Wednesday, September 30, 2009

WTI Continues Slow Mo Dead Cat


Looks like a series of abc, x's up from the 65.00 low . Below the channel support and  the next leg carries down to at least 61 as 3=1. Then again, if 3 = 1.618 of the 1 (more common),  it targets 56.58. The .382 retrace of 32.40 to 75 is at 58.73, the 50% retrace is 53.70.

Natural Gas Hitting It's Marks


 
 Click on Chart
Natural Gas is almost text book at this point. It reversed from the .618 retrace at  yesterday's low, and made an easily counted 5 waves up to 4.975. See Natural Gas Wave Count where 5.00 is targeted as C=A up.  So is that it?  Since then it has had what looks like an abc down to retrace .618 (about) of yesterday's rally. The 5 count up yesterday and corrective look of the little retrace suggest further highs are probable. If the next  leg is "c" = "a",  with "a" 4.39 to 4.99 it targets 5.20. If "c" =1.618 of "a" it targets 5.57, also C =1.382 of A. So If it can make new highs 5.20 then 5.57.

Oh I almost forgot. The fib .236 retrace of 15.78 to 2.40 is 5.57

Eurozone CPI Declines .3%

LONDON (MarketWatch) -- Annual consumer price inflation across the 16-nation euro zone unexpectedly fell 0.3% in September, the statistics agency Eurostat reported Wednesday in a preliminary estimate. Economists had expected annual CPI to match the 0.2% fall seen in August. 

That's called price DEFLATION not inflation.

Tuesday, September 29, 2009

Record Deflation in Worlds Second Largest Economy

Sept. 29 (Bloomberg) -- Japan’s consumer prices fell the most in at least 38 years in August, heightening the risk that prolonged deflation may hamper the country’s recovery from its deepest postwar recession.
Prices excluding fresh food slid 2.4 percent from a year earlier, topping July’s 2.2 percent decline, the statistics bureau said today in Tokyo. The drop, the sharpest since the survey began in 1971, matched economists’ estimates.
Even when excluding food and energy, consumer prices fell 0.9 percent in August, the same pace as July, which was the sharpest decline in seven years, the bureau said.
The yen’s rally to an eight-month high also threatens to stunt the recovery by making Japanese exports more expensive and eroding the value of repatriated profits. Japan’s currency traded at 89.96 per dollar at 9:53 a.m. in Tokyo from 89.63 before today’s report and rose as high as 88.24 yesterday, the strongest since January.
Record Unemployment
A report this week will show the jobless rate reached 5.8 percent last month, topping July’s postwar record, according to a Bloomberg News survey of economists. Wages probably slid for a 15th month in August, figures are expected to show tomorrow.

This came out last night and had to be looked for. Excluding Bloomberg Major Media had no coverage.

Natural Gas Spot Month at Seven Mo. Highs

The Spot Month roll accomplished what the the outright contract has been having difficulty achieving; significant highs on the chart,  retaking  7.5 mo.s of downside.  Take note that a 4th of  2 lesser degree's is at 4.88 on the spot chart .





In the meantime the Nov. contract can pull back a good way and still maintain the current intermediate and long term upward expectations.  Even the 4.30/ 4.40 area would not really damage it.  Shorter term, eyes will be on the simple .62 retrace of the last leg up.

Crude Chops Sideways

Click on chart to enlarge.














Crude is not exactly accelerating down ( though it's not ripping up either ). This choppy sideways action is usually considered a consolidation prior to a resumption of the trend, and certainly thats a strong possibility even probability here. But.

Take a look at the action  following both the "c" and "e" labeling  on the chart. The subsequent sell offs of $4 and $6 respectively had very similar choppy action that looked like the current one.

Monday, September 28, 2009

SP Hits .618 Retrace


Sp hits a very likely candidate , the .618 retrace point , for the end of corrective bounce back up. Label it 2 of a greater degree.
If that is the case, the next structure down will start to gain momentum and accelerate as a 3 and we will see some prior lows start to get taken out.
Given the extent of the work taking the shorts out over the last 6 mo.s the potential for large retraces offering entry points during a 3 down could be minimal.

WTI Clarifies Wave Count


The move down last week was just retraced fib.382 in an abc pattern.
If that contains the bounce, it lends weight to the count down as 1, composed of 5 subwaves. 

New lows on the day under 65.41 will confirm the beginning of the 3 down.

Why One Bubble Burst Deserves Another

Via Zero Hedge,  Andy Xi lays it out. Click on title for more.


"First, let's look at the most basic objective of deleveraging the financial sector. Top executives on Wall Street talk about having cut leverage by half. That is actually due to an expanding equity capital base rather than shrinking assets. According to the Federal Reserve, total debt for the financial sector was US$ 16.5 trillion in the second quarter 2009 -- about the same as the US$ 16.6 trillion reported one year earlier. After the Lehman collapse, financial sector leverage increased due to Fed support. It has come down as the Fed pulled back some support, creating the perception of deleveraging. The basic conclusion is that financial sector debt is the same as it was a year ago, and the reduction in leverage is due to equity base expansion, partly due to government funding."

Nothing changes if nothing changes.

Sunday, September 27, 2009

WTI Update for Sept. 27





The obvious count for WTI is as a C=A down from 75.00 at 65.00.
It WAS my target.
See  WTI Update   from Sept. 21 .
and   WTI Due for Down Leg

However given the likely severe weakness in the Euro and equities markets, WTI will have an awful tough time turning around. For instance, it would have to overlap 68.75 to start looking bullish, and that's a long way up fighting those headwinds. Even "war" with Iran barely budged it.

So I prefer the depicted 1, 2, -1-, -2- count implying a 3 down accelerating here.
 Big Picture; after 5 waves down from 147.30 to 32.40 , the huge rally retracing .37 of that move  has been corrective.
 The structure beginning down here COULD be 3, in a move resuming the larger downtrend.
Could get interesting.

Dow Industrials Elliott Count Reviewed

Analyze This @ Crudewire.com started publishing 2 months ago. So of course only those on my IM list received the opinions and market comments prior to July 27 2009.
Another look at the Dow and it's wave structure is critical at this juncture.

One of the early questions argued by Elliott Wave practitioners was where the Super Cycle 4th wave ended. Was it in 1974 at the 577 low or as is more commonly believed today, in 1982 at the 800 low?
In 2007 , using the 577 low, I targeted Dow 14,160 as a final Super Cycle 5 top. It was exceeded by roughly 40 points. The target was derived by using the common 5 = .618 of 1 through 3 (577 to 11,700 ) added to the Oct 2002 4th wave of lesser degree at 7286.  As turns it out the 5th wave was .621 of 1 through 3.

At that time I also targeted an initial collapse to between 7400 and 7100 as 50% of the move up from 577 to 14,200  AND a gross 50% pullback from 14200 respectively.  It was also the area of the 4th wave of lesser degree.  At that time very few believed it possible.

I also called for a bounce from those 7200 area  levels to between 9500 and 10,000 on the Dow.  From the 7200 level 9874 would have been a perfect .382 retrace up. ( I believe the highest settle in the last few weeks has been 9827) . And the 9800 level is the area of the 4th wave of lesser degree.

The Dow of course exceeded the 7100 target on the downside. In the moment I saw the selling panic as dynamic, stayed flexible BUT got very bullish equities on a clear 5 wave count down to the 666 SP Mar lows.

Of course now the Dow is in the previously assumed and targeted retrace zone. It topped in classic fashion:  terrible volume leading into it , abc wave structures, historic bullish sentiment, and HEAVY insider selling, a Fed announcement pushing to quick unsustainable fresh highs and a reversal close. Additionally there are confirming wave counts on other index s discussed elsewhere

It has had a potential 5 waves of minuette degree down from the 9917 high, but they may also be counted as a 1, 2, -1-,-2-.  This consolidation from Fri and over the weekend will tell  us where we are. An acceleration to new lows anytime Mon or early Tues prior to getting back above 9735, and we're likely in a 3 down (consistent with taking out a wedge support line ).

And that is likely either within a 3 down of Super Cycle Degree or a C of Super Cycle Degree.
What targets can be generated for that? How about C=A , the 7760 points from 14200 to 6440? Puts the Dow at 2157, ALSO an 85% pullback from 14200.

Sound bad? How about the 4th of lesser degree ? That would be the previously mentioned 577 (or is it 800?)

Lets get really optimistic. How truncated could the next wave down be? If the C or 3 = .618 of A or 1, that targets 5122. A gross .618  pullback from 14,200 targets 5424, still a LONG way down from here.

Friday, September 25, 2009

Euro Head and Shoulders?


Maybe not just yet, that right shoulder looks a little scrawny.
BUT taking out that horizontal support at 1.4610,  will no doubt provide the selling momentum that takes the Euro through the .382 retrace point of the last months move up. And take a look at the 50% retrace point, getting through that will indicate some serious weakness.
Of course if it is a Head and Shoulders pattern, breaking the neckline projects to about 1.4350
And there are A LOT of Euro longs.

Natural Gas Rolls On and Up

Natural Gas continues it's counter intuitive move up, defying  the petroleum complex price direction, the fundamentals , the weather, and of course, recent stock market action.
Not unexpected however. Please see
 Monthly Bar Chart NG  
and  Natural Gas Slide   from Sept. 4.







In the current Elliott count , the first c=a,  followed by a retrace labeled -b- . The -c- is comprised of 3 roughly equal legs of lesser degee, all clearly related and expanding the channel. The subsequent triangle correction can be labeled -x-, with expectations of a subsequent abc perhaps equal to the first series $1.50, targeting $5.00. However it might be that it's  -d- and we are getting close to the end of what will be A of larger degree. The ability of Natural to hold the channel trendline will help resolve the argument.

In favor of the higher target is of course the upcoming roll. Spot charts will likely be a lot higher come Tuesday, and probably will take out the previous highs at 4.16. Unfortunetly the giant roll up is problematic for those holding Nov right here. That contract can come off quite a bit without incurring any technical damage.

Thursday, September 24, 2009

SP; What do you think?


Could be it's in a 3 down, but so far it has held at the c=a point.
Given the larger context of a rally structured in abcx's with ever decreasing volume, out of this world bullish sentiment at the highs, and the impulse wave nature of the down move, prefer 3 or maybe -1- of 3.

 New lows on the day will help answer the question.

BTW, the SP Dec high @ 1075.75 is  1.616 of 666, the low. The cash SP high was 1080, exactly 1.62 of 666.

I mention this in Strange Attractor for the SP @ 1076.50
published on Sep 17.
"I don't know of any Elliott rational for a fibonacci  advance / pullback of an a outright number, but that has been showing up lately in various markets. For instance WTI had a .78 gross pullback at 32.40 from 147.30, and the NG had a  gross .85 pullback from 15.78 high at 2.40.
Whatever works."

Whatever works probably works because it's a very simple algorithm . It was after all a move driven by HFT and prop programs.

Rbob Breaks Down


The dramatic move lower yesterday confirms the resumption of the downtrend , most likely a C wave. The C will equal the A @1.51 (spot month) and C=.618 of A @ 1.65.

Shorter term the trendline is providing a little resistance and it looks like another sub wave down is required to complete an initial 5 waves. If it can get back above the former support line of the expanding triangle , the 1.726/1.73 level should be the next resistance.
Note the RSI beginning to show some minor divergence.

DOE Stats Highlight Weak Economic Recovery

U.S. Avg prices for Gasoline -$1.17 vs. last year, Diesel -$1.34 vs.last year.
Demand is particularly grim for distillates.  Not much better for gasoline.
The persistence of demand destruction despite lower prices vs. last year, highlights the weak condition of the economy and consumer frugality. Consider at this time last year, Lehman had failed and the world financial system was paralyzed.



Wednesday, September 23, 2009

Euro Update Post Fed


Euro not liking the Fed announcement re MBS support. And after such a great move too.
The fibonacci retrace points will each be consecutively more damaging as they are taken out.

Shorter term it's holding a 50% retrace of the very last 5 wave. The .618 retrace of that is about at the same level, 1.4690, as the .236 retrace of the greater structure pictured in this chart.

Fed Expectations

The Fed is widely expected to leave rates unchanged and to make positive noises about the probable end of the "recession" .  They will announce planning for the management of possible future inflation, and the "exit" strategy in placating tones.
If memory serves me, typical intraday market behavior is for a run  up in the hour or two prior to the announcement ,  followed by the release, and an immediate head fake presenting an excellent  fade opportunity. Unfortunately it can sometimes be a double head fake.

In the larger context of a bear market rally in it's latter stages, any new highs that were then subsequently reversed, and followed by new lows on the day , would be very bearish.

WTI 9/23 Update





This morning, prior to the DOE inventory numbers, as the WTI chopped sideways, it really looked like a consolidation prior to popping to new highs.
This is a good example of how the market can require a  good old fashioned common sense perspective on the longer term. Sometimes fundamentals rule.
See  Rbob Provides Reality Check

 Since WTI has overlapped  both the Nov. and spot month "d", it is highly likely that a new low under the "A" will be forthcoming. That would be 67.11 for the spot month. And C=A at 65.00. 

Natural Gas Wave Count





Until proven otherwise, this is my prefered count out of the many possibilities. The c=a  relationship is commonly seen,  while a 3=1 is rare, and the triangle formation is not usually seen in a 2 position, thus ruling out a 1, 2, -1-,-2-, structure, leaving abc, x.

It does look like another series of abc's up could be expected particularly with new highs.
BTW if that does occurr, a C = A structure of larger degree will target 5.00 from the 3.50 x wave.

Delayed Foreclosures Stalk Market

From the WSJ
"For now, the delays have led to what is probably a temporary drop in the supply of bank-owned homes in California and other places where investors and first-time home buyers have been competing for bargains. In Orange County, Calif., the number of bank-owned homes listed for sale dropped to 322 in early September from 1,404 in November 2008, according to Altera Real Estate.
But the number of foreclosures is expected to increase in the fourth quarter as mortgage-servicing companies determine who is eligible for a loan modification and who isn't. "We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running" for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to "abnormally low" levels in response to government efforts to stem foreclosures, she adds."

Not exactly hot news for those following  foreclosure activity. I am active in that market and my experience is that of 30 or 40 listed foreclosures at my local Sheriffs Sale, 90% are either postponed or bought by the bank for a nominal sum. This has been consistent for the last 6 months.

Tuesday, September 22, 2009

Rbob Provides Reality Check


Not much of a bounce, and clearly a drag on the WTI. It did clear a  .382 retrace of that last leg down but not for long.

With rising unemployment, foreclosures and bankruptcies it will be interesting to see how demand  holds up. And yes, it is in contango.

Bullish Sentiment at Record Highs

Again from Zero Hedge
The chart below shows a Speculative Options Activity index. This is simply the number of opening options transactions that are bullish bets on the market minus those that are bearish on the market.


                                                             

WTI 9/22 Update

Another permutation.





While the Euro hit fresh highs, and the SP's are darn close, WTI ain't feelin' it.

Weekly US Railroad Carloading Decline Accelerates, Hits 1993 Levels

From Zero Hedge;
The latest data out of the Association of American Railroads has been released. While a month ago the weekly YoY decline hit a very troublesome -17.1%, the last weekly decline added another almost 3% to the deterioration, and is now down -19.8% for Week 36. Cumulative traffic decline is flat at -18.4%. Including intermodal traffic or ton-miles in the calculation does nothing to improve the conclusion. Not a single "carload originated" category has improved, and in fact even the relatively stable ones from the prior update have slumped.




I have had anecdotal confirmation of this data from a "train builder".

Natural Gas Update


The count up from the lows is most easily done as a series of abc, x's and not a classic impulse wave of 5 sub waves. Unfortunately. It means we can expect almost anything: an X wave of greater degree back to be followed by another series of abc's up, an X wave of similar degree go straight to abc up for a 3rd series, even new lows under 2.40 cannot be ruled out, in fact, that might be the most likely resolution.

However the big picture is supportive. See Monthly Bar Chart NG    After hitting a low of 2.41, an 85% pullback from 15.78 and getting within 45 cents of the 1.95 target, and now having retraced  89% of the last leg down from 4.08, the greater risk still remains to the upside. It may just be a tough grind up structured in abc's. Not unusual for natty.

Shorter term a 50% pull back of the whole move up is around 3.15, a .618 of the last series of abc's comes in at 3.31 and the trendlines will provide some trigger points.

Monday, September 21, 2009

WTI Update


The WTI is most likely in a C wave down from the 73.23 B structure high. While it really needs to overlap the 68.02 level to confirm the count it 's already  exceeded the .764 retrace of that "c" leg. See WTI Due for Down Leg .   
If it were to equal the A down from 74.99 to 67.00 it will target 65.23. Any bounces at this point should be contained by the .618 retrace of todays leg down at 71.20, and preferably the 50% retrace @ 70.77. Tomorrow the Oct. contract expires.

Sunday, September 20, 2009

Exxon Elliott Chart

The excellent Daneric's Elliott Waves posted a very good wave count on good ol' XOM. Please click on title for more.






A break down out of the triangle projects some significant way, for instance even a C= .618 of A targets 47 or a 33% fall in the stock price from here. It's hard to imagine Exxon dropping like that in a vacuum. Far more likely is a fall in the context of a general resumption of the downtrend in equities and commodities.

Friday, September 18, 2009

US business group warns of swine flu absenteeism

In the 16-page volume titled, "It's Not Flu as Usual: An H1N1 Business Preparedness Guide," the largest American business federation presented scenarios in which more than 10 percent of staff are too sick to come to work an any given day over the course of several months to a year.

"In communities where H1N1 flu circulated this past spring, the infection rate was roughly 6 percent to 8 percent over a three- to four-week period. During the winter season, infection rates could be two to three times higher, as both the H1N1 (swine) flu and the seasonal flu circulate and sicken people simultaneously," the guide said. "

Presumably that will effect gasoline consumption.

Thursday, September 17, 2009

Strange Attractor for the SP @ 1076.50

The SP Sept. today hit a high of 1076.50 , a gross .616 advance from the 666 low.
I don't know of any Elliott rational for a fibonacci  advance / pullback of an a outright number, but that has been showing up lately in various markets. For instance WTI had a .78 gross pullback at 32.40 from 147.30, and the NG had a  gross .85 pullback from 15.78 high at 2.40.
Whatever works.

Heating Oil .618 Retrace

Could be a complete series of abc's  up from the lows, hitting the .618 retrace point.
Back below 1.75 would confirm a reversal,  and nearer by under  a .618 retrace  of that leg @ 1.7930 would probably do it.

Longer term this would  imply a resumption of the downtrend.  See   Heating Oil Chills

WTI Due for Down Leg


Chop , Chop. The count is clearly structured in a,b,c, x's which I've simplified on the chart. The B could go as high as 73.90 as c=a in that structure. BUT.
That would  put WTI awfully near the top of the range we've been in for 2 months, and downside risk  would be high.

The "c" of B wave MAY be complete here.  An overlap of 68.02 , the beginning of that wave, will confirm that.  SO using the 50% retrace of that "c" as a likely tell.

Note that just under the overlap, is the 50% retrace of the move up from the July lows of 67.77 ( Oct ) .

It's about time WTI explored the lower end of the the range.

Euro Highs Pose Question

If you owned the Euro where would you get out?

Wednesday, September 16, 2009

Natural Gas

This is a likely Elliott count with the 5 making a "1"  of larger degree. Notice that it ran into trouble at the channel trend line AND the .618 retrace of OCT's last leg down (not the spot mo. which it's already exceeded). Since it is very early days on the pivot, the count may get labeled somewhat differently if there is an extension etc. BUT the point is, that after a consolidation IF the NG takes out the highs at 3.61 it will likely be a 3rd wave with the potential for serious upside (typical 3rd waves are a fib multple of the 1st wave ).

Euro Again














Once again . Probably safe to say that a pullback below 1.45 will have the momentum guys on the sell side. Even getting under the trend line support around 1.46 will scare off the buyers. Notice the .236 retrace point there of the last leg up from 1.4190.   In other words the Euro has to keep accelerating, something it's been finding harder and harder to do lately.

Tuesday, September 15, 2009

WTI

WTI puts in a classic abc correction up for a .382 retrace of the last leg down.




It only took new highs in the SP's.

Monday, September 14, 2009

IS THE CREDIT CRUNCH OVER?

The FDIC quietly shuttered three more banks on Friday, including Chicago-based Corus Bank, which was riddled with commercial real estate exposure and brings to 92 the total number of banks that have been forced to close so far in 2009, and the year still has more than three months to go. So far this year, there have been more bank failures than in the last 15 years combined. So for economists to be increasingly calling for a V-shaped recovery, or any sort of recovery over and beyond the long arm of Uncle Sam, ignores the fact that there is a gaping hole in the credit system that is going to impede any sort of organic rebound in economic growth.
The number of banks that have failed this year climbs to 92
It is so evident, with fiscal stimulus accounting for 100% of global economic activity this year and an estimated 80% government contribution to world GDP growth in 2010, that this entire recovery is as illusory and artificial as it was in the treacherous 1930s. Even after the bottom at that time, a bottom that was aided and abetted by a 40% dollar devaluation, and after seven years of rampant New Deal stimulus, the CPI was still deflating at a 2% annual rate by the end of the decade, the unemployment rate was still north of 15%, and the level of GDP was still below its 1929 peak. The equity market had merely traded in a wide band for seven years after the initial bout of enthusiasm off the mid-1932 trough, policy rates were still at zero, the long bond yield had moved below the 2% threshold, and the best performing asset class proved to be corporate bonds, notwithstanding the acute default experience at the time.
Meanwhile, bank credit continues to contract at an alarming rate. During the September 2nd week, U.S. commercial banks cut back on their commercial & industrial (C&I) loans by $10.3 billion; their real estate credit by a huge $15.3 billion; and their lines to consumers by $6.4 billion. In sum, $32 billion of banking sector lending evaporated during the week, bringing the total contraction to over $200 billion since the end of July. Not only is that unprecedented, but it is also a record decline in percent terms — down at over a 12% annual rate on a 13-week basis. Indeed, we have massive government stimulus that is still just patching a leaky boat, and the consensus economics community is trying to “sell” this idea to investors that credit typically lags the cycle. That may well be true, but not by this much — these declines in lending activity are triple the most severe downdrafts we have seen in the modern era — there is no comparison.
Bank credit continues to contract at an alarming rate
What we do know is that without Uncle Sam’s generosity, U.S. real GDP would have contracted at a 6% annual rate in the second quarter and outside of this continuous government support, as well as what can only be described as a temporary realignment of auto production, the economy is actually still contracting. It is totally unclear to us that the recession is actually completely behind us. Indeed, the National Bureau of Economic Research (the NBER) seems to be in no hurry to make such an early declaration (as it did, a tad prematurely, in 2002).By David A. Rosenberg
Breakfast with Dave  14th sept. ‘09


"It is so evident, with fiscal stimulus accounting for 100% of global economic activity this year and an estimated 80% government contribution to world GDP growth in 2010, that this entire recovery is as illusory and artificial as it was in the treacherous 1930s........

"Meanwhile, bank credit continues to contract at an alarming rate. During the September 2nd week, U.S. commercial banks cut back on their commercial & industrial (C&I) loans by $10.3 billion; their real estate credit by a huge $15.3 billion; and their lines to consumers by $6.4 billion. In sum, $32 billion of banking sector lending evaporated during the week, bringing the total contraction to over $200 billion since the end of July. Not only is that unprecedented, but it is also a record decline in percent terms — down at over a 12% annual rate on a 13-week basis. Indeed, we have massive government stimulus that is still just patching a leaky boat, and the consensus economics community is trying to “sell” this idea to investors that credit typically lags the cycle. That may well be true, but not by this much — these declines in lending activity are triple the most severe downdrafts we have seen in the modern era — there is no comparison.
Bank credit continues to contract at an alarming rate

What we do know is that without Uncle Sam’s generosity, U.S. real GDP would have contracted at a 6% annual rate in the second quarter and outside of this continuous government support, as well as what can only be described as a temporary realignment of auto production, the economy is actually still contracting. It is totally unclear to us that the recession is actually completely behind us. Indeed, the National Bureau of Economic Research (the NBER) seems to be in no hurry to make such an early declaration (as it did, a tad prematurely, in 2002).”
Source: www.gluskinsheff.com

SP Hits Fibonacci .618

                                                      C=.618 of A at 1048, the High.

UNG Will Re-Open

"The U.S. Natural Gas Fund (NYSEArca:UNG - News) will accept new creation units beginning on Sept. 28, its sponsor explained in a new filing to the Securities and Exchange Commission. That would end a stalement between regulators and managers that has lasted since June.
Re-opening UNG would also signal the end of a nearly three-month period in which investors watched their open-end ETF trading at huge premiums, much like a closed-end fund."

Fund is down in pre open trading. Under 10.00 , an overlap and slightly more than a 50% retrace, raises the risk of new lows considerably.

Natural Gas and the UNG Roll

Natural HAS moved up smartly and even now is over 3.00, up .62 from it's lows. BUT with the sharp retracement Fri., upcoming UNG roll (-1.07 ouch!), weakness in equities, WTI and Euro , the potential for an overlap of 2.74 is HIGH. 
An overlap of 2.74 will raise the risk of the recent move up being a minor correction, with new lows under 2.41 likely.

However if NG gets a push to new lows, 1.95 is the C=A TARGET. Real dollar long term risk will certainly be to the upside.

 

Friday, September 11, 2009

Euro Hits Long Term Retrace

The Euro topped out last July at 1.6038 and moved down in 5 waves to 1.2329 last October .  That .3709 long term move down , call it A, was retraced exactly .62 at this afternoon 's high of 1.4636. Additionally within the abc structure comprisng the B wave correction back up, the c from 1.2457, is structured in 5 waves , an -a-,-b-, -c-,-d-,-e-, and the last -e- is equal to .61 of -c- at todays high. I'm willing to call that the termination of B .



  
The completed B implies a high risk of Euro weakness to under 1.2329 with C=A targeting 1.0927. Of course the 4th of lesser degree may also offer support around 1.16 but these are still huge moves having presumably a huge negative impact on USD commodities.

 
Check out the hourly RSI divergence.   

                

WTI Key Reversal

It's been a month of wide swings within a broad range for WTI. Interestingly it failed to follow Equities and the Euro to new highs, underlining perhaps it's inherent fundamental weakness. Physical reality intrudes .
In any event,  today saw a Key Reversal Day usually quite a bearish indicator. However the current count down from the highs at 74.99 is less than an ideal 5 waves while the bounce from 67.00 is no clean impulse wave either.

The best looking impulse wave is todays precipitous drop. In the meantime both todays move and the swing up that ended today are contained by the .76 retrace resistence levels. It would be great to see an overlap of the 67.02  low to clarify things a little. Really any convoluted resolution is possible from here, so keeping flexible as short term counts develop is key.

Naturally the SP and Euro are the big lead markets and both may have potential highs in place today as their respective wedges complete.  If not, they are clearly running out of steam and have limited upside potential.

Natural Gas Celebrates

The move down from 13.70 to 2.41 can be counted as 5 waves with the last wave from 4.08 (or 4.16 depending on your count) complete for "C".  The "A" was the 15.78 to 4.05 move and "B" 4.05 to 13.70.
The termination of C at 2.41 makes for a fibonacci 85% retrace from 15.78.
As has been mentioned previously, the risk of a major move up is HIGH given that scenario.
So a .382 retrace of 15.78 to 2.41 targets 7.52, and 50% targets 9.09.

Shorter term any retrace down from here should hold the 50% point of yesterdays rocket, and the break out point around 3.02, also the long term trend line referred to in previous comments.

On the upside taking out the .618 retrace of 4.08 to 2.41 at 3.44 will help confirm that last leg down is complete.

Thursday, September 10, 2009

Natural Gas Storage

Summary
Working gas in storage was 3,392 Bcf as of Friday, September 4, 2009, according to EIA estimates. This represents a net increase of 69 Bcf from the previous week. Stocks were 495 Bcf higher than last year at this time and 503 Bcf above the 5-year average of 2,889 Bcf. In the East Region, stocks were 163 Bcf above the 5-year average following net injections of 55 Bcf. Stocks in the Producing Region were 269 Bcf above the 5-year average of 830 Bcf after a net injection of 13 Bcf. Stocks in the West Region were 72 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,392 Bcf, total working gas is above the 5-year historical range.

Industry avg expectations were for a build of 71 Bcf.

Morning Yuk

 From Bloomberg
OPEC Agrees to Maintain Production Quotas as Oil Trades Above $71 a Barrel

"Supplies rose by 80,000 barrels a day in August, to 26.25 million barrels a day, signifying compliance of about 66 percent, from 68 percent in July, the IEA said today.
Compliance with existing production quotas is improving and prices may rise further by the end of the year, Algeria’s Khelil said."

NG Head and Shoulders

Natty is poised between two technical points that will likely determine if the lows are in or not, 3.00 and 2.62. Under 2.62 gives this recent move up from 2.41 a very corrective abc look with an overlap of the last structure and retrace of the .618 .

Shorter term, a break of the neckline on a minor Head and Shoulders pattern targets a test of the 2.62 level.

New highs over 3.00 and it looks good,  pls see  NG Update

SP Pivot?

After hitting a perfect double top (at least on this chart) on zippo volume, with RSI divergence and a potential 5 count up on an "E" wave, downside risk is high. An overlap of 990 will confirm it, but taking out a 50% retrace @1015 will be an early tell and pull some momentum in. At this point it needs to stay under 1036.50 for that bearish scenario.

IEA Assumes World Economy to Recover at the End of this Year

Preliminary data indicate that global oil consumption declined by 3 million barrels per day (bbl/d) in the second quarter of 2009 compared with year-earlier levels.  Members of the Organization for Economic Cooperation and Development (OECD) accounted for most of the decline; total non-OECD consumption was virtually unchanged.  The current macroeconomic outlook assumes that the world economy begins to recover at the end of this year, led by non-OECD Asia.  As a result, EIA expects world oil consumption to grow in the fourth quarter of 2009 compared with year-earlier levels, the first such growth in 5 quarters.  Projected world oil consumption grows by 0.9 million bbl/d in 2010.

Hey good luck, I hope it's true.

Wednesday, September 9, 2009

NG Update



Natty hits fib .76 resist., horizontal resist., and long term trendline resist. dating back to 1995, around 3.00. pls see  
Monthly Bar Chart NG .

Obviously a settle above that level is a big positive for this rally. Meantime the move up can be counted as an abc, so caution up here is in order.

SP Squeaks Weak Double Top

SP's look like they got nothin' left. With dollar lows and a commodity rally, this push to new high's is low volume and looks almost obligatory. No volume. Also a possible Elliott wave count putting it in a 5th wave of  "E" , up from 865.

USD Unitary Markets

Today's market forecast: "A giant carry trade enforced to all asset classes by every quant fund out there" from Zero Hedge.

"A quick look at the USD index makes me think we are forming an ending diagonal. I was wondering about that looking at EURUSD yesterday, and it seems other Elliott Wavers out there are making the same observation about the Dollar index. The attached chart shows the ending wedge we are forming, and would indicate that the DXY is going to chop lower, a process that apparently could last another month and a half if we are out of luck... And then we would have a brutal reversal and USD strength. To get a good idea of what an ending triangle looks like take a look at AUDUSD last year, it's as textbook as it gets. And don't forget that there is often times an excess on the last leg past the support before it reverses!"

http://www.zerohedge.com/article/todays-market-forecast-giant-carry-trade-enforced-all-asset-classes-every-quant-fund-out-the

And from Daneric's Elliott Waves

"Looks like the ending diagonal is perhaps in the making as I suggested a few weeks back. It may be ending but somehow I think we'll have a drumbeat of "dollar is doomed" stories for the next few weeks for the final waves."



So thats the consensus folks. Can't say I disagree.

Tuesday, September 8, 2009

NG Update

We definetly got a  reversal, pls see Natural Gas Slide ,  and an overlap of 2.75, ...BUT ...at this point anything is possible even new lows. Violent up AND down action is often seen at major turning points as the market argues the merits. So far today it feels like that is going on, and the move up could be described as an abc correction. More will be revealed.

WTI Retrace ETC

As expected, WTI gets a bounce after the overlap of  it's final move up.  Please  see  WTI Overlap   . This characteristic, of reversing immediately following an overlap,  is becoming a feature in a lot of the markets lately. In the good old days an overlap was useful as a confirmation of a count ..signifying the  wave overlapped was at least completed, and possibly the entire structure of greater degree was completed. So overlaps have been used as stop points. And while some things may change, gunning for the stops probably won't.
Having said all that, the validity of the overlap from an Elliott Wave perspective remains. By now a lot of the weak shorts are out,  and levels represent a decent entry or reentry point.

Saturday, September 5, 2009

An Insider look at Ginnie Mae MBS

A little weekend reading from Zero Hedge:


Here’s a random conforming loan size GNMA pool (G2 4170) from June 2008 – 12,224 loans, $199k WAOLS, 97% median LTV, $2.46bil original pool size:


These conforming loans don’t look too much better, huh? These losses will be just huge…. I mean, these numbers are just 1yr later… this will be perhaps a more massive transfer of losses to the upper income tax-payer than anything else we’ve seen so far….

Click on title for complete story. Then again, why ruin your weekend?

Friday, September 4, 2009

Monthly Bar Chart NG

Another view. The highs and lows on this chart are a little different , must be based on daily settles. Getting back above the trendline that cuts across at about 3.00 would be a positive for Natty. A move contra the rest of the energy complex and world equities markets might seem counter intuitive , but  it's been doing just that for the last 8 mo.s.

From Sept 2  Natural Gas Update 
" there is my weird notion that the monthly bar chart is tracing out a Rorschach ink block test...it's symmetrical look implies it could see a spike at any time."

Natural Gas Slide

The Trend HAS Been our Friend, but at this point in the game SERIOUS reversals can occur at any time. Nat Gas got within  45 cents of the long term target for the decline from 15.78 this morning. While that target is still a significant % down from here, in real money,  not that much.
The last leg down from 3.22 (on the roll) is equal to .618 of the 4.08 to 2.69 move that preceded it at 2.36.  And on the last little move down from yesterdays highs we have 5=1 at 2.41 .
Retraceing more than .618 of that last leg @2.61 should be a warning of a more significant  move. An overlap of 2.74 would have the shorts very nervous and rightly so.