Tuesday, September 13, 2016

Uh Oh Equities (and everything else)

The precipitous fall Friday was clearly the beginning of something as opposed to the end of something, ie a correction down.
This is the most important factor at the moment for Elliott Wave analysis. It will color the interpretation of developing sub waves and their implications going forward.

Why was it clearly the beginning of something ? Volume Friday in the SP was about 50% higher than it has been running, and breadth was heavily broad. Additionally it decisively took out all the previous lows over the last 2 months.  This followed a month of weak attempts at new highs capped off by the Thursday Sept 8 Key Reversal Day (including overnight trading); a higher high, lower low, and lower settle.

click to enlarge
Note the repeated RSI negative divergence.

All the above paint a picture of an exhausted up move, and a hot move down.
It is very very seldom that an initial impulse wave in either direction is NOT followed by AT LEAST 
one more significant wave of Fibonacci relationship to the 1st wave down.  And it if it is a 3rd wave (rather than a c wave) it can be expected to be a multiple of the 1st wave, ie 1.618 or 2.618 of the initial move. AND this has the potential of being the beginning of a move lower of MUCH higher degree.

click to enlarge

The above bounce is likely a 2 wave which is often a deep retrace of the 1st wave, it could well have another leg up, for an abc structure (or not).
Risk of an accelerating move down is high in this scenario, and extreme care should be taken.

If an Elliott Wave 5th wave of primary cycle degree is complete, even a normally modest .382 retrace will be dramatic.
BTW chart opinion only NOT a trading recommendation.

Friday, September 9, 2016

Natural Gas Surfaces

Haven't weighed in on NG in over 18 mo.s on this blog...it's just been too far down for too long BUT..
 I love it!

It's consolidated in an abc pattern (sorry can't add text on chart) in a relatively shallow retrace of preceding leg and is heading back up.

If it can start to make new highs it may well be confirming the beginning of a very long term structure to the upside.

 click to enlarge
Time to buy some wells.
Just my opinion.
Futures and options trading is only suitable for professionals and the truly deranged.

WTI Whip It Good

WTI  Cracks that whip  once again as hedgies battle hedgers.  The spike up spurred on by yesterday's inventories, is only the most recent in a series of sharp reversals seen over the last year, albeit of lesser range. This is more evident in the chart of the contract rather than the nearby continuation chart.
This suggests a market testing direction and is not uncommon at turning points.
 1 year
 click to enlarge
The legs back and forth do appear to be structured in " abc"s, characteristic of consolidations/ corrections. Most likely the WTI wave structure is in the middle of this, and will take more time prior to clarity, however these swings should start stretching out as it resolves.  

1 month

As stated in the preceding post, risk is somewhat greater medium term to the downside in this set up, 40 before 50. 

NOT recommending anything except go sailing! 

Thursday, September 1, 2016

Crude Flush

The move lower today has taken out some telling Elliott Wave points, signaling medium term weakness and bolstering the case for limited upside risk.

Specifically the Fibonacci .62 retrace of the last leg up provided only brief support yesterday afternoon and there has been an important overlap of a previous high. 
1 month chart

click to enlarge  
That overlap negates the possibility of this pullback being a corrective 4th wave to be followed by a 5th wave to new highs. 
In the current structure the risk is much higher now that the move up to 49.36 was part of a larger corrective structure and counter trend medium term. Testing the 40 low and even exceeding it are now definite possibilities.  
 1 yr chart
 click to enlarge

Very short term bounces can be expected of course. Here the Fib .382 is sitting on the 4th wave of lesser degree and that 50% retrace point really looks like an area that can be revisited.
No trading advise here friends purely bs

Wednesday, August 31, 2016

USD Time?

The USD is smack in the middle of its long standing range at 96.24. The big question is whether it will get into the upper half of that range and start to challenge some of the previous highs and signal longer term strength.
3 yr chart
click to enlarge
At this point the sideways structure IS on the mature side at 17 months. Sideways moves have only exceeded this once, 2012 to 2014, which lasted 23 months. 

Additionally it is possible to identify a double abc structure potentially completed.

 3 yr chart
click to enlarge
In the first series of abc above, the c =.78 of a. in the next abc series the c = .62 of b and b =.62 of a

6 mo chart
click to enlarge
And as you can see below once again USD is challenging the .62 retrace point of the previous leg, in this case the c from the second series.

At the moment then there are a number of resistance  points clustered just overhead; the median of the range at 96.24, the .618 retrace at 96.28, and the overlap of beginning of the last subwave down at 96.50.
Taking out 96.50 will confirm the beginning of a new structure up , potentially of a higher degree that challenges the top of the range seen over the last 2 years.

Why do we care? Crude of course.

Monday, August 22, 2016

Hedge Funds vs. the Hedgers

When it comes to excitement WTI pretty much wins. Between geopolitics, currency sensitivity, refinery economics, seasonality, and consumer behavior you're talkin never a dull minute.

Recent spec short covering by hedge funds, ignited by freeze talk and USD weakness is finally meeting producer hedging with Q 17 hitting 53 Friday. John Kemp at Reuters reports,
" Hedge funds had established a record short position of 220 million barrels in NYMEX WTI by Aug. 9, but this was followed by a record one-week 54 million barrel reduction in short positions by Aug. 16."

 So right now it's the Hedge Funds vs. the Hedgers and it s not at all clear who s going to be triumphant (Que Olympic theme)
Bulls want to see 48.55 taken out, the 50 % retrace and overlap of a previous low.

Bears want to see 46.46 penetrated.

USD Update

Critical to so much else in the market the good ole USD is looking particularly stable and directionless longer term, slightly weaker medium and shorter term.

The above 5 year chart reveals only 6 months spent in a trend, unless sideways can be considered a trend.

More recently the USD can be described as nearing the bottom of it's range, with support yet to be proven certainly.
I can find Fibonacci relationships between the swings within the range, but frankly, all that is subject to revision in a structure like this, until it is pretty definatively complete.

6 Mo

click to enlarge
The move up over the last 2 days will have to break 95 for starters, with 96.50 looking a lot more convincing.

Very short term it has to hold 94.42

Monday, August 15, 2016

Crude Rally Stall?

The Crude had a pretty good pop last week, up 10%. Is there more to come?

 1 mo. Sept
click to enlarge
WTI is definitely tagging some Fib retrace levels as well as having a corrective (upside) abc look.
 c = a at 45.30
6 mo. Sept

click to enlarge

 6 mo. Nearby

 6 mo. Nearby
Over all the upside move COULD be an abc structured B of larger degree within an ABC down.
 If so it should reverse here and the highs will be in.
I have been thinking something along this way for a while, so I have a bias, and the structure itself is not an easy trade.
Last half Aug good beach weather.

Tuesday, August 9, 2016

WTI Levitates

Big push above the earliest resistance of Fibinacci .38 yesterday, all the way to the 50%.
Thank You to Mohammed bin Saleh al-Sada and the shorts.  As a mostly Elliott Wave guy I have to go with the price info;

 click to enlarge

 A 50% retrace is usually where you would look for a sub wave to run out of steam, however, the chart action on the downside SO FAR has a choppy and corrective look, followed by another thrust up, with impulse like characteristics.

Next serious target is the .618 retrace AND it really should not be exceeded if this move lower from 52.73 still has more to run. If it doesn't have more to run and WTI starts to challenge that 52.73 high, the next targets above that WILL be the 59 area as a long term Fib .38 retrace; 

 click to enlarge