Analyze This

A little late coming across this, but it made great weekend reading. Lots of juicy detail re 'jacking' the close on Nymex . I really love part 100. "Hunter was in the Maldives on March 29, 2006, when trading occurred for the April expiration. Amaranth traded a large prompt month futures position in the settlement period and had a much larger short prompt month swap position. This was the second time that Amaranth had ever traded such large volume in the natural gas futures final settlement period." (click on title for the transcript)

  At the 72.65 low the move off the highs is a .60 retrace of the last ABC up from 65.05 to 84.00. MAYBE that's enough reason to find a little support. But considering the big picture.....? Bounces are a gift.

There was a story on Bloomberg last night regarding a Morgan Stanley Jet Cargo bound for Port Everglades, originating in the East and  transitting the Canal.  A first I guess. While the following is not exactly fresh news,   I love it when fundamentals can grab my attention. Of course we're not exactly hurtin' on the supply front: AND this one too! I wonder what will happen if those refineries ever come back on?

Not an impulse wave up. This looks corrective in structure, so far 2 series of little abc's, with potentially a 3rd to go. If it overlaps 74.96 next resist is the .236 retrace at 75.41 Mar contract , spot mo. a little lower 75.30, this is also the 4th of lesser degree resist. click to enlarge There is a potential for a 5 count down, but the lack of any real extension in any of the waves so far is cause for staying neutral at this point, they could still be in the wings. Euro, equities, long specs all could easily weigh Big Picture from Jan 6    WTI- Sale of the Decade?     "when it's trading at $50, or $40 or $16 ...$83 's gonna look mighty sweet. All initial 5 wave structures get followed by at least one more leg , in this case down. And 147 to 32.40 was a BIG 5 down." Exploit the bounce.

click to sharpen A bad night for the Euro. Though so far the last 24 hr's looks rather choppy , not impulsing down...yet. It is possible that a-3- of 3 is about to begin. That count is eliminated by an overlap of 1.4193. And the .618  retrace at 1.4093 should really contain any bounces.

From Tuesday Jan 26. "The c=a at 5.13 on a break lower. Additionally the .618 retrace of the Feb contract is at 5.13 Given the likely hood of this move down being corrective and choppy overall 5.13 may well be a tough level to get through." Short term it looks like at at least a bounce and perhaps a more complex and choppy structure to retrace some Fib level. click to enlarge  Given the above relationships and the fact that 5.13 is also the 50% retrace on the spot month chart, taking that level out with any kind of conviction will be significant and intermediate term bearish. This market can retrace a long way back up before it confirms any intermediate term reversal. It would have to overlap the 5.81 point, also the .76 retrace of the abc structure down. click to sharpen Looking at the Weekly chart an initial ABC up is complete , note the overlap of the 1st leg up at 5.31 eliminating a potential 4th wave interpretation of this move down.  If this is an X or B wav

From Jan 20., Natural Gas Consolidation Whether it dumps from here or test's the high of the range, there is a HIGH likelihood of an eventual move to new lows from this formation. In general this kind of choppy action is to be expected with this structure down. Would not be surprised to see it last through the shoulder period accompanied by a decrease in volatility as it makes it's way toward 4.00 / 3.50."  Yest morn Mar 555 strad was 60 @ 63, this morn the 545 was 58.5 @ 60 Just barely printed new lows a few moments ago though it barely counts. The structure down does have a 5 ish look to it though, so a retrace to one of the Fib levels, maybe the trend line may be in store.

IEA to Meet CFTC, OPEC, Banks on Curbing Speculation (Update2)  Jan. 27 (Bloomberg) -- The International Energy Agency will meet OPEC, banks and U.S. and U.K. regulators in Tokyo next month to discuss limiting energy-price speculation. " .. And (this is my favorite part) ... "Speculative net-long positions in oil futures, or bets prices will rise, were the highest in at least 27 years in the week ended Jan. 12" .....They ARE down 1% since then, that should help.

It is very early in the development of the move down and so the labeling  of this chart is tenative. This is a common count however, and almost all alternatives call for continued downside. The 2 wave has resistance at the trend line and the 4th of lesser degree; 1114, which is also a 50% retrace. The important thing here is that the next leg down will likely be a 3, usually the most powerful. So the 3= 1.618 of the 1 at 984, and 2.618 of 1 at 918, using the 2 as labeled above. click to sharpen

What we all knew... From Zero Hedge,  Presenting The BlackRock-AIG Presentation In Which It Becomes Clear That Soc Gen Had Pledged Sub-50 Cent Securities To The Fed's Discount Window "And speaking of the Federal Reserve, while reading the SocGen section, we came across this little stuner on page 3: We have heard second-hand from a trader that Soc Gen has pledged much of the portfolio to the Fed discount window for future liquidity Aside from the fact that in October 2008 France-based Soc Gen was not a Primary Dealer ( it only just applied for this position a few weeks ago ), one needs to turn to page 5 of the presentation to realize that Soc Gen's portfolio had a value of 49 cents on the dollar. What this implies is that in October of last year (and ostensibly prior) Soc Gen, a foreign, non Primary Dealer, had access to the Federal Reserve's Discount Window, where it had pledged securities that had a value of 49 cents on the dollar , and for which the Fed would

A picture's worth etc... Weekly Continuation click to sharpen The log term implications of the trend line break are significantly lower prices for Heating Oil, see Heating Oil Trend Line .   Shorter term 1.8150 , as the .382 retrace of the double zig zag up, will be looked for to provide some support. Note the triangle apex is about there as well.  Mar HO So far I don't identify the "moment of recognition" associated with a -3- of 3 down. Guessing it's still to come, possibly when Mar takes out 1.93, the overlap of the last move up. click to sharpen On the Mar daily 1.80 shows up as support again.

After the expected consolidation within the range, see Natural Gas Consolidation , it finally looks like Natty is going to break to fresh lows.                             click to enlarge The c=a at 5.13 on a break lower. Additionally the .618 retrace of the Feb contract is at 5.13 Given the likely hood of this move down being corrective and choppy overall 5.13 may well be a tough level to get through.

click to enlarge The choppy sideways consolidation in the Euro looks complete and like it's about to resume the downtrend, as it overlaps previous days lows. Odds of the next leg down being a -3- of 3  are HIGH, as the recent consolidation,  the -2- wave,  is certainly the biggest in price and time since Jan. 13. Take a look at the weekly continuation chart for the implications of that count. click to sharpen First of all new lows here will take out the support provided by the .382 retrace of the whole move up. The 50% retrace is at 1.3740, note the important horizontal support. It is not uncommon for a 3 wave to be a Fib multiple of the 1st wave, so 1.618 targets 1.2919. Even if this next leg equals just the most recent move from Jan 13, it takes out 1.3740.

Thursday seems so long ago, the SP was at 1135, and the VLX index was 18. . ...and really it's a whole new ballgame. China , the USD,   money for nothin',  not to mention that whole Obama Volcker thingy .  I mean what's a girl to do without a customer book to trade against. The SP Mar confirmed it's failure at 1148, with the overlap of 1109, the first lower low since July. Now it's sell any bounce. Kinda thought we might get it on the opening Mon. but it came in tonight (Sun) . click to sharpen This is a .62% of the very last leg down .  Mon. morn Update: The bounce was high enough to look like another 2 wave back up....-2- of 3 ? That count of course will make for a very ugly Monday. It does look over, so new lows on the day , under 1096, will confirm.

click to enlarge The internal wave count on the structure labeled 1 can be found at WTI Update   That implies a 3 just beginning and while it's a little early to count the subdividing waves with confidence, it's yet  to display characteristics of a 3 of 3 or expansion etc. Have to guess  that's yet to come and so far only seeing a 1,2,1,2 wind up.... Here's the big picture.. click to sharpen

The one bright spot in the refining universe, Heating Oil, is on the verge of a serious cooling off. Weekly Continuation  click to enlarge Note the 5 wave structure down from 4.1586 to 1.1319, a 73% decline. The corrective double zig zag back up failed to even retrace .382. though it nicely climbed the trend line. Once again, we have an initial 5 wave's down , and in Elliott theory it will be followed by at least one more leg, in this case down. And it's sitting right above that trend line. So where's it goin'?  The move up from the '99 low of .292 to 4.1586 was retraced a Fib .78 at 1.13. Lets call that A down. If the C= .618 of A that targets .35, roughly where it started from. That is not uncommon with commodity spikes. A little less draconian might be C=A in % terms targeting .60.  The minimum move that could be hoped for if it were to overlap the 1.13 low would be the .85 retrace of .29 to 4.1586 at .87. Feb. 5 min. click to enlarge Short term this c

                                   click for sharper image                                   It looks like UNG has 5 waves up from the Dec 8.50 low to 10.85  and that is retraced 50% around 9.70. Expectations would be for another move up to resist around 12.15, also a " c=a " from 9.80 It is important to note that the next couple of mo.s of the NG curve are in backwardation and June through Oct. is a relatively flat .40 or so. This mitigates the structural risk of the roll that has been plaguing this ETF and encouraging the shorts. Currently short interest is 4.8%. Conversely the NG appears to be under continuing pressure see Natural Gas Update   Perhaps the new CFTC position limits will encourage the "closed end fund" idea, and drive buying in the face of NG weakness.

Is it over? The dollar is certainly looking good. ( See   McKinsey On Sovereign (De)Leveraging And Untenable Debt Loads   over at Zero Hedge.)  But the SP is so far not exactly displaying impulse wave down characteristics from it's high. click to enlarge However it IS possible that the final abc up finished on Tue. at 1147 without being able to print a new high. That is unsatisfying but other indices DID make new highs before retreating, most importantly the Dow.  While confirmation on an interpretation of an SP failure will have to wait until it overlaps the 1109 point, new lows today on the Dow will certainly support that interpretation.  click to enlarge Note the trend line penetration and settle. BTW, the SP has not had a lower low after making a higher high since July; overlapping 1109 definitely would do that.

An excellent piece from the FT's Alphaville:   Digging deeper into the CFTC’s position limits Posted by Izabella Kaminska on Jan 20 10:21. Energy analyst Olivier Jakob from Petromatrix has crunched through the CFTC’s proposals on position limits released last week. His findings are worth flagging up because they differ to the consensus view that the proposals, if enforced, would be a benign influence on energy markets. First, he guesstimates the limits would certainly affect at least one large Wall Street investment bank offering a leading commodity index. And while the bank — which he does not name — could apply for an exemption to a maximum of 130,000 WTI contracts on a single month, they would then be prohibited from holding speculative positions. In other words, would it be worth it? According to Jakob, therefore, the limits create an uncomfortable situation for some of the larger Wall Street investment banks offering commodity indices — and could force them to

click to enlarge Current count is quite bearish. Even if todays low was the -5- th wave low rather than an irregular-b- wave, the range should pretty much contain an upside pop. Implies a 3 down to start today or tomorrow.

Screaming sideways, every narrower range...NOT an impulse wave. Whether it dumps from here or test's the high of the range, there is a HIGH likelihood of an eventual move to new lows from this formation.  click to enlarge In general this kind of choppy action is to be expected with this structure down. Would not be surprised to see it last through the shoulder period accompanied by a decrease in volatility as it makes it's way toward 4.00 / 3.50.

There has been all kinds of fundamental discussion on the "news" that is driving the Euro this morning .  The news is the Euro is in a long term C wave down...that's the driver...not whether one party or another won an election. It could just as well  have been a different "news" event; the fed , trade, earnings, ECB action. It is however always interesting to see what is being fitted to the wave development. click to enlarge Shorter term the mornings plunge is looking like it may have a little 5 wave count down from 1.44 complete or nearly, and a short term bounce/ consolidation could be expected here. A Fib retrace .236 also the 4th of lesser degree would be close to retesting the 1.4258 break down point. Any bounce should be aggressively exploited. This is early days in the C wave down.

click to enlarge While NG could still be consolidating within the range seen over the last week or so, the break below the little neckline and the fact that it has retraced nearly .618 of the move down already, argues in favor of a resumption of the larger trend down.  Another leg down from 5.81 equal to the 1st targets 5.06, and the .618 retrace of the completed C leg up is at 4.91

For the better part of a month the Euro has been parked between 1.4257 and 1.4578. That appears to be about to change. The choppy sideways action is a classic abc consolidation of the sharp drop from 1.5140 to 1.4215. retracing .39 of that move. A very common and relatively modest retrace. Mar Euro   Since making the 1.4578 high , labeled "C" in the above chart, the Euro has come off in a move that has impulse wave characteristics and will likely end up counting as 5 waves. There is a good possibility that it takes out the 1.4258 point ..the termination of the B wave, and for most purposes the bottom of the month long range. Below is the monthly continuation chart to put all that in context. click to enlarge A break below 1.4250 following the recent consolidation, can easily be interpretted as the beginning of a 3rd wave down of a C wave of larger degree. The C could eventually carry the Euro to new lows under1.23. See   Where Is the Euro       published Nov.26 200

Natural gas retraced a .382 of the 4.16 to 6.11 spot mo.move at the 5.36 low. So far the choppy consolidation of that move down has been contained by the .618 retrace. Chop Chop. Another leg down from 5.81 equal to the 1st targets 5.06, and the .618 retrace of the completed C leg up is at 4.91

    By Grant Smith Jan. 15 (Bloomberg) -- OPEC’s compliance with record supply cuts announced last year slipped to 58 percent in December, down from 60 percent the previous month, according to the International Energy Agency . The 11 members of the Organization of Petroleum Exporting Countries bound by production quotas raised output by 95,000 barrels a day to 26.6 million a day last month, the Paris-based IEA said in a monthly report today. That means OPEC exceeded its collective target by 1.8 million barrels a day. OPEC, responsible for about 40 percent of global crude supply, announced an unprecedented series of production cuts in late 2008 amounting to 4.2 million barrels a day in response to collapsing global demand. Its commitment to that target faltered last year as prices rebounded by 78 percent. Qatar and Saudi Arabia increased output the most in December, each boosting their production by 30,000 barrels a day, according to the IEA. Saudi Arabia, the

click to enlarge More to come on the downside, following the 1st 5 down. A corrective 2 wave can retrace deeply, so  .618 would be no big surprise, though it feels like it gives us a flat shallow 2.

                                                                              Feb Gas click to enlarge Mar HO                          Easily counted 5 waves down. An initial 5 wave leg  is always followed by at least one more leg in that direction, in this case down.

From FT Energy... US petroleum stocks fit for bursting Posted by Izabella Kaminska on Jan 14 11:45. Weekly US energy inventory data release on Wednesday confirmed the unbelievable. US petroleum stocks rose in the week despite especially cold weather in the region during the period. Meanwhile, Dennis Gartman of the Gartman Letter draws attention to the fact that aggregate inventory rose by 8.9m barrels, amongst the largest weekly aggregate increase ever. More absurdly still, gasoline stocks are now at levels not seen in two years — some 10m barrels higher than they were last year....... The market responded to the disconnect between distillate and gasoline demand by storing the former offshore in floating storage. This is easily done for distillates. But now that we’ve seen a bit of a pickup in demand for distillates because of the weather, a potential surplus of gasoline has been produced. And, unlike distillates, gasoline is not easily stored offshore. Hence the probab

 click to enlarge Not an impulse wave in sight ......but that is what might be expected here. From Jan 8 ,"The structure down will have to be closely observed;  prob. another abc, with no new lows under 2..40, targeting some Fib retrace ie .618 at 3.82. That  spot month 2.40 low was an 85 % retrace of 15.78 and ending an ABC down that took years to complete. This little abc up is too abbreviated to correct that." However THIS little move down is far to shallow to correct for a $3.71 move up from 2.40....yet there is certainly short term upside potential left in this bounce, ie 5.81, the .618 retrace. Could be we get a very choppy structure down.

click to enlarge Some of the principal fundamental themes of the equities rally are stumbling. The China story.  And now commodities are in the spotlight, first Alcoa and now inventories.  Time to resume the down move.

The WTI reversed from an important point, the culmination of a 5 count up on the C wave at $84. See Mon.s   WTI Trending .  It terminated right in the middle of the target zone  for that wave , see WTI 2010 High . That was the 3rd ABC up from 32.40, and that's all that's allowed in Elliott. So what next? click to enlarge The move down has described a nice channel and the -3- is 1.382 of -1-. After a consolidation, a -5- down would be expected, and Elliott methods for projecting 5th wave targets all easily overlap 79.12, the 1st wave of C up, confirming the reversal. Longer Term the completion of a triple zig-zag move up from 32.40 implies NEW LOWS under 32.40.  But maybe it could be counted differently, the weekly bar chart ALMOST looks like it could be a 5 up. So given a potential B wave or X wave down, or even a 2 wave back, the .618 retrace targets 52.12. So risk to the lower $50's is HIGH. Additionally 2 out of the 3 LESS BEARISH scenarios allow for subsequent

Was it Alcoa ? China raising banks reserve ratio requirements? A delayed reaction to the ugly jobs report?  Or just the weather? Feb Gasoline Feb Heating Oil click to enlarge These charts look to have running 2 waves in the very short term, implying a 3 down is just starting or soon will  be. Feb WTI From Monday morning, "At the moment we are completing 5 waves on the "c" of an abc up from  68.59 (spot mo.), and 70.83 (Feb contract).   The "c" = 2 x "a" at 84.00 (spot)  and the "c"= 2.38 x "a" at 84.15 (Feb). However the trend is your etc. so...watching for overlaps of previous lows to confirm and most importantly overlapping the 1 at 79.12." Bye Bye trend.

OK buyers are in charge. This move has been in place for a month, and is nearing completion. Today's upper trend line on the channel crosses around Goldman's number of $85. At the moment we are completing 5 waves on the "c" of an abc up from  68.59 (spot mo.), and 70.83 (Feb contract).   The "c" = 2 x "a" at 84.00 (spot)  and the "c"= 2.38 x "a" at 84.15 (Feb). However the trend is your etc. so...watching for overlaps of previous lows to confirm and most importantly overlapping the 1 at 79.12.

By Ambrose Evans-Pritchard Published: 6:35PM GMT 10 Jan 2010 "The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters....... The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc. Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse. This has not stopped an army of commentators is trying to bounce the Fed into early rat

The  ABC structure up from 2.40 is probably complete. The 6.10 high is right on target,  see Natty   or any of the last month's post's.  On the spot chart the C=.66 of A, a similar relationship as 2 to 3. On the Feb contract we have C=A. click to enlarge Shorter term it needs to overlap the 5.61 and 5.51 lows and under 5.32, the 50% pullback on the Feb contract (the .382 spot month retrace is at 5.35)  and it should start gaining momentum. The structure down will have to be closely observed;  prob. another abc, with no new lows under 2..40, targeting some Fib retrace ie .618 at 3.82. That  spot month 2.40 low was an 85 % retrace of 15.78 and ending an ABC down that took years to complete. This little abc up is too abbreviated to correct that.

Check out Dr Jeff Masters Wonder Blog , "The winter of 2009 - 2010 has seen a very strong negative NAO, causing much of our cold weather over Eastern North America and Europe. The NAO index for the month of December 2009 was -1.93, which is the third lowest NAO index since 1950 for a winter month (December, January, or February). The only winter months with a lower NAO index were February 1978 (-2.20) and January 1963 (-2.12). January 1963 was one of the coldest months on record in the UK and the Eastern U.S. . February 1978 was the coldest February on record for five U.S. states, and featured the historic blizzards in both the U.S. and UK . The NAO so far for January 2010 has continued to stay strongly negative, ranging between -1.5 and -2.1. However, the blocking ridge over Greenland is forecast to weaken next week, allowing the sharp kink in the jet stream to straighten out. This will increase the NAO index to more typical values, allowing a return of more ordinary winter we

This zombie equities market....( dead but doesn't know it)  is still stumbling forward. Or is it? How many abc's up does it get?  Overlapping the low at 1109 would be an obvious reversal,  it's only 20 points below.