Friday, December 31, 2010

Happy New Year!

There is a pretty good argument that we have the completion of the move up that has taken place over the last 6 mo.s.
Active contract Daily
click to enlarge
Note the 14 Day RSI is exhibiting negative divergence, and the MACD rolling/crossing down.
 The structure up can be counted as 5 waves. The "e" = .46 of the "c", the "c" = 1.5 of the "a", and the "e" = .39 of "a" thru "c".
Even if you are viewing the last 6 mo.s up as  the beginning of a longer term upward structure that makes significant new highs, this is looking like a place to take profits with serious risk of a major pullback, ie a 50% retrace of the last six mo.s, or 125 points.

There is a tremendous amount of complacency out there..note the VIX 
click to enlarge
Readings below 17 mark the beginning of major moves down ,  and there is a very high risk of that being true again. No matter what the Fed does. This argues for more than  merely a corrective retrace of the last 6 mo.s.
 Weekly
 click to enlarge
Again note the 14 Week RSI negative divergence vs the April 2010 high.
Frankly this structure up from the lows has presented a lot of analytical challenges since Sept. of 2009. One of the featured characteristics since then has been overlaps of previous high or low points, some ( and perhaps increasing)  follow through, and then a reversal, carving out an expanding triangle type of formation.

So while the SP might not crater from here to new lows under 666, a move to new lows under 1000 would be a continuation of the last 16 months pattern.














Thursday, December 30, 2010

WTI Tops

 From the WTI Update of Dec 22;   
"the -C- = .618 of the  -A- at 91.76. Also roughly the 50% retrace on the above chart.....
In general looking at this as an area that would likely be significant resistance for this contract and potentially the exhaustion point  of the B wave up."
It DID print 12 cents above that point, however the Fib ratios on this scale have a lot of wiggle room.
Subsequent legs to the downside ARE structuring as 5 waves.

click to enlarge

If you think the move down is corrective that makes what I have labeled 1 the A, so you want the C not to exceed the A , or 90.03, additionally the .382 retrace of the last structure up is at 89.95.

If the 3=1.62 of the 1 it targets 89.19.

Wednesday, December 29, 2010

Monday, December 27, 2010

Natural Gas

It's been 10 days since the last post,  when the market had just printed 3.96, and the bounce to Fibonacci resistance called for was accurate.
"So a bounce from near here would be expected ...50% of the last 4.55 to 3.96 leg is at 4.25, .382 = 4.18."

Turns out both 4.25 and 4.18 are providing a little resistance, and it looks like the 4.18 may get a re test  (written this morning when trading around 4.00)
However the count still suggests further downside work and a new low for the Feb contract will coincide nicely with the 3.80 target for the spot month mentioned in Natural Gas Update from Dec 9;  
"If this top is in here an X wave could easily retrace .62 of the move up from 3.28 (to 4.65), to target 3.80."

 Jan Hourly
 click to enlarge
Note the 50% retrace at this afternoons highs of the 1. And if that -a-,-b-,-c- structure up is completed, a move down equal to the 1 (or a) will target 3.86 from here.  

These are relatively unexciting swings to be making calls on, however prints under 3.85 are to be viewed as potential end points for the X wave down mentioned above and in the last post. The significance of that is derived from the much longer term count; please see Natural Gas Review from June 8.
The likelihood of the 3.28 low holding is high as the .76 retrace of the 2.40 to 6.11 abc structure. And 2.40 is pretty solid as described in the above link.
So another set of abc's up from mid winter seasonal low's could be be expected.






Wednesday, December 22, 2010

Christmas at the Airport

I was waiting for a flight to come in at Newark Airport yesterday and was in my normal impatient pre holiday mood, working through all I had to do before Christmas. Waiting for the plane,  I noticed a slightly tense couple next to me waiting to meet someone. They looked like they had been there awhile. Typical airport scene, everyone in a hurry.
A tan, slightly weather beaten man about 35 came out from the arrival hall and I noticed he was wearing camo's and desert boots.
The woman next to me raced forward and wrapped her arms around this guy and was not letting go, she was holding on as if a life depended on it. Quite a few minutes later they turned to go and of course she was crying tears of joy and really probably a whole lot of feelings I can only guess at it. Believe me , it's one thing to see a picture of this, and a whole 'nother thing to see it in person.
I don't really know what the back story there was, but witnessing that reunion was a gift, it really put me in mind of what's important not just at this time of year but all year.


Merry Christmas

WTI Update

From last Wed post;
"Just does NOT look like a big impulse wave down, or even ready to begin one for that matter. So looking for an attempt to test the highs. May fail of course."
On the road today (like a lot of the last week) but will try and update this as I go;
Some quick charts
 Active Mo Continuation Week
click to enlarge
All these continuation charts have slightly different highs and lows, but this one is what I am going to work with.
 Note the negative divergence on the weekly 14 RSI.
 Additionally the -C- = .618 of the  -A- at 91.76. Also roughly the 50% retrace on the above chart.

Note the daily 14 RSI neg divergence.
On the daily chart above the "c" wave began at 70.76 in late Aug. and moved up to 88.63 on Nov 11. before pulling back to 80.28 on the 23rd of Nov.
This latest leg up will = .618 of that 70.76 to 88.63 structure at  91.32
The 147 to 32.4 initial "A" wave down is retraced 51.5% at 91.32.
In general looking at this as an area that would likely be significant resistance for this contract and potentially the exhaustion point  of the B wave up.





Friday, December 17, 2010

Natural Gas Nose Dive

The sharp move lower in Natty over the last week, at 68 cents (remember the good ole days!), represents a 15% decline in a week. You don't see that % decline, that quickly, often. 
This mornings lows of 3.96 represent a 50% retrace on the spot month chart of the 3.28 to 4.64 structure. Additionally a case can be made for 5 subwaves down from 4.55
click to enlarge

Note the negative divergence on the hourly 14 RSI.
So a bounce from near here would be expected ...50% of the last 4.55 to 3.96 leg is at 4.25, .382 = 4.18.

The last post calling for the X wave down that we are experiencing, was pretty timely and I hope everyone got a look. I Instant Message Skokie Energy clients when  I post, and also try and feed Twitter. If you email me with some info I will add you to the I M list. guywbishop@gmail.com

Thursday, December 16, 2010

Uh Oh

Couple of recent headlines...
from Dec 15 Commodity Assets Expand to Record $345 Billion in November, Barclays Says
 and from B of A Fund Managers Survey: a huge surge in energy bulls

 A net 44 percent of the respondents predict the world’s economy to strengthen in 2011, compared to 35 percent a month earlier. A net 51 percent anticipate corporate profits improving next year, up from 36 percent in November. At the same time, more investors believe that inflation is likely to rise with a net 61 percent of the panel forecasting higher core inflation in 2011.
Energy has dislodged Technology from its pedestal as the world’s favorite stock sector for the first time in a year. Technology had been the top pick for 11 consecutive months since January. A net 38 percent of asset allocators are overweight Energy, up sharply from a net 24 percent in November. A net 34 percent of the panel is overweight Technology, a monthly fall of one percentage point. A second large gainer was Materials, with an extra 8 percent of respondents moving to overweight positions. Both Energy and Materials are sectors that traditionally benefit from rising inflation.

And as most are aware the CFTC Commitment of Traders reports that non commercial O.I. for the Crude Rbob and HO reflecting the above sentiments and show long O.I. at highs for the second half.






 

Wednesday, December 15, 2010

WTI Consolidates

click to enlarge
Just does NOT look like a big impulse wave down, or even ready to begin one for that matter. So looking for an attempt to test the highs. May fail of course.

PS 1:00 pm,
The 50% retrace of the 147 to 32.40  5 wave leg down , at 89.70 has been pushed through of course. Is it possible that the .618 retrace at 103 can be achieved in this macro environment? Unlikely, for political considerations if nothing else. Additionally the USD appears to be supported here and may be beginning a new move up. How far can the "50%" retrace area be pushed? Maybe 52% still qualifies as being in the window. That would be 92.00.
And while crude stocks are showing some return from the stratosphere, what exactly is so bullish about the following charts:


Thursday, December 9, 2010

Natural Gas Update

Natty cranked up to near levels that can be seen as significant resistance for an initial abc structure up from the 3.28 lows.
Continuation Daily
click to enlarge
The key points here are the c=1.03 of a, and the move up from 3.28 now equals .36 of the 2.40 to 6.11 abc structure up from the lows last year. NG has also retraced 48% of the 6.11 to 3.28 move down. None of these Fibonacci relationships are hitting the mark exactly ( often the case) but taken together they suggest extreme caution regarding expectations for further upside from here, at least medium term.
Though not shown on the above , the daily RSI is also showing slight negative divergence at the high, and the slow stochastic is rolling over. 
So while this may be still only be the beginning of a more robust structure up that occurs over the next  couple years, an X wave down is to be expected at some point. Additionally the avg seasonal  price peak is Nov 20,  so it's right in there.
If this top is in here an X wave could easily retrace .62 of the move up from 3.28, to target 3.80.

Shorter term;
Hourly
 click to enlarge
Again note the negative divergence on the RSI
If the rally is to continue than this last leg up needs to NOT be overlapped at 4.35. And while there has been a very difficult series of that lately, with a potential abc up in place , seasonal factors etc. this contract needs to provide encouragement to the bulls here, or else.
Overhead there is resistance at 4.70 and 5.07, the .382 and 50% measures of the first abc up from 2.40 to 6.11
So all in all looking for the X wave to develop now  .


The Rock and the Hard Place

Michael Pettis describes the classic "between a rock and a hard place" the Eurozone faces in  The rough politics of European adjustment
A must read that leaves one wondering what the future political landscape of Europe will look like.

If You Were Wondering

Don't miss this from Zero Hedge;

Arms (TRIN) Index At Most Extreme Deviation Since 1956

Wednesday, December 8, 2010

Rbob / EIA Inventories

Here's a little something to keep in mind as Rbob gets hammered today.
From Reuters; managed money net longs.


  The just realeased EIA inventoy numbers;

10:30 08Dec10 RTRS-EIA-U.S. WEEKLY GASOLINE STOCKS UP 3.81 MLN BBLS TO 213.96 MLN, VS FORECAST OF 0.5 MLN BBL BUILD
10:30 08Dec10 RTRS-EIA-U.S. WEEKLY DISTILLATE STOCKS UP 2.15 MLN BBLS TO 160.21 MLN, VS FORECAST OF 0.5 MLN BBL DRAW

 click to enlarge
So if you're long anytime after Dec 1 you are now under water.
PS    Y on Y Gas demand down.7%

Monday, December 6, 2010

OMG Natural Gas

The pull your hair out contract. I haven't posted on this forever, since Nov.22, Natural Gas Update (self protection prob.) All the comments and the count in that post are still relevant.
Targets remain 4.80 to 5.10...for this first abc up from 3.28.

Tops, Elliott Wave and Stuff

Starting to feel like Bob Prechter in the '90's...All Bear All the Time. And all the old sayin's like "a bull market climbs a wall of worry" and " buy a market that goes up in the face of bad news" are runnin round my head.
Problem is: I hate buying a market that is being supported by only one factor, even if it is the Fed;

From the 60 Minutes interview with Ben;
Q: How would you rate the likelihood of dipping into recession again?

A: It doesn’t seem likely that we’ll have a double dip recession. And that’s because, among other things, some of the most cyclical parts of the economy, like housing, for example, are already very weak. And they can’t get much weaker. And so another decline is relatively unlikely. Now, that being said, I think a very high unemployment rate for a protracted period of time, which makes consumers, households less confident, more worried about the future, I think that’s the primary source of risk that we might have another slowdown in the economy.
Q: You seem to be saying that the recovery that we’re experiencing now is not self-sustaining.

A: It may not be. It’s very close to the border. — it takes about two and a half percent growth just to keep unemployment stable. And that’s about what we’re getting. We’re not very far from the level where the economy is not self-sustaining.

(I love that first response;   so glad there won't be a double dip.)

Plus there's the little issue of all this commodity froth being assisted by the last great bubble of the post modern era..see China's credit bubble on borrowed time as inflation bites from Ambrose Evans-Pritchard and RBS.

Meanwhile WTI Crude hits the 50% retrace point at 89.76


click to enlarge
Note the negative divergence on the RSI (so far)
Intermediate term;                                               Jan  Daily
 click to enlarge
Again note the RSI divergence.
Here the Z = .618 of the Y, and the Y= 2x the W.
The legs labeled wyz are clearly abc structures that are related by Fibonacci ratio's.

The SP came very close to the .618 retrace of the entire move down from 1578 to 666 @ 1229, hitting
1227.75 or .616

Can it continue to go higher? WTI at the .618 retrace say of $103 ? Or SP's at 1339; the .76 retrace?
Sure, Elliott .618 retracing of waves are absolutely common and usually expected. But given the jobless recovery and the Fed 's justification of QE2 policy, erring on the side of caution against todays significant Fibonacci points makes sense.







Tuesday, November 30, 2010

Gasoline Demand -.3% Y on Y

NEW YORK, Nov 30 (Reuters) - U.S. retail gasoline demand
rose 2.3 percent last week from the week before but fell
slightly year-on-year, tempered by winter weather and increased
air travel, MasterCard Advisors' SpendingPulse report showed on
Tuesday.
Average gasoline demand rose 211,000 barrels per day (bpd)
to 9.33 million bpd in the week to Nov. 26 compared with the
previous week, although that represented a drop of 0.3 percent
from the same week last year.
The reporting period includes the Thanksgiving holiday,
which MasterCard had expected to boost demand as consumers
traveled to visit their families.
Over the latest four weeks, U.S. gasoline consumption fell
0.3 percent year-on-year.
Average retail gasoline prices slid 2 cents versus the
previous week to $2.86 a gallon, MasterCard said.
MasterCard Advisors estimates retail gasoline demand based
on aggregate sales activity in the MasterCard payments system
coupled with estimates for all other payment forms including
cash and checks.

Crude and FX

In Europe this morning the bureaucrats are not having a good one. One can only imagine the scramble to get out of Euro's , from CFO's  to the individual saver.  
Gold In Euros Breaks Out, As Inedible Metal Hits All Time Highs In Europe

 And Brent priced in Euro's hits new highs for the last 7 mo.'s. as well. See Previous post. 
WTI Euro Divergence
Of course today's Eurozone jobless number rising to 10.1% doesn't exactly bode well for whatever products they might be planning on refining from that crude.
And storage isn't particularly attractive with the curve flattening out.

Back to FX - with all the noise over Euro, one can be excused for overlooking the Yen top. 
 The more recent complete 5 waves up from May this year is rather obvious, and the Fib retrace points no doubt will provide some support , at least short term. However this latest move up likely completes a long term move up beginning in '07 at 80.59. If that is true then the the Yen will overlap this years lows, with .97 being a .62 retrace of the longer term structure. 


Combined GDP of Eurozone, US and Japan '09 = 35.6 Trillion
China and India = 6.22 Trillion











Friday, November 26, 2010

Ireland NOT Unique

From Reuters ;
EURO GOVT-Bunds rise on periphery nerves; Spanish yields up
"Yet again, we've kind of shot ourselves in the foot this morning in terms of the front page of the Irish Times talking about how senior bondholders may have to burden-share in relation to the Irish banks," a trader said.
"If the story in the Irish Times is true, Spain and Portugal and Italy and everybody will be feeling the effects of it," he said.




And from the NYTimes;
 
Irish PM's Majority Down to 2 With Election Loss
Sinn Fein candidate Pearse Doherty won an overwhelming 40 percent of votes in Donegal, northwest Ireland, according to election officials. The final result from the six-candidate race is being announced later Friday.
Cowen faces a struggle to win votes on raising taxes and cutting spending after the 2011 budget is unveiled in parliament Dec. 7.

AND
 
Until now, Ireland has stressed that its financial laws give 100 percent protection to senior bondholders, just like depositors.
"The constant 'goal post moving' in terms of regulation ... does enormous damage to investor and entrepreneurial confidence," Ostwald said in a note to investors, adding that such talk will cause government bond yields to rise even in countries like the U.S, Britain, Germany and France.

Coming soon to a theatre near you.
See Dubai Not Unique

Thursday, November 25, 2010

Euro Update

click to enlarge
Pretty easy to see the 5 wave count down off the 137 high. So far the action off the lows is looking like an abc correction with c=.78 of a. With a better than average likelyhood of new lows , we will call the move down 1 of greater degree and the correction 2. So a 3 coming up.
click to enlarge
So if we can expect another move lower, it will easily take out the .618 retrace of the last leg up as well as the .76 and .78 (would be 1.2952). Even equal legs down targets 1.289 from here. So likely will confirm the above structure UP as an -A-, -B-, -C-.

What does that mean? Well if it's a corrective ABC  up, that is complete then new lows under 1.1880 could be expected.

European Yields Hit Highs on Turkey Day

Ireland :
click to enlarge
Nov. 25

Spain;

Wednesday, November 24, 2010

WTI Update

Turns out the move down  was a "b" wave, down and under on the Jan contract , conventional on the spot mo.
Additionally the consolidation has taken quite a bit of time so relabeling the Elliott count is called for;

click to enlarge
 A "2" wave of course CAN carry quite deeply into the body of the "1" , however given the down and under "b" this will more likely end up as a flat with resistance very nearby at the .382 retrace, if it hasn't reached it here.
Of course the USD and geopolitical risk has me leaning toward the interpretation as a flat.
The longer term implication of the "3" wave being about to begin, actually increases downside risk here significantly. Even modest Fib multiples of the "1" put the measured target for "3" well under the 75 level. If we are looking at an ABC down off the highs and C=A from here that puts WTI at roughly 75.
 



Tuesday, November 23, 2010

Monday, November 22, 2010

WTI- is consolidation done?

click to enlarge
If the above label of 4 is correct we have started a "5" down with targets as described in prior
TI Again post. If the 5th extends and is 1.382 x the 3rd wave it will target 75.68 or lower.
Of course if the lows today are a "b" wave, then we revisit the mornings highs.

Greece II

Now it's the Greeks turn again. Check out the new highs in the bond yield.

Natural Gas Update

If you are interested in the backstory here is
Natural Gas Review  from June 8, and 
Natural Gas /Seasonal Lows from Aug 29

click to enlarge
The rally off the seasonal low has been rather difficult to count, with sharp reversals and abc's so far being the pattern. This can be indicative of merely corrective moves, however for reasons stated in above links, the rally likely has further to run even though it is structured in abc's.
If the next series of abc's were to equal the first "a" it will target roughly 4.80. Additionally the move up is 50% of the 2.40 to 6.11 move at 5.07. Please note the horizontal resistance at the 5.00 level.
So 5.00 +/- .10 will be closely watched.

click to enlarge
Shorter term the 50% pullback of the -3- wave ought to contain the -4-, and an overlap of the 1, at about the same level, would raise red flags on the bullish count above.

Week End Fundamental News

The CFTC Commitment of Traders report reveals specs liquidating last week; oil long and natural gas short open interest both coming down.  Bloomberg has a nice summary and groovy charts for both the crude net longs and gas net longs.
Given the still sizable NYMEX NG managed money short open interest at  201,274 contracts, I'd guess there's still a ways to go.
NG Net Longs

Of note also is last weeks Baker Hughes Rig Count, finally starting to decline; the 19 rig decline is all NG.

Thursday, November 18, 2010

Euro and the SP

For the first time in a long time the SP and the Euro are not working in tandem. The Euro DID have a big night up but has been coming off since the NY open, as has the Yen, yet SP's have been of course on a tear. TY GM , Ben B et al. How long does this key correlation of the risk trade continue to diverge? This occurred during the period  just  preceding the SP high as well.
 SP Dec Hourly
click to enlarge

Euro Dec Hourly
click to enlarge
Note the SP's have reached the 50% retrace of the move down.

TI Again

Ti DID get lower lows, though not 3 dollars worth. In fact the 3 wave count looks complete at 1.23 x the 1.
Jan
 So  far this is only 3 waves down, it needs a 5th to qualify as an impulse wave and the beginning of something much deeper. It could be that the 3 waves are an abc down into the 4th of lesser degree, but crude would have to overlap 85.76 to confirm that (though retracing more than .618 or 83.81 would be a good indication of that happening). Still believe the longer term structure and factors dicussed in yest.s post favors the impulse wave down and a much bigger move to come. The 50% retrace on the above really should contain the bounce.
Jan


The 3 did not (at least yet) extend, and at 1.23x 1, was rather minimal. Subsequently the 5th, if it shows up should get an extension. If it were to be .618 of 1 thru 3 it will be 4.94, very similar to the preceding waves, if it extends, say 1.382 x the 3rd =7.19 and so on.

Wednesday, November 17, 2010

Euro

Yesterday the Euro of course was the big story. At the lows of 134.44 it had retraced 50% of the entire leg up that began in late August, and bounced. A little.
click to enlarge
A 50% retrace can often  mark a reversal (see crude oil) but it all depends on context. How's the overnight bounce look?
Dec 15 min
click to enlarge
Doesn't look exactly like an impulse wave up.In fact it is clearly corrective with overlaps and a rather modest .382 retrace of the last leg down yesterday morning.
So at the moment lower lows look pretty likely. 
How much lower? Under the next milestone would be the .618 retrace at 132.30.
It seems like just yesterday the whole world was complaining about the devaluation of the USD and hyperinflation. Although yesterday no doubt saw a lot of liquidation, I'm guessing there are still a few Euro longs/ USD shorts out there.


Tuesday, November 16, 2010

WTI Update

Where is the next 5 bucks most likely coming from:

click to enlarge and sharpen
Note the MACD crossover, a similar set up occurred in early Aug. The RSI is not yet oversold.
And how bout those last four candlesticks...ouch. Still haven't even reached the .382 retrace.

click to enlarge
As yet no positive divergence on the hourly RSI. All together this looks like the next 3 bucks anyway is coming out of the downside. WTI would have to bounce a long way to indicate a possible reversal.
The wave labeled 1 is 4.20, 3 will =1.618 of 1 at 78.96




Friday, November 12, 2010

WTI

The pre-open high yesterday of 88.61was a 49% retrace of the 147 to 32.40 collapse. That collapse was a clear 5 waves down from an all time high.  The leg up from the lows has been anything but a clear 5 waves up. It is a very difficult structure to count, with many possible alternative interpretations; typical B wave.
There will be another major leg down ( at least) of either 5 or 3 sub waves. If that major leg down were to equal the 1st leg in percent terms from 88.61 , then 19.50 becomes the target. If it were to be equal to .618 of the 1st leg in nominal terms then 17.92 becomes the target. So the long term downside risk from wherever the B wave terminates is obviously huge.
Shorter term the technical damage done last night signals the completion of the move up that began in late August.



As seen above the move down off the current highs has found short term support at the .382 retrace and 4th of lesser degree, on the subwave -5- of the last leg up.
But the hourly bar chart reveals a 5 down off the highs...so more to come ...
Look to the 4th wave on the daily chart and 50% pullback of the 71 to 88.61 move around 79.75 for nearby support...still a long way off.
I think if it were to take out the .618 retrace of that leg at 77.60 it would confirm the top was in.

Thursday, November 11, 2010

Natty

The natty ran into resistance at the 50% retrace of the last leg down, 5.23 to 3.27 on the spot chart.
And has so far found support at the 50% retrace of the last leg up on the hourly chart.

 On the upside, if the current structure down were to reverse and overlap 4.126, it would confirm an abc down, and raise the probability of higher highs.

In Case You Were Wondering

From Calculated Risk

European Debt Update

Don't miss the interactive charts links Ireland today; 8.92%

 

 



 

Tuesday, November 9, 2010

Gold Tops

At the risk of offending the gold bugs:

click to enlarge
The 5=.618 of 1 thru 3 @ 1450. Note the negative divergance on the weekly RSI.

 Daily

Agian note the negative RSI divergence. In this chart the (5) = (1).
Looks like 1386.5 is the next milestone.

I don't really have a count on the very long term chart but the downside risk here is considerable.