yesterday's range and value area. Initial balance came in at 95 ticks, i.e. 15% above its rising 10-day average. We can say that volatility was again on the rise today, especially during the period preceding the release of the DOE inventories numbers, and maybe for half an hour after also. Likely target now down to the 103.00/25 area From a trading point of view, price's been basically just rotating around the open price for most of the session today. Needless to say that this environment was not very suitable for my short-term-scalping trading style. I definitely need a market that trends and not a choppy one. Out of frustration I even tweeted at one point: "Once you think that it's going lower or higher, it does the opposite. Shit day"! You get the picture? Frankly, I was out of sync with the market today. Although, I knew where it was going, I wasn't really "in the zone" able to capitalize on the (few) interesting moves we got. Well, it happens sometimes. You can't win every day. Folks, the thing I still have to struggle with after that many years trading is... PATIENCE. Something to work on for sure. Meditation maybe? I took 3 trades today: 1. Long 105.16 at 11:25, exit 104.88 at 12:09 for a -28 ticks loss. 2. Short 104.88 at 12:09, exit 104.88 at 13:10 for a breakeven trade. 3. Short 104.65 at 13:33, exit 104.50 at 13:36 for a +15 ticks profit. Result: -13 ticks today. More articles on my blog Or on my Tweeter stream

Yes, this could happen too (downside). But, I observed in the past that whenever the COT Large Speculator position is very long like right now, the market tends to remain up for longer than anyone can imagine. Just sayin. Michel Julien

We came within 10 ticks overnight to match the July 19 high of 108.92. It was close, but no cigar. From that height, crude oil tumbled down for the rest of the session to an intraday low of 106.45, painting on my 4-hour what looks eerily like a double top. I'm personally not convinced that this is one for various reasons, but nevertheless, it definitely represents a warning sign by the market that higher crude oil prices are not really welcome. This morning the market opened at 107.38 i.e. within yesterday's range and value area. From that level, it needed to either go up to 107.87 to fill yesterday's gap or come down to 105.05 to fill Wednesday's gap. Well, it did neither ending up rather contained within a 90 cents range all day long. For those interested, earlier this morning the Brent-Wti spread went down to $1.60 from $2.40 when I recommended to short it a couple of days ago (too bad I didn't short it myself). I always keep an eye on this spread because once in a while I like to trade it. So, to recap today's action is pretty easy. From the beginning to the end of the pit session, oil's price gravitated around the level I had elected yesterday as my "line in the sand" at 106.66. Although it broke below it a few times today, it was never for very long nor convincingly. Below that level the potential for a $1-2 drop is very real in my opinion. I took 2 trades today. The last one I took is still opened and will be carried over the weekend. I read on zerohedge today that: "US Embassies Across Muslim World Mysteriously Shutting Down This Weekend". If there are some nasty things happening over there over the weekend, I may be pleasantly surprised with my open long position Sunday evening when trading resumes. Otherwise, well, business as usual. Wednesday's gap at 105.04 will be revisited. Question is: will it be before or after we hit $110? I took 2 trades today: 1. Short 106.55 at 11:08, exit 106.95 at 11:46 for a -40 ticks loss. 2. Long 106.95 at 11:46, still pending completion. Results: -40 ticks today, +51 ticks this week. More articles on my blog Or on my Tweeter stream

It might be a little bit premature to commit to an official position on that question, but bulls definitely were back in the market at full strength today. They even pushed hard enough to the upside to invalidate the downward channel that had been firmly in place since July 19th. So, is this just a temporary situation or rather the continuation of the former uptrend started June 24th? In my opinion we will probably have to wait until 105.35 is broken convincingly to the upside before confirming that indeed the bulls are back in charge. In the meantime, it is still a "sell the rallies" type of market (but now with extra caution I'd say). This morning, just before the pit session started, it looked like we were in for a difficult (or at least risky) trading day. We had on deck the DOE inventories data publication, the FOMC meeting and the usual end-of-the-month traders' behavior. Thus, caution seemed to be more than advised. The market opened at 103.41 within yesterday's range and value area. We had 2 gaps begging to get filled today. Yesterday's gap down at 103.09 and Monday's gap up at 104.58. Incidentally, both of them got filled today which is a relatively rare occurrence. Just prior to the release of the DOE numbers at 10:30, I tweeted: "Looks to me that traders are expecting inventories numbers that could be bearish for WTI. If it's not the case, this is going to pop". And popped it did. Visibly, the numbers weren't bad enough. After a slight setback, bulls could regain some ground At one point, we went to as high as 105.08 before the close of the pit (with a little help from the FOMC's gibberish also I must add). So, the bulls have flexed their muscles today and are almost back in the driver's seat. Looking to get short anyway? In my opinion 105.35 would be the low-risk level to enter short, but with a super tight stop in case things get out of hands quickly. I took 3 trades today: 1. Short 103.30 at 9:18, exit 103.30 at 9:34 for a breakeven trade. 2. Short 103.30 at 9:50, exit 103.20 at 9:56 for a +10 ticks profit. 3. Long 104.34 at 11:56, exit 104.55 at 12:24 for a +21 ticks profit. Results: +31 ticks today, +439 ticks this month. More articles on my blog

A chart to show the very rapid depletion of the Comex physical gold when price is low like right now. Fastest decline ever according to experts. Just sayin.

To get a good idea about the wti-gold ratio and its interpretation read the following article Financial Iceberg

Last year physical demand wasn't nearly as strong as this year and the year before that physical demand was even lower. The lower the price, the higher the demand. It is as simple as that. You are bearish on gold obviously and you may be right, who knows? The one question that is very interesting when we talk about gold is: at what price level will physical gold demand (real demand) trump paper gold supply (speculation)?

Although we are still in a downtrend on the 4hr chart, the importance of the $104 level has been demonstrated again today. This should be a little bit comforting for the bulls in my opinion. We even have what looks like a triple bottom on the 4hr. So, it seems like there are lots of buyers at that level which would explain why $104 has been VERY resilient so far. In fact, this market has been consolidating since last Thursday between 103.85 and 105.50. From a technical point of view, trading that range until it's broken seems to be the way to go for now. Should we break below $104 then we'd have a $2 black hole, maybe more. To the upside, we need to clear 105.87 to regain some bullish momentum. Now, from a market profile point of view, the market opened this morning within Friday's range but outside of the value area. Prior to that it had already covered a lot of ground going from 103.87 to 105.37 (for a $1.50 run) during the latter part of the overnight session. The initial balance of 109 ticks this morning (40% above its 10-day average) implied that volatility was high and therefore caution was advised. Traders did try after that to bring the price down towards Friday's session low at 103.90 but ran out of fuel. The rest of the session was pretty much filled with two-sided action and we finally ended the afternoon almost unchanged from Friday's close. I only took one trade today: 1. Short 104.92 at 9:33, exit 104.72 at 9:41 for a +20 ticks profit. Result: +20 ticks today For tomorrow, what should worry bears is that we keep making poor lows since last Thursday. Generally, it is a bullish sign if it persists. We'll see. More articles on my blog

Hi Bob, Actually, I'm only trading wti crude, but have been a long time "watcher" of gold cause I use, among other things, wti-gold ratio in my crude oil analysis. Regards