Wednesday, July 1, 2015

Crude Oil Weakness is Not Gold Friendly

by Dan Norcini
Trader Dan

Amidst all the talk about “Grexit” ( are the rest of the readers as sick of hearing about this as I am at this point?), one thing being overlooked, especially by those who keep calling for some sort of rip roaring surge higher in gold and silver, is the fact that crude oil is weakening.
In short, with many looking at the situation in Greece as contributing to a hit on economic growth, and with the fact that China is struggling, crude oil is moving lower as traders are concerned over a SLOWDOWN IN DEMAND.
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ConocoPhillips (NYSE: COP)

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. Its portfolio includes shale and oil sands assets; lower-risk legacy assets in North America, Europe, Asia, and Australia; various international developments; and exploration prospects. ConocoPhillips was founded in 1917 and is headquartered in Houston, Texas.
Take a look at the 1-year chart of Conoco (NYSE: COP) with the added notations:
1-year chart of Conoco (NYSE: COP)
COP declined into December of last year. When the stock finally bottomed, COP ended up finding support at $60.00 (green) over the next 7 months. Now that the stock appears to be falling back down to that support level again, traders should be able to expect some sort of bounce. However, if the $6o.00 support were to break, lower prices should follow.

The Tale of the Tape: COP has an important level of support at $60.00. A trader could enter a long position at $60.00 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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With Market Closed, Trading Greek ETF GREK Is Gamble, Guessing Game

“The ETF can’t be more liquid than the underlying, and we know the underlying can be become quite illiquid” – Howard Marks
There’s been quite a bit of spirited discussion this year about whether ETFs provide liquidity. The proliferation of exchange traded bond vehicles and the concurrent decline in dealer inventories has led some to question whether investors are being lulled to sleep by so-called “phantom liquidity.”
Barclays took a close look at the issue recently and discovered that since 2009, the “net” portion of gross bond ETF trade volumes had declined from over 20% to just 12%, which the bank cites as evidence that ETFs are adding liquidity to the market.
But this could simply reflect the fact that volumes for ETFs that track assets like junk bonds have skyrocketed over the same period, with low yields fueling both the supply and demand side of the equation and thereby increasing the likelihood that flows will be diversifiable (versus unidirectional).

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