Friday, October 30, 2009

Whipsawed!


OMG do you think they let Equities and Euro close the week out under all those support trend lines and the 50D MA? Somebody better cut lunch short and get back to work.



Probably not, BUT they must have squeezed every last short out by now. It's just the longs left for the HFT guy to scalp.

Natty

First of all the DEC NG has held the .618 retrace of it's move off the lows.
Secondly , on the SPOT MO. the highs of 5.35 are just overhead . See   
Natural Gas Roll



Take a look at where the Fib retrace points hit on the Dec. fib .382 is 5.34, and the .618 is at 5.59 .
As mentioned many times previously:    
for the spot month ..." The "-c-" = 1.618 of "-a-" @ 5.59 That target is ALSO  c = 1.382 of a ( of a greater degree on the spot chart) AND the long term .236 retrace of 15.78 to 2.40.  That represents a significant cluster of resistance"
AND on the Dec .
"Note the Head and Shoulders neckline that also cuts right about there (5.59) : quite a lot of resistance all together.... exceeding that would be a real indication of unusual strength. The next  fib retrace on the longer term charts would be the .382 retrace of 13.70 to 2.40 at 6.72"

WTI Leads and Retraces .78

So much for common sense. See  WTI Update 
The crude retraced a Fibonacci .78 of it's move down off the $82 high yesterday. Quite a move.
Compare that to the SP's Fib retrace of .37, and the Euro's .46 retrace.




Also note the overlap of  $80 negating a potential 1,2..1,2, structure down,  highlighting the move as a series of choppy abc's down. The move down now looks quite corrective in character.

The thrust up from 65.05 can also be counted as not being complete and still  shy of a 5th wave. The 5=1 (of this move from 65.05)  is at  83.37, ADDITIONALLY if the thrust up is seen a 5th wave out of a triangle ending at 65.05 it would equal the first move up from the 32.40 lows to 50.40 at 83.05. ( I don't like that interpretation just yet, but it sufficiently muddies the water and corrective legs like ambiguous counts.)

An alternative bearish take is that WTI retraced .78 and resumes the down move , perhaps in continued choppy fashion leaving ANOTHER weird thrust or X wave to ponder. Or alt. 2:  consolidate within the range first producing a little b, and c prior to moving lower .

Thursday, October 29, 2009

USD Ain't Dead Yet



In fact, after 5 waves up, a 2 wave of greater degree back down is to be expected. The 50% retrace is just under current levels at the previous support/ resistance of 75.90 and the .618 retrace is 75.72 , arguably the break out area for the  up move. Either one of these levels would be a VERY common and not particularly deep pullback for a 2 wave. Of interest is the media hype around the dollar "weakness" today, the conviction  that we are seeing a return to the previous trend is also common with 2 waves.                                               


Natural Gas Inventories

Natural Gas inventories increased 25 bcf vs. industry expectations of between 24 and 45 bcf

Summary
Working gas in storage was 3,759 Bcf as of Friday, October 23, 2009, according to EIA estimates. This represents a net increase of 25 Bcf from the previous week. Stocks were 373 Bcf higher than last year at this time and 414 Bcf above the 5-year average of 3,345 Bcf. In the East Region, stocks were 109 Bcf above the 5-year average following net injections of 17 Bcf. Stocks in the Producing Region were 237 Bcf above the 5-year average of 951 Bcf after a net injection of 1 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,759 Bcf, total working gas is above the 5-year historical range. Working Gas in Underground Storage Compared with 5-Year Range

WTI Update


Crude oils final $17 thrust from $65.05 to $82.00 will take a lot of downside work before confirming a reversal is in. The .382 retrace is 75.53, the 50% retrace is  $73.57, and the .618 is 71.53. In a bullish interpretation of the thrust it would be assumed to be the beginning of an extended move, so TOO deep a retrace would be unlikely, while a retest of the presumed break out point, even a slight push below , would be normal. The long term $147.30 to 32.40 move was retraced .382 at 76.30, and  the resist line across the tops of the Dec contract cuts right about 77.00. Below the 50% @ 73.57 and the bull interpretation  looks very unlikely.

                                                                click on chart to enlarge
  However the likely reversal in the USD and equities begs for common sense and lends weight to interpreting the thrust as a completion of a final series of abc's up from 32.40. A move  above $80.00 would  invalidate that count. Really $78.80 should hold it. 

   

                                             

Wednesday, October 28, 2009

Commitment...Sort Of.

The Euro is on the verge.



The SP is a little further along. Note the Fibonacci retrace levels lining up with the previous lows.

The Nasdax Composite , having climbed rather steeply, definitively took out the support trend line.

It will be interesting to see how Asia behaves tonight. Petro China , until recently "the worlds largest company", missed analysts expectations with a 24% drop in earnings. That was after hours over there.

Quite a lot like the WTI spot month chart. Three series of A,B,C's up.

Natural Gas Roll

Natural Gas has a cluster of resistence at the 5.57 level on the spot month chart. From the Oct 19 and Oct 13 post: 
"Over 5.12 and 5.57 looms large. The "-c-" = 1.618 of "-a-" @ 5.59 That target is ALSO  c = 1.382 of a ( of a greater degree on the spot chart) AND the long term .236 retrace of 15.78 to 2.40.  That represents a significant cluster of resistance. Given the near record inventories, and the seasonal tendency for an intermediate term pullback from Oct on, the downside risk following the next leg up will be HIGH.
Additionally there is the potential for the pullback to last several months into the seasonal early winter low. If for instance that were to be a not uncommon 50% pullback on the spot chart to roughly 4.00, that would represent some real pain for holders of the Feb. contract."

The main point here is that with the roll tonight and the current Nov/Dec spread adding something like .72 to the spot chart that resistance level may be in play. In fact it is the 50% retrace on the Dec chart from yesterdays lows.


Note the Head and Shoulders neckline that also cuts right about there: quite a lot of resistance all together. And IF that level is taken out, the .618 remains, exceeding that would be a real indication of unusual strength. The next  fib retrace on the longer term charts would be the .382 retrace of 13.70 to 2.40 at 6.72.

Unusual strength is unlikely given the seasonal trends and the current overbought condition of equities. BUT...


Click on chart to enlarge.
The Dec  chart has ALREADY retraced 50% of it's move off the lows AND
with the roll into Dec. as the spot month, even further deterioration down to the 5.00 level will still be pretty healthy looking on the spot chart:







.

Tuesday, October 27, 2009

Euro Hit .76 Retrace





The Euro topped out  July08 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 .76 at the high of 1.5062 last Thursday one year later  . Additionally  the "c" up from 1.2457 has a very complete look to it's count at the high. That is likely the termination of B .

The completed B implies a high risk of Euro weakness to under 1.2329 with C=A targeting 1.1353. Of course the 4th of lesser degree ( on the REALLY long term chart) may also offer support around 1.16 but these are still huge moves having presumably a huge negative impact on USD commodities.

Confirmation probably would take an overlap of 1.40, a little closer, the .618 retrace of that move up from 1.40 hits about 1.441. All a long way off.

WTI Update


Overnight WTI has been in a tight consolidation and new lows are likely. Even if this is just a corrective move down a little c=a targets 75.65. And the .382 retrace of the last leg up is at 75.53. That will be an interesting support test.

Longer term the structure of the move down from the high @ 82.00 is not  a clean 5 wave count. YET. (Amazing what 2 weeks can do.)  It is possible to use the 81.50 as a failure and count down from there, but the 82 high really was a complete 5 waves up from 65.05. We have seen many early starts to big moves look similarly ambiguous, and it could be we get abc's all the way down, in a B wave or X wave correction to the 32.40 to 82.00 structure.

More will be revealed.

Heads Up

The potential for an acceleration to the downside is HIGH.


                                                Chart from Daneric's Elliott Waves

The above log scale chart of the Dow has the supporting trend line for the entire move up right under today's close. I'm not sure how widely followed a log scale would be on such a relatively short term and small scale move but it sure looks significant on that chart.


The above SP chart illustrates a likely count of 1,2-1,2,3, that is a couple hours away from accelerating down and taking out 1060, the 50% retrace and 1050, the .618 retrace of the last leg up . Additionally the support trend line drawn off the July 865 lows and Oct 2  1019 low cuts around 1055.   There is an alternate count     I've mentioned that has a failure at 1095 and only a single 1,2,3 down.  Both of those counts imply a likely end to the corrective rally beginning 666 and RISK of new lows under that number has to be considered  HIGH.   That interpretation would be supported by the penetration of the support trend line on the Dow in the chart above.


               click on chart to enlarge

 Note the .382 retrace of the C wave at roughly the overlap of the last leg up around 1019.

There is a potential alternative count that has the move down from 1100 as an "abc" allowing one more new high . The SP's have to reverse from here and take out 1080 the .618 retrace of today's move pronto to have any hope of seeing that.  And of course the Dow trend line has held SO FAR.

Obviously an equities collapse would be accompanied by devastation in commodities , especially WTI.
All this will be helped along by the USD short covering once THAT gets started in earnest. More on that later.


                                           


Monday, October 26, 2009

Didn't Take Much in the End

A couple of reality based mini shocks like the EU pushing Banks Too Big To Fail to downsize:

ING Will Divest Insurance Units, Sell $11.3 Billion of Stock to Repay Aid ING Groep NV plans to raise 7.5 billion euros ($11.3 billion) in a rights offering and sell its insurance units as the biggest Dutch financial services company seeks European Union approval for a taxpayer-funded bailout.
More to come?

And  Congress displaying un common sense:

From Bloomberg: Housing Tax Credit Probably Won’t Be Extended in U.S., ISI Says
“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note.
We should know more soon. Most economists opposed an extension of the tax credit because it is poorly targeted, very expensive per additional home sold, there was little job creation, fraud was widespread, and there are many serious unintended consequences.

And then there's this :

Remember that wedge?

In any event , the SP support is just under the mid day consolidation at 1060, a 50% retrace of 1018 to 1100, and 1050, the .618 retrace of same. AND cutting SOMEWHERE in there is the trend line up from the July lows 867.

On Hold

The Euro pushed it's high JUST a little Sun. night. It may get one more shot at that, but please , when the elephants move toward the exit it's going to get ugly. The short term rising wedge trendline is just under 150.

SP is chopping sideways in an obvious consolidation , with the 1071/1070 lows from last week looking vulnerable.
Hence on hold, waiting for the Euro to finish up, and the SP to gain momentum down.

In other news this weekend, Citibank took itself out of the credit card business.  Ruh Roh .
How The Citi-Grinch Stole Christmas (and Why It's a Good Thing)

 And GS sees the China boom continuing to drive product demand :  
Goldman Maintains $85 Oil Target on `Robust' Demand for Diesel From China Goldman Sachs Group Inc. maintained its forecast for crude oil to reach $85 a barrel by the end of this year on “robust” demand for diesel in China, the world’s second-largest energy consumer.

Friday, October 23, 2009

The Whole World IS Watching




It looks like it won't take much for the USD to break out  above the declining wedge trendline . Call it 75.75 just to be sure.

Those Overnight Highs

WTI got to 81.77 overnight ....not quite a new high , but perhaps a FAILURE to make a new high , and the completion of a final C wave up from 65.05 (  equals the A up from 58.32 spot mo.)  Hard to know just yet and the Fib. retrace points are a way off,  the 50% is 73.41.  BUT at this point, new lows on the day would be bearish short term targeting the Wed low of 77.60


The SP is shaping up similarly with a potential FAILURE at the overnight high of 1095. In it's case however, the last leg up is clearly a 5 structure, and since it too failed to make new highs , an overlap of the beginning point, yesterday's low 1070.50,  would signal a reversal. Under 1050  and it's in BIG trouble. So that's prob. the one to watch.

Morning Yuk




Thursday, October 22, 2009

Natural Gas Inventories











Click on chart to enlarge


































The Herd Catches the Scent

What happened in the last hour?  Do you really think it was Bove's comments on whatever bank?
More likely a highly overbought and weakening market , fed on HFT and ungodly injections of liquidity, starting to sense the end.  There was noise coming from various central bankers re excess liquidity (China) and currency trade concerns (Europe), and  moves to tighten down on  HFT,  but really it's just the natural progression of this market and WE look for a headline to explain it.

Corrective structures CAN be very complex and difficult to analyze /trade. The Dow and SP are just under a 50% retrace of the whole move down and have moved up in choppy abc structures. Obviously if the SP overlaps the beginning of this last leg up at 1019 it will be seen as being all over.  
Shorter term various Fibonacci retraces of that leg will add conviction to the downside as they are taken out: the 50% retrace is at 1060 , and .618 retrace at 1050.


Another MARGINAL new high say 1120, is certainly possible , true for crude too at $83ish but that air pocket last night reminds us of what we fear.

Wednesday, October 21, 2009

Post DOE WTI Highs


The DOE inventories were not exactly bullish. Crude builds in Padds 2, and 3,  miserable distillate demand 12% below LAST year, and mediocre gasoline demand. Don't forget that this time last year the nation was virtually in shock post Lehman Bros. Still when the market acts bullishly on bearish news it's probably bullish.


So what next? This LOOKS like a great sell opp. Hard to believe that higher gas
prices aren't going to further sour consumer confidence
and result in additional demand destruction. 
I suppose that guy from Goldman can drive around a lot.
 
BTW the move up from 65.05 = the move up 
from 58.32 to 75.00 @ 81.73 

Morning Yuk

Goldman Sachs’s Griffiths Says Pay ‘Inequality’ Helps Everyone Oct. 21 (Bloomberg) -- A Goldman Sachs International adviser defended compensation in the finance industry as his company plans a near-record year for pay, saying the spending will help boost the economy.


Comments welcome.

NG On Track

The Natural is progressing: after taking out the previous highs at 5.12,  it is now consolidating under the fresh high 5.23, and testing that 5.12 breakout. It can retrace 50% from here, to 4.79 without doing much  damage to the upside structure. There have been a series of pretty good pullbacks, maybe that's a characteristic of this advance , then again,  maybe we see the rule of alternation come in to play and get a very shallow move holding above 5.00. Target remains 5.58.

Correction to WTI Wedge Failure Portends What?

My charts are down  and I'm using a substitute system that I'm not that familiar with. Sorry. The 50% retrace numbers quoted in the original post,  WTI Wedge Failure Portends What? were off, the correct %  are below.

So at this point WTI has to get damage done before it can be confirmed done to the upside. How about the 50% retrace point of the presumed 3 wave up from 68.88 at 74.64? A little nearer by under 77.60 the 50% of the last leg up from 74.79 would also add to the downside mo.

Tuesday, October 20, 2009

API's

    cl + 3.8, gas - .56, dist  - 1, ref 81.5%

Options Volatility Update

And from Skokie Energy:
mike korn (10/20/2009 11:17:25 AM): wti jun straddle good barometer of implied crude option vol....jun 82.00 strad 20.35 bid, started morning with 20.50 bid
mike korn (10/20/2009 11:20:42 AM): natgas option premiums softer too.  jan 615 strad started 1.04b and now jan 620 1.04b

WTI Wedge Failure Portends What?


WTI has a completed count up from $69 with a wedge shaped 5th , from Thur.s 74.79 low, being taken out this morning. Now it may have well another wave up to new highs still in it to complete the whole move up. Or not. The wedge formation argues against there being another wave, since it's usually found in a final position. There is however, the asymmetry of the abc up from 65 that argues for another wave up at some point ( it really looks like a 3 wave from 69).
On the Fibonacci front there are a number of counter intuitive alternative counts that have a 79.60ish to 79.90 target zone. But for starters the Nov contract had a c=a up at the 79.56 point. That would be the c starting from the 65.05 low and the a from the July low of 61.38.
So at this point WTI has to get damage done before it can be confirmed done to the upside. How about the 50% retrace point of the presumed 3 wave up from 68.88 at 74.64? A little nearer by under 77.60 the 50% of the last leg up from 74.79 would also add to the downside mo.

This move up in WTI as well as all other asset classes is a corrective rally. When it's done, it's resuming the  long term trend. As previously discussed, it's a very crowded trade with almost no shorts left anywhere except NG.

Monday, October 19, 2009

How The Federal Reserve Bailed Out The World

From Zero Hedge, further reading to this mornings post on Analyze This       
Banks Doubled Down: Super Long Assets /Short USD
"What pushed the system to the brink was not cross-currency funding er se, but rather too many large banks employing funding strategies in the same direction, the funding equivalent of a “crowded trade”."..the Bank of International Settlements, "The US dollar shortage in global banking and the international policy response"
and
Why is this critical? We are now back at a time when the only gains in the stock market are at the expense of dollar destruction, with a concomittant funding for dollar denominated assets. In one short year since the collapse of Lehman we have gone back to the same dollar funding risk exposure as was on the books in these days before Dick Fuld's empire unravelled. While whether or not the Federal Reserve stepped beyond its bounds in practically bailing out not just Goldman Sachs, but as this paper has proven, virtually the entire world, is not up to us to decide. However, a critical topic is: have we learned anything from the implications of an unprecedented dollar funding gap, which is likely back to record levels once again? What is obvious is that the Fed's current policy of a weak dollar, contrary to its repeated lies otherwise, is simply enhancing the dollar funding moral hazard: and the breaking point will come sooner or later with disastrous consequences.
As the H.4.1 discloses weekly, the Fed's liquidity swaps are now back to almost zero. This means that foreign Central Banks believe they have the FX swap and dollar maturity situation under control. They thought the same before Lehman blew up. And they were wrong. As the DXY continues tumbling ever lower to fresh 2009 lows, the trade de jour is once again the dollar funding one, although unlike before when the Yen was the carry currency of choice, this time it is the dollar itself, positioning banks for the double whammy of not just a dollar funding shock, but one coupled with a potential massive and historic short squeeze. If and when an exogenous event occurs, not even $6.5 trillion in Fed swap lines will be sufficient to bail out the world economy. It is time someone in Congress asks the Chairman all the pertinent questions that evolve from this analysis and how he is prepared to handle its next, much more vicious, and likely terminal, iteration.
Full BIS paper.

Banks Doubled Down: Super Long Assets /Short USD

Simplified, the current worldwide trade du jour is short the USD,  long assets:  real estate,  paper, commodities , and equities .  That includes the Fed  and other central banks obviously. To call this a crowded trade is a colossal understatement.  Not even sure if "bubble" does it justice. A systemic roll of the dice.  The odds of an orderly exit are laughable.
Twenty Years Ago Today the '87 crash had a 2 month lead time from the mid August high. This market is not going to offer that luxury. Try 2 days.




The USD  may make new lows. Barely, like 75.00 It looks like the final stages of a -5- wave  down from 77.50 to complete a (5) wave wedge of greater degree down from 79.50 to complete a 5  for C. Whew.

Morning Yuk

Adam Storch COO of the SEC

The Business Insider has posted an image and qualifications of Adam Storch, 29-Year-Old Goldman Guy Who Is Now COO Of The SEC.
Storch graduated from SUNY Buffalo. During college he did a stint as a summer intern at Neuberger Berman and worked at Deloitte & Touche for two years after graduating.

Storch then went to NYU's Stern School of Business. This lead to a job at Goldman, where he worked for the last five years.


(Thanks Mish I needed that)

Natural Gas Outlook and UNG

Natural Gas is consolidating just under Friday's highs 4.88. The .62 retrace of the 5.12 to 4.35 "-b-" wave down is 4.83, so new highs over the 4.88 level represents a resumption of the move up and likely advance to test 5.12, the "-c-" = "-a-".  BTW there is still a significant 33% of spec shorts according to Fri.'s COT report.

Over 5.12 and 5.57 looms large. The "-c-" = 1.618 of "-a-" @ 5.59 That target is ALSO  c = 1.382 of a ( of a greater degree on the spot chart) AND the long term .236 retrace of 15.78 to 2.40.  That represents a significant cluster of resistance. Given the near record inventories, and the seasonal tendency for an intermediate term pullback from Oct on, the downside risk following the next leg up will be HIGH.

Additionally there is the potential for the pullback to last several months into the seasonal early winter low. If for instance that were to be a not uncommon 50% pullback on the spot chart to roughly 4.00, that would represent some real pain for holders of the Feb. contract.


UNG is just finishing it's roll into Dec, OUCH! That costs them something like 17% of their position as they pay up.  Hence the UNG price under performance and failure to match the NG spot month  113% move up by a long shot, only 33%.
So if the NG gets to 5.58 or so UNG will be lucky to see better than $12.00. All those holders of UNG MAY be encouraged by upward momentum. but personally I think the upside performance may start to disillusion.

Friday, October 16, 2009

"It was real wasn't it ? "


and don't miss


Guest Post: JP Morgan 2009 Q3 Results – Miracle or Mirage?

CDC on H1N1 ..Not Good

WASHINGTON (Reuters) - Delivery of some swine flu vaccines has been delayed because companies cannot make as much as they had hoped, the U.S. Centers for Disease Control and Prevention said on Friday.
The CDC's Dr. Anne Schuchat said while 40 million doses had been anticipated for the end of October, only about 28 to 30 million doses would be available.
"Yields for vaccine are lower than would be hoped," Schuchat said in a telephone briefing.
She also said deaths from H1N1 swine flu were above the epidemic threshold in some U.S. cities and states. H1N1 flu activity was widespread in 41 states, she said.
"It is unprecedented for this time of year to have the whole country having such high levels of activity," Schuchat said.
She also said more children had died in the space of a few weeks than usually die in an entire influenza season. "There are now a total of 86 children under 18 who have died from the 2009 H1N1 influenza virus," Schuchat said.
As of Wednesday 11.4 million doses of H1N1 vaccine were available and 8 million had been ordered by states for distribution.
The U.S. government has ordered vaccine from five companies: Sanofi-Aventis SA, CSL Ltd, Novartis AG, GlaxoSmithKline and AstraZeneca unit MedImmune.
Schuchat said 15 percent to 20 percent of patients with H1N1 who needed to be hospitalized were requiring intensive care.

Natural Gas Moves Inversely to WTI


                                                                  At least enough.

BTW  the low yest. still qualifies as a -b- wave down , let's see if it can take out the 5.12 level, obviously -c- = -a-.

WTI Short Squeeze Close

That was a nice clean 5 wave move up yesterday into the 78.17 high. The final acceleration occurring at the 2:10 pm margin change for daytraders.  Call me a conspiracy theorist but I can 't help thinking that the flash trading folks have discovered CME Globex WTI orders. And it could be I'm just late to the party on that. If true, it obviously would make a very fine case for using the floor, or Clearport.

In any event the 78.17 high represents a move up from 58.32, that if complete, will equal exactly 50% of the preceding ABC up: 33.55 to 73.23. And that will be a complete series of 3 ABC's up from 32.40, the max allowable.

The USD finally looks to have a bottom in place after a classic declining wedge 5th. The Yen led the way noted Mon.   USD: Ready for Take Off?   Followed by Gold selling mid week. Very unusual with the dollar still weakening at that point.
And finally, the SP squeezed up into 1095 overnight , for C= .78 of the A and nearly a 50% retrace of the whole move down at 47%. Also curiously, 1098 was the opening on Oct 6 2008 , the day the SP dumped to 1009 and the likely candidate for the 3 of 3 of 3 moment of recognition title.

SEATBELTS  EVEYBODY.

Thursday, October 15, 2009

Major MoMo Sucker Trade To Fade

WTI made a VERY impressive run to new highs on inventory data that is questionably bullish.
Padd V crude stocks down 2.7 and Padd III up 4.1.
Leaving out the Padd V give crude a 3.0 mln build. Runs % down 4.1%  at 80.9.% Cushing crude stocks up 400,000
Crude Imports -0.367
Gas Imports  - 0.321
Gas Demand  -0.013
Dist Demand +0.03
I suppose shutting down refineries works to clear that pesky gasoline inventory but doesn't that kinda put the whack on crude? 
MoMo traders to the rescue.
BTW notice Gold and Yen lately? Will the Euro be far behind?

It's NOT Goldman Sachs

If you listen (or watch ) MSM, this morning you would have heard the puzzled questions re "what was SO BAD about  those earnings after all "?  Whatever. The selling started at 2:00 a.m. in currencies and Gold broke down below a trendline it had been creeping up yesterday rather quickly. Equities probably had a GS earnings release bid in. Now thats out of the way we get to hear the anchors bleat re 4 SP's down.


    The Yen looks like it's got a  Head and and Shoulders neckline break coming up. It never came close to putting in a new high yesterday.

Wednesday, October 14, 2009

Those Earnings

from JPM:
"Net revenue was $7.5 billion, an increase of $3.4 billion, or 85%, from the prior year. Investment banking fees were up 4% to $1.7 billion, consisting of equity underwriting fees of $681 million (up 31%), debt underwriting fees of $593 million (up 19%) and advisory fees of $384 million (down 33%). Fixed Income Markets revenue was $5.0 billion, up by $4.2 billion, reflecting strong results across most products and gains of approximately $400 million on legacy leveraged lending and mortgage-related positions, compared with markdowns of $3.6 billion in the prior year. "
Marking up the mortgages huh?

and  Intel's
SAN FRANCISCO (MarketWatch) -- The tech sector staged an early rally on Wednesday, powered by Intel. Corp.'s upbeat earnings report.
Intel /quotes/comstock/15*!intc/quotes/nls/intc (INTC 21.03, +0.54, +2.64%) , the world's biggest semiconductor company, posted a lower profit, but reported better-than-expected sales and a fourth quarter outlook that exceeded Wall Street expectations....
Riding on Intel's upbeat view of the near future, shares of other chip companies also rose.  These gains helped set the stage for a sector-wide rally that pushed the Nasdaq Composite Index up about 1% to 2,160.

Sure hope consumers decide to buy new computers for Christmas.

US consumer confidence falls in latest week-ABC 

NEW YORK, Oct 13 (Reuters) - ABC News on Tuesday said that its weekly gauge

of U.S. consumer confidence fell, as Americans took a dimmer view on the buying
climate and their personal finances.
The Consumer Comfort Index fell to -48 in the week ended Oct. 11, from a
reading of -45 in the previous week.
The index first hit a record low of -54 in the week to Dec. 1, 2008, and
again in the week to Jan. 25, 2009.

WTI Highs

Back at the drawing board, moving around the ABC's a little.
Big Picture: long term resistence just overhead at 76.35/77.17 as the .382 retrace of 147.30 to 32.40, 2.382 x 32.40, and the avg. historical seasonal rally target ( W. Zimmermann at United) in Oct.

Shorter term we have a candidate right here at 75.32 the days highs.
The move up from 65.05 is most clearly counted as an abc with the c=a at 75.32. And that move up can be seen as C of larger degree ABC with C = .618 of A @ 75.35.

The WTI has traded in a very choppy manner since late July. The chart has been open to many potential alternative counts and it's been difficult, at least for me, to picture the end game. See    
WTI GRINDHowever there is a potential count up from 32.40 structured in 3 series of ABC's, with this morning's high the termination of the 3rd , and final series of ABC's up, at 75.32.

Morning Yuk: Saudis Seek Payments for Any Drop in Oil Revenues

From the NYT,
Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.

Tuesday, October 13, 2009

NYSE Short Interest

From Zero Hedge

On October 9, the NYSE provided its latest Short Interest update. The total number of shorted shares on the New York Stock Exchange at September 30 was 13.06 billion, a 3.5% decline from the 13.52 billion on September 15, a 42.5% decline from the all time high short position of 18.61 billion on July 15, 2008, and a 23.8% decline from the 2009 high of 16.17 billion in mid-March. The latest short interest represented a mere 3.42% of the total share outstanding as more and more bearish bets are closed, either voluntarily or forecefully. The current SI is equal to the short interest at the end of 2007.

Natural Gas Hangs Tough

Natural Gas has spent the last week trading sideways in a range between 5.12 and 4.75, and this morning it's right at the midpoint.. It has been supported so far at the 50% retrace point of the last leg up for the Nov contract. That leg is labeled "a" in the below chart.


The descending highs over the last week suggest that there is some consistent selling going on around the 5.00 level, while the lengthy sideways move near the highs also suggests decent buying interest. That leg is labeled "b" and is clearly NOT an impulse wave down, whether the 4.75 lows hold or not.

Getting back above the 5.00 level would indicate new highs are likely.
AND if the "c"="a" it targets 5.57 from 4.75.
That target is ALSO c = 1.382 of a ( of a greater degree on the spot chart) AND the long term .236 retrace of 15.78 to 2.40.
That represents a significant cluster of resistance. Given the near record inventories, and the seasonal tendency for an intermediate term pullback from Oct on, the downside risk following the next leg up will be HIGH.

Additionally there is the potential for the pullback to last several months into the seasonal early winter low. If for instance that were to be a not uncommon 50% pullback on the spot chart to roughly 4.00, that would represent some real pain for holders of the Feb. contract.

SP: Strange Attractor All Over Again

It couldn't be simpler: the SP low of 666 x 1.618 = 1077.58. Today's high was 1079.46. This has been discussed before. See
SP; What do you think? 

Can it exceed 1080? Perhaps not. It's bumped up near here a couple times before, Sept 23. and Sept 17.

BTW 1078 is also exactly the mid point of the 3 of 3 down ( I have that from 1313 to 840). That point was passed in a vicious dump occurring on Oct 6th 2008, with an open of 1098 and a low of 1008. Definitely a moment of recognition.
Another oddity if you care to call it that; The SP high of 1576 was made Oct 11 2007. What is it about Oct.?

So look out below brother. LOL . A move down would probably have to take out the 50% retrace ( and 4th of a lesser degree) of the last little "e" leg up at 1044 to be taken seriously.
Click on chart to enlarge.

Monday, October 12, 2009

USD: Ready for Take Off?

I am really not a FX person but in THIS market, we're All FX people.
Sunday my waitress was telling me how the USD was toast, and that I should buy gold, so let's take another look.




The Euro topped out July08 at 1.6038 and moved down in 5 waves to 1.2329 in October of 08 .  That .3709 long term move down , call it A,  has been retraced  .68 at the highs of 1.4840 . 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- beginning from 1.40 is equal to .61 of -c- at the high of 1.485 . While it is possible for that "e" structure to eke out some minor new high like 14855,  further significant gains above there are very unlikely.
The implication for the Euro is dire, for instance a C=A down from 1.4850 targets 1.11.


The Japanese Yen is also at a significant juncture. After correcting up vs. USD in an ABC structure lasting TEN  years, the Yen topped out Jan09 and came off in a clean 5 waves to April 09. Since then it's gained against the USD in a series of abc's that has taken it nearly back to last Dec.'s highs.  Call that waves 1 down  and 2 back up (or a and b). Last week Crudewire called attention to Yen vulnerability. See  USD EURO YEN ETC  and
Yen Leads the Way Down 





If the Yen is beginning a 3 wave down after finishing a TEN yr. move up , the downside  potential gets really intresting; for instance the move down in the mid 90's was from 125 to 68 , so IF this leg is a 3 or C down AND it equals A you're talking about it losing half it's value vs USD. 

Hard to imagine right now.  But then the unimaginable seems to be happening more frequently.

Schizophrenic Market

The following stories found on the Bloomberg Energy page tell the whole story.

 Crude Oil Rises a Third Day as Demand May Increase on Economic Recovery Crude oil rose above $73 a barrel for the first time in three weeks as advancing European equities reinforced confidence in the global economic recovery.
Sunoco Joins Valero Shuttering Refineries as Winter No Match for Fuel Glut Oil refiners from Valero Energy Corp. to Sunoco Inc. are cutting the most capacity since the early 1980s, anticipating the coldest U.S. winter in a decade won’t be enough to soak up a glut of fuel.
Kuwait Reduces November Oil Price as Demand From Asian Refiners Declines Kuwait Petroleum Corp. cut its official selling price for November crude oil, reflecting reduced demand from refineries in Asia.

Friday, October 9, 2009

Yen Leads the Way Down


Keep an eye on that trendline, against this mornings lows.      
From Mon. 10/5:
"The Yen is much less of a component in the DX but appears to have 5 waves up with some evidence of topping. Additionally it is famously responsive to Japanese intervention. :

Oct. 5 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii issued his clearest warning yet that his nation is open to intervening in the currency market even as the Group of Seven declined to criticize the tumbling dollar.
“If currencies show some excessive moves in a biased direction, we will take action,” Fujii said Oct. 3 in Istanbul after a meeting of G-7 finance ministers and central bankers.

Thursday, October 8, 2009

WTI Update


Thing about B waves is you tend to re label the chart alot. The upside is, you can go long OR short and if you hold long enough you can USUALLY make money. The last 3 months has seen a number of choppy swings back and forth between $65 and $76  in abc structures. Today the high at 72.55 was a .76 retracement of the spot month high at $75 to the recent $65 low.  Possibly an X wave termination to be followed by another abc DOWN. Taking out Thur.s low at 69.17 would the confirmation of that.

 click on chart to enlarge

On the other hand, the action is clearly NOT an impulse wave down. The USD has yet to reverse course , and WTI has been chopping nearer to the top than the bottom. SO fresh highs over $73 and likely it'll try for 76.30 the .382 retracement of 147.30 to 32.40


Natural Gas Update


As mentioned previously , on the spot mo. continuation chart, the c =a at 5.00 has been exceeded. So far the downside action from 5.12 looks corrective. The new target is c = 1.382 of a @ 5.57, that is also -c- = -a- on the Nov. contract, AND the long term .236 retrace of 15.78 to 2.40. That represents a significant cluster of resistance. Given the near record inventories, and the seasonal tendency for an intermediate term pullback from Oct on, the downside risk following the next leg up will be HIGH.

Additionally there is the potential for the pullback to last several months into the seasonal early winter low. If for instance that were to be a not uncommon 50% pullback on the spot chart  to roughly 4.00, that would  represent some real pain for holders of the Feb. contract.

I have to say it's been really nice to be bullish on something the last month. Especially natty. See Natural Gas Update 
  Natural Gas Slide
 and
Monthly Bar Chart NG
 Oh well, there's always next year.

Natural Gas Inventories











Working gas in storage was 3,658 Bcf as of Friday, October 2, 2009, according to EIA estimates. This represents a net increase of 69 Bcf from the previous week. Stocks were 473 Bcf higher than last year at this time and 480 Bcf above the 5-year average of 3,178 Bcf. In the East Region, stocks were 138 Bcf above the 5-year average following net injections of 37 Bcf. Stocks in the Producing Region were 272 Bcf above the 5-year average of 897 Bcf after a net injection of 24 Bcf. Stocks in the West Region were 70 Bcf above the 5-year average after a net addition of 8 Bcf. At 3,658 Bcf, total working gas is above the 5-year historical range.

Wow.