Wednesday, December 30, 2009

SP Rally End?

Is the rally over? Sure looks like a correction.

The 50 % retrace of the entire move shows up as 1126 on this chart. Using 1576, 666 and 1130 as the points I get a 50.9% retrace.

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This trendline may be important but it's been taken out numerous times before, when drawn using Sep, Oct, or Nov lows. More important will be overlapping the 1087 low; note the consistent series of higher lows.


An early tell might be taking out the  .618 retrace here, esp if done with conviction. That trendline from the daily bar chart crosses somewhere around there. AND 1103 is the .236 retrace of the zig zag abc up from 1021made Nov.2.

Tuesday, December 29, 2009

Natural Topping Out?

From Monday Dec 21,
 " More likely the 4 is still developing and a 5 will produce new highs. C= .618 of A at 6.26 .
NG would have to get below 5.52 to write off new highs and confirm a longer term move down is resuming.
BUT if you are a producer levels like 5.93 and further out 6.00 might be worth scaling in at." and Tues . the 22nd, "The pullback went to 5.53 and the next leg up appears to be underway. Wave 5 = 1 at 6.07. "  

click to enlarge

It's a little early, but it could well be that there is now a complete count up from 4.157  for a C wave. That C wave is now .63 of the A wave, a significant Fib relationship that gives weight to the count being complete.  The alternative would be that this last leg up from 5.60 is only -1- of 5, so watching the fib. points on a retrace of same.

A .62 retrace of the ABC would take NG back to 3.78.

Sunday, December 27, 2009

US Treas Bond and Crude Calendar Spreads

I don't often look at the T- Bond but the following piece from Zero Hedge.com grabbed my interest. 
Brace For Impact: In 2010, Demand For US Fixed Income Has To Increase Elevenfold... Or Else
".... Accounting for securities purchased by the Fed, which effectively made the market in the Treasury, the agency and MBS arenas, but also served to "drain duration" from the broader US$ fixed income market, the stunning result is that net issuance in 2009 was only $200 billion. Take a second to digest that....
Out of the $2.22 trillion in expected 2010 issuance, $200 billion will be absorbed by the Fed while QE continues through March. Then the US is on its own: $2.06 trillion will have to find non-Fed originating  demand. To sum up: $200 billion in 2009; $2.1 trillion in 2010. Good luck."

Take a look at the 30 year charts:          
                                                                        

click tp enlarge


I once heard a presentation by a famous old commodity technician and CTA named David Johnson in which he called for a long term multi decade rally in the bond market based on a reverse Head and Shoulders pattern. That was 1983, so I have a tendency to give that pattern credibility in T Bonds.

Another story caught my attention this weekend, from Bloomberg,
Treasury Yield Curve Steepens to Record on Debt Demand Concern
 "The U.S. will sell $44 billion in two-year notes on Dec. 28, $42 billion in five-year debt the next day and $32 billion in seven-year securities on Dec. 30. The five-year sale and seven-year offering equal the all-time highest issues of the securities set last month."

Now take another look at those charts.

What does this have to do with crude?  Well it's likely that rising rates are accompanied by a stronger USD.
And it's doubtful that the equities markets like it. Of course if equities collapse T Bonds might still avoid a dump.  Demand for crude will be constrained in either scenario. Additionally one of the trades providing spot crude support , the contango trade, will likely cost more.                             
                                                            12 mo. Crude Calendar Spread



                                                                         click to enlarge




Wednesday, December 23, 2009

SP Double Alert



click to enlarge
Great example of a wedge C wave.  Won't take much to produce a really ugly failure.  BTW SP retraced 50% of the 1576 to 666 move down at 1521 today.

Check this out:


Natural Gas and Crude Option Values

At Skokie Energy we get markets for large options traders and  execute for them.
That info is communicated NOT on this blog but via IM's

An example of one of todays markets in NG follows:
    apr-oct 4.00 put strip 1125/.1325  crossing 5.80
apr-oct 700 call strip .3950/.4150   xx580  
feb 5.70 strad .83/.86

Here's some crude;
 M 50/60 1x2 vs 7750 trading 60
 Options: j 110/120 cs trds 12
z11 150c @ 220

If you have need of that kind of info and
clear Nymex Clearport or ICE,  Email me with your IM info at
guywbishop@gmail.com
We will put you on the list.

Tuesday, December 22, 2009

API and DOE Inventory Expectations

Industry Average;

Crude down 1 million bbl s,
Gasoline up .8 million
barrels, distillate down 2.3 million barrels. Refinery utilization up 0.2 to 80.2% of capacity.
  
Update
API 's came in:  Crude  -3.7
Gas down  1.1 ,  Dist down  .7 
Cushing down  .12

Natty Update

From Monday, " More likely the 4 is still developing and a 5 will produce new highs. C= .618 of A at 6.26 .
NG would have to get below 5.52 to write off new highs and confirm a longer term move down is resuming.
BUT if you are a producer levels like 5.93 and further out 6.00 might be worth scaling in at."



The pullback went to 5.53 and the next leg up appears to be underway. Wave 5 = 1 at 6.07. 


SP Alert

Gaming it....

....and the game is now one of " chicken" as the prop desks keep this elevated into the close of 2009.

Monday, December 21, 2009

Crudewire.com Named Most Accurate Forecaster for 2010


Crudewire.com Named Most Accurate Forecaster for 2010

By Gary Smithe and  Graham Rachel

Dec. 21 (Bloomberg) -- Oil’s biggest annual rally since 1999 is poised to reverse with losses of at least 19 percent next year as the global economy stagnates and OPEC continues near record production, the most accurate crude forecaster says.
Guy W. Bishop of Crudewire , whose predictions this year were within 9 percent of market levels, now says oil will average $59.50 in the fourth quarter of 2010, down from current prices of about $74 in New York. The median Wall Street estimate is for an increase to $83.
Oil is set to decline as growth in China and India pauses in the face of consumer exhaustion, while the Organization of Petroleum Exporting Countries continues cheating on output, Bishop said. Analysts say OPEC will keep supply targets unchanged at a meeting in Luanda, Angola, tomorrow, “With global demand stagnant and OPEC holding production flat, stockpiles are going to go up, and that’s bearish for prices,”  he said
Commodities will also be hurt from the stronger dollar and U.S. rates rising he said.

Just kidding. This is a parody of an article originally appearing on Bloomberg which can be seen by clicking on the title.

WTI Elliott Update





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Weak Euro and More To Come

Now THATS a trend.

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Sure looks like more of the same to come. Pretty easy to see how a -5- =-1- and 5=1 could carry us below 1.40.

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The B wave retraced  a Fib. .78 of the A wave. The C will be equal to A at 1.1516.

Gold for Christmas?

Make sure you get a gift receipt,  it looks like it's going to be getting a lot cheaper.


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Wave 3 down anyone?


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Note the penetration of .618 retrace point of the last leg up. Below $1000 ought to get attention. Where do you think it would find support at that point , $700 ? And what would that imply for other commodity assets?
 


Natty Struggles



Natural is bumping up against some resist here at 5.23, the point at which the C up = .50 of the A (2.40 to 5.35).  It might be done, but for this morning to be a 5 failure both the 4 and 5 would have to be very truncated. More likely the 4 is still developing and a 5 will produce new highs. C= .618 of A at 6.26 .
NG would have to get below 5.52 to write off new highs and confirm a longer term move down is resuming.
BUT if you are a producer levels like 5.93 and further out 6.00 might be worth scaling in at. Beats 3.60.

Friday, December 18, 2009

WTI Rediscovers Geopolitics or Something

Excuse me for being a little cynical here. First we had a story on the "Gulfo" yesterday, and the timing of that had NOTHING to do with USD strength I'm sure. Now we have "War" between Iran and Iraq. Or is it Iran and the US? 
In any case crude is not at $15. THATS when you invade and get a nice pop. Up here they're " prayin for the Apocalypse" . Just before Christmas too.... It might work for a little bit. Unfortunately as we know, if you buy the rumor on this stuff, the rush to sell the news usually results in a terrible whack. Besides they never stop selling the stuff, insurance premiums just go up.


However the reluctance of crude to do what it's "suppose" to do , correlate with the USD in recent days , has been notable. While that will be the larger fundamental influence longer term in the meantime what are we looking at? The move down in the above chart from 78.59 is easily counted as 5 waves. It is distinctly different from the choppy abc structure that preceded it, 82 to 72, however it IS roughly equal to it at $10. It could be there is an abc , 3-3-5 flat structure down complete. However as a correction to the 32.4 to 82.00 move it would be extremely shallow. So wait and see here.

Natural Gas Elliott Update

The -3- of 3 shows up (when I'm out) in classic form. Some consolidation now of that move could be expected. The 4th of lesser degree (s) support hits in at both the .236 retrace and .618 retrace of the 3 wave at 5.74 and 5.43. Having taken out 5.57 decisively the next longer term resistance / target is 6.26 as .618 of the 2.95 spot month A leg. Of course, there are potential targets over that as previously mentioned, most prominent being the C=A at 7.40. Given all that, I would be surprised if a consolidation were to retrace as much as .618 of the last leg and nearer by support ie 5.74 or 5.62 would be more common.

Thursday, December 17, 2009

SP Vertiginous Moment

Or Wile E. Coyote makes a come back, again.


WTI Elliott Update

Is the bounce in WTI since Friday a correction or reversal ? From Mon. morning,
 "This count down looks a little more conventional and is likely complete short term or nearly complete , for an "a" down. The main point here is how long do these markets remain out of sync? Probably not long.

My expectations:  barely new highs on the SP accompanied by consolidations in the Euro and WTI,  followed by a race to oblivion.  Sorry Santa."  (clearly had it wrong on the Euro)

The current count reflects the probability of this move up being a short term correction, contained by the 50% retrace of the preceding move down, and structured in abc's.


The resumption of the trend down will be confirmed by an overlap of  70.60, the beginning of  yesterdays run up, and what would have been perhaps a -3- wave up.

click to enlarge
And conversely, if we get new highs over 73.55, something else is going on, at minimum a more complex and serious correction. Over 75.00 , the .618 retrace of the last leg down from 79.04 and alarm bells should be ringing. Given the USD strength this morning it appears unlikely.
And to revisit the comment from Monday,  
"The main point here is how long do these markets remain out of sync? Probably not long."

Wednesday, December 16, 2009

Natty Where Ya Goin?

From Yesterday Morning,
"The wedge that is starting to shape up normally is a sale. However this is less true short term, since it has not been at all tested, and can end up as a running correction . The 5.57 target as .236 retrace of 15.78 to 2.40, is just overhead. That is an initial target I've been mentioning since the 2.40 low. The kind of explosive 3 of 3 to the upside that could take it out quickly has yet to show up."

click to enlarge
Natty has touched the .236 resistance and found selling. A little early to call the C wave up from 4.44 done. However the last leg up from 4.84 to 5.57 (.73)  is roughly EQUAL to the preceding leg from 4.44 to 5.23 (.79);  tempting to label it C=A. Additionally, not only is 5.57 the .236 retrace of the whole move down, the structure up from 4.44  is a .382 of the 2.95  move from 2.40 to 5.35. So an important resistance point.
An overlap of the 5.20 point in above chart, will confirm this particular structure up is complete.
If that turns out to be the case a .618 retrace of 2.40 to 5.57 puts it at 3.62.

Tuesday, December 15, 2009

What Doesn't Go Round , Doesn't Come Round

 Treasury International Capital Data for October






Treasury International Capital Data for October
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for October 2009. The next release, which will report on data for November 2009, is scheduled for January 19, 2010.
Net foreign purchases of long-term securities were $20.7 billion.
  • Net foreign purchases of long-term U.S. securities were $43.4 billion. Of this, net purchases by private foreign investors were $28.8 billion, and net purchases by foreign official institutions were $14.6 billion.
  • U.S. residents purchased a net $22.7 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $8.3 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $43.9 billion. Foreign holdings of Treasury bills decreased $38.3 billion.
Banks' own net dollar-denominated liabilities to foreign residents increased $21.6 billion.
Monthly net TIC flows were negative $13.9 billion. Of this, net foreign private flows were negative $32.1 billion, and net foreign official flows were $18.2 billion.
Complete data are available on the Treasury website at www.treas.gov/tic.


The complete tables are interesting illustrations of just how stagnant int'l investment has become.

Additional illustration's of global stagnation, M3 levels found on
nowandfutures.com.

 click to enlarge 
 








Dollar Rules

As some may recall the relentless rally in commodities esp crude was driven by USD weakness, this year AND last. With that in mind the weekly and daily USD charts below should be causing  panic. We know what happened in the latter half of '08.

click on to enlarge


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The above charts depict classic reversals. The daily chart closed above the previous high on Nov.3, not to mention taking out trend line resist days ago, and it's not that far away from the Oct.1 high of 77.23. Currently it's approaching overbought on the Daily RSI's ( did I just write OVERBOUGHT? ) but after such pervasive bearishness , that could get squeezed pretty high I'm thinking.
The Weekly chart speaks for itself. Weekly RSI not even close to overbought. More of the same to come I'd say.

Natural Gas Grinds Up


click on to enlarge
The wedge that is starting to shape up normally is a sale. However this is less true short term, since it has not been at all tested, and can end up as a running correction . The 5.57 target as .236 retrace of 15.78 to 2.40, is just overhead. That is an initial target I've been mentioning since the 2.40 low. The kind of explosive 3 of 3 to the upside that could take it out quickly has yet to show up.

USD/ WTI

To paraphrase my comment from Fri..... 
Lets pretend your bonus is not being taxed at 50%, or in long vesting stock....you've made a TON short USD / long oil.  It's mid Dec.,  Emerging markets and European sovereign's default risk is screaming up ....it's the day before DOE inventories.
What do YOU do?
                                           $DXY


Additionally the Crude is no longer oversold short term , and has had a chance to consolidate into the 4th wave of lesser degree and  the .236 retrace. It could go higher BUT can resume the downtrend at any point now.
WTI



   email this char

Monday, December 14, 2009

Heating Oil and Gasoline




Lest we forget....

click on chart to enlarge


The products certainly don't look ready to reverse yet; both are consolidating at the lows. 
What levels are to be looked for in the next leg down? If the Rbob is in a little 4th , 5=1 around 1.73 for the spot chart.

BTW that would likely drag crude.

WTI SP Euro Decoupled?

Bound and determined to get the SP to new highs at year end, Santa's Elves have been hard at work Sunday night and before the open. Surely this will set new volume records.  I gave up believing in Santa awhile ago but am rethinking that.
SP

The is even more impressive when you consider that the move up from Dec. 9 1085 has been achieved while Crude has come off $3.00 and the Euro almost .02
click on chart to enlarge
BTW I can count 5 waves down out of the above pattern , which contains an extended -5-. Don't love it though.
 WTI

 click on to enlarge
This count down looks a little more conventional and is likely complete short term or nearly complete , for an "a" down.

The main point here is how long do these markets remain out of sync? Probably not long.
My expectations:  barely new highs on the SP accompanied by consolidations in the Euro and WTI,  followed by a race to oblivion.  Sorry Santa.

Natural Gas Spot Month Resistance


click on chart to enlarge
The previous high on the spot chart,  5.35 for A Oct. 22, was technically exceeded by 2.5 cents on Dec 11.
At the moment the labeling reflects that 5.375 high as part of a consolidation preceding a powerful -3- of 3 of C, as labeled above. However...
there's always a however it seems...that area of 5.35 has been pretty good at rejecting  attempts to breech so  waiting for either proof in the form of momentum to new highs or additional chart development .

Saturday, December 12, 2009

That Which the ECB Hath Separated, Let No Man Join Together Again!

Monsieur Trichet was not amused. In a strongly worded reply that was given extensive coverage in the Spanish press (but barely received a mention in the English language one), he told Ramon Tremosa in no uncertain terms that there would be no second chance for the banks, "There is not one Euro for Spain, and another for the other countries. There is only one Euro, one rate of interest, and one exchange rate".
So, the carving knives are now out. The ECB has been put in an impossible position, and intends to act as it sees fit. The lions share of the responsibility now rests on the shoulders of Europe's political leaders. Only this afternoon Angela Merkel came to the temporary rescue of an increasingly besieged Greece, by pointing out that healthier members of the euro zone aren't prepared to abandon Greece and other heavily indebted countries in the currency union. Worthy remarks, and absolutely to the point. But how far is it the responsibility of richer and economically healthy states to continually come to the rescue of those who insist on doing nothing to improve their own situation? On precisely the same day Spanish Prime Minister Jose Luis Rodriguez Zapatero came out fighting, and rejected all rejected negative economic forecasts that currently surround Spain, saying for the umpteenth time that Spain was about to emerge from recession. How much more in denial is it possible to be, and how much longer must the future of all Europeans continue to be put at risk by head in the sand statements like this?

for more with charts click on title.

Friday, December 11, 2009

WTI in Narrow Consolidation


click on to enlarge
While it's possible that WTI finished up an abc structure down at yesterdays lows, so far no evidence.  The move up is anemic so far hence assume it's consolidating. Additionally the Euro is displaying exactly the same
behavior.

Lets pretend your bonus is not being taxed at 50%, or in long vesting stock....you've made a TON short USD / long oil.  It's mid Dec.,  Emerging markets and European sovereign's default risk is screaming up ....it's Fri.
What do YOU do?

Natural Gas Elliott Update


The NG is consolidating JUST under/at the spot month highs of 5.35. Note the minor  pullback to  retrace .236 of  yesterdays move up.  This suggests a 3 of 3 of larger degree is in the near future. The overhead resist at 5.57, as .236 retrace of the 15.78 to 2.40, will likely be taken out in that scenario. If this structure up is C=A ie. 2.95 , it targets 7.40 from the 4.45. Additionally the .382 retrace of 15.78 to  2.40 is 7.51.

Not Buying it....China Exports Numbers

China’s Exports Fall at Slower Pace as Global Demand Recovers Dec. 11 (Bloomberg) -- China’s exports fell at a slower pace in November as global demand began to recover from the financial crisis.
Shipments slid 1.2 percent from a year earlier, the customs bureau said on its Web site today, after falling 13.8 percent in October. The median forecast in a Bloomberg News survey of 26 economists was for a 1.4 percent increase. The trade surplus was $19.09 billion, today’s data showed, compared with $23.99 billion in October.

Note the headline vs the relevant info; exports down 1.2% vs. expectations of UP 1.4%. The comparison to last year is of course to the max paralysis point in the credit collapse. Not exactly impressive. Wait till Christmas is over.  You could hear the nervous tremors in the voices of the Bloomberg Asia correspondents  cheerleaders as they reported it around 10pm EST. " Everyone knows the China story is a growth story" Or something like that.

Thursday, December 10, 2009

Euro Pauses...the calm before the storm?


 
                       click on chart to enlarge
 That little consolidation pattern at the lows used to be called a "hairball".
Guess what happens next.



Natural Gas Consolidating


click on chart to enlarge
For the NG to produce further legs up in this structure,  it should  really hold either the .618 retrace at  4.73   ( also  c=.618 of a)  or the .76 retrace, at 4.61 ( c=a) .

Wednesday, December 9, 2009

Soveriegn Credit News Continues to Weigh on Euro

Moodys places UAE and Dubai GRI's on negative credit review.
DIFC, December 09, 2009 -- Moody's Investors Service has placed the ratings of government-related issuers (GRIs) in the UAE on review for possible downgrade. This includes all GRI's that are owned by either the federal UAE government, or the government of Abu Dhabi. The review was prompted by a need to re-validate, and possibly reconsider our support assumptions following Dubai's recent decision to explicitly segregate its direct obligations from those of its GRIs, following which a decision was subsequently made to pursue a debt restructuring at Dubai World.

The ratings under review currently benefit from very high implicit government support assumptions and assume that even in most potential stress scenarios the government will not make a distinction between servicing its direct obligations and those of its state-owned companies.

Issuers whose ratings were placed on review for downgrade include the following:

- Abu Dhabi National Energy Company (TAQA) issuer and debt ratings: Aa2 / on review for downgrade. The Prime-1 short term ratings were affirmed.
- Mubadala Development Company (Mubadala) issuer and debt ratings: Aa2 / on review for downgrade. The Prime-1 short term ratings were affirmed.
- Tourism Development & Investment Company (TDIC) issuer and debt ratings: Aa2 / on review for downgrade
- International Petroleum Investment Company (IPIC) issuer and debt ratings: Aa2 / on review for downgrade. The Prime-1 short term ratings were affirmed.
- Emirates Telecommunications Company (Etisalat) issuer ratings: Aa2 / on review for downgrade
- Dolphin Energy (Dolphin) long term debt rating: Aa3 / on review for downgrade
- Aldar Properties (Aldar) issuer and de


Not to mention Greece and Spain.