Friday, April 30, 2010

Natural Gas Update

from Tues. Apr 27 Natural Gas
" On the upside , the c=a at 4.40, and has retraced .236 at 4.36.
On the downside, the next Fib retrace support is .76 at 3.29.
With the equities in position to top out up here at the .618 retrace of the whole move down, accompanied by record bullish % numbers, hard to be positive on the Natural. In fact, a retest of the 2.40 level can not be ruled out."
  click to enlarge
The current impulse wave down looks set to make new lows both for the contract month and against the 3.83 spot month .618 support.
The 5th wave targets 3.79 as .618 of the 1 through 3, and 3.29 per above.

WTI Update

click to enlarge
 WTI has retraced a Fib. .78 of the 1st wave down at this mornings highs. The above labeling describes an expanding triaqngle with the following relationships; b is 1.12 of a, c is 1.34 of b and 1.5 of the a, d is 1.11 of c and 1.49 of b, e is 1.11 of d and 1.24 of c. Those relationships are consistent with an expanding triangle formation.
The last e leg does look impulse like rather than breaking into subwaves of abc, so caution on the above interpretation.
Important to note that the 50% retrace of the 147 to 32.40 5 count down is at 89.70, so that area, any new high basically, is both a magnet AND of course serious resist.

Thursday, April 29, 2010

SP Update

The SP has retraced nearly .618 of the first 5 down, retesting the intermediate term trend line, for a big 2.
Wave 3 down should start pretty soon. (Of course with crude screaming up it may take stocks to new highs...LOL)

Wednesday, April 28, 2010

Equities and the "Risk" Trade

Starting with the most visible....
The Dow at it's high Monday achieved an exact  .618 Fibonacci retrace of the entire move down.
The SP achieved a .61 retrace.
This was accompanied by record bullish readings by almost all the measures, diverging RSI and advance/decline ratio's and the lowest VLX since Sept. 2008.

 click to sharpen
The move down had an increase in volume and breadth as it took out the daily support trend lines.
June SP
click to enlarge
There is currently a very clean 5 wave structure that takes out the trend line on the (3) of -3-.
click to enlarge
And while there is a probable bounce for a retest of that trend line in the works ....this thing looks done. Unfortunately. Implications for the next 5 years are grim. Imagine the mood out there if the SP  goes back to 878, the .618 retrace of the move up. And that is more likely than not.
On to the Euro. People are asking "will there be a Euro ?", so a bounce must be imminent, but it is a good question, and whatever the answer may be, it's got a very difficult road ahead. See Euro Targets Update , from Apr.22.

So there is a high risk of both Equities and the Euro coming under severe selling pressure over the next several months , say until next October, with a race to the USD, . That means a race away from all other assets. 
That includes energy.

Thur. Apr 29
This is a must read, The End Of The Line
  it simply, in plain English, recaps the daunting debt and currency issues informing the above outlook...
" The three parties are preparing to face up to a catastrophic post-electoral situation (8). According to LEAP/E2020 the United Kingdom could well suffer a « Greek (9) » event with British leaders announcing that the country’s situation is substantially worse than that disclosed before the election. The numerous meetings, at the end of 2009, between the Chancellor of the Exchequer, Alistair Darling, and Goldman Sachs is a very reliable indicator of sovereign debt manipulation. As we wrote in the last GEAB issue, all one needs to do is follow Goldman Sachs to know where the next risk of sovereign debt payment default lies." .....don't miss the rest.








Tuesday, April 27, 2010

Natural Gas

So far the intermediate term support for the spot month at 3.82 ,  has held. That is the .618 retrace of 2.40 to 6.11 , and has been mentioned often by Crudewire in previous posts as a probable target and reversal point for this move . That is no longer the case. The move down from 6.11, esp. the last 90 cents does not look like a B wave, it trended too perfectly and it has impulse wave characteristics. Equally important, from a shorter term perspective, the action up from 3.82 has a classic abc flat look. 
On the upside , the c=a at 4.40, and has retraced .236 at 4.36.
On the downside, the next Fib retrace support is .76 at 3.29.
With the equities in position to top out up here at the .618 retrace of the whole move down, accompanied by record bullish % numbers, hard to be positive on the Natural. In fact, a retest of the 2.40 level can not be ruled out.

Friday, April 23, 2010

WTI Update

click to enlarge
 The "c" wave here is 1.33 of the "a", and the "b" was 1.11 of the "a", quite consistent with an expanding triangle. If thats the case a "3' down could be imminent.
The key of course is if equities run into trouble up here in the end zone.....the .61 retrace of the whole move down. I believe that is highly likely around here or just slightly higher, ie  1230. The Euro short covering may delay it all a bit but still think it has more downside in it , see preceding post.

Thursday, April 22, 2010

SP Gut Check

SP's really need to hold the .76 retrace or it sure looks like an overlap of the 1180 low is coming up and that has seriously negative implications.


click to enlarge.
So far the move down is not counting as a clean 5 wave structure. It is still early in it's development, could be we're seeing a series of 1,2,1,2's  so nimble trading ...any new high would likely be minimal given the long term fib. levels  around .618 there.

Euro Targets Update

From Nov.26, Where Is the Euro" Long term the Euro topped out  July08 at 1.6038 and moved down in 5 waves to 1.2329 a year ago October .  That .3709 long term move down  is retraced .78 at 1.5222.
A failure by the Euro from here projects to a minimum 1.2856 as C=.618 f A. And of course the C=A at 1.1435."
And from Mar.24, commenting on the above, "That day the Euro high was 1.5145.
Today the Euro has decisively taken out 1.34 , the .618 retrace of the the entire B wave up from 1.2323 to 1.5145.
The next  Fibonacci retrace point providing potential for a pivot is the .76 at 1.2995.
Note that is just over the 1.2856  minimum target for this C wave down."
 click to sharpen
The weekly bar has a 5 wave structure down from 1.514, and it appears we are in the 5.

So where are we now? The recent abc structure up on the Euro was likely a 2 or b as labeled, of the 5th  and the old low of 1.3270 is about to be challenged.

The  5 =1 at 1.29. Note the support of 1.2856 and 1.2995 in above.
So there is a pretty significant cluster of support around 1.29/1.30.
So will that be it? Could be either a complete C down or potentially the first leg of C down.

The Euro bottomed in 2000 at .8229 following its debut. It then rallied for 8 years into the 1.6038 high.
The .382 retrace of that is at 1.3030. The 50%  retrace is at 1.2138, and the .618 is at 1.12.

My guess is that THIS ABC stucture down will carry to at LEAST the 50% (or 1.21). I don't see any reason for the ABC structure to be unusually quick or shallow. And even if you were thinking that the .82 to 1.60 move was structured in 5 waves, what would  be the 4th of lesser degree was at 1.16 : a likely target for a pullback. 
So the support at 1.30/1.29 will likely produce a decent bounce, esp. given the short open interest. And it needs careful watching for structural clues to it's nature...is it corrective or impulse wave like? Long term reversal or serious bounce?
Of course if the Euro blows through the 1.29 area it would be extremely negative.

 

Wednesday, April 21, 2010

WTI

click to enlarge
Whatever the long and intermediate term wave count, the above chart depicts a clear 5 count down followed by a choppy overlapping corrective move retracing 50%, and terminating at the 4th of lesser degree.
In other words, it's highly likely WTI gets at least another leg down to new lows.
Given the very advanced stage of the corrective move up from 32.40,  achieving a 48% retrace, and the extreme risk of equities markets reversing after a 61% retrace for the Dow, the risk of an extended and severe drop for WTI is very high. 
Even if one is NOT looking for a C wave to new lows under 32.40 (which is a very distinct possibility) a .62 retrace of the structure up from 32.40 to 87.10  puts it at $53.

Monday, April 19, 2010

Do You Chase It?

The SP looks quite impulse like on the downside and it sure started down from the right place, see
Equities Revisited BUT..there are alternate counts ..like the leg down is part of an expanding triangle correction and one more high to go...see Daneric's ...However..the consequences of NOT treating this as a likely top in are HUGE .

click to enlarge

Given the overlap, a pullback to at least 1144 is a high risk, and THAT would only be a modest correction to the very last leg up. This is a sell the bounces situation...1198 is the current .618 retrace of the last leg down.
Chasing it with tight stops is probably justified.

The WTI is more problematic. The chart is not as clean as the SP ....but it WILL follow.

Friday, April 16, 2010

WHO sold you that?

Ah-Hmm. How do you think most traders are going to want to answer that question?  Goldman's customer base ought to be shrinking pretty fast ...like that glacier in Iceland.   And without a customer book to trade against it's a little tougher to sustain unbroken winning trade days.. 
Still it has some value...













Definitely worth looking at after a 50% retrace...say 120, though I personally like the .618 around 100.

And do check out this Dec 23 NYT story....

Banks Bundled Bad Debt, Bet Against It and Won


Banks Bundled Bad Debt, Bet Against It and Won

WTI Update

The WTI has yet to display any impulse wave characteristics on the downside. The first structure down from the highs is clearly an abc, contains lots of overlaps etc. Not much of a surprise given the 89.70 target as 50% retrace of the move down. On the other hand % retracements certainly have wiggle room and the current high represents a 48% retrace. So high alert here. Of course one of the major factors for the commodity $ inflow is the world wide stocks rally , see   Equities Revisited 
and that is in the end stages, with .61 retrace targets met (though not the top of the target zone) accompanied by extreme complacency , and bullishness.
click to enlarge
All the above suggests the somewhat greater likelihood of one last abc structure to new highs for the WTI finishing the complex series of ABC's up from 32.40. Target zone between 87.10 and 89.70.
Obviously this will represent a VERY long term top if this count is correct.  

And it is very hard to see this rally as anything other than a correction to the unforgettable impulse wave down from 147 to 32.40.

Thursday, April 15, 2010

Britain Closes Airspace as Volcanic Ash Spreads

The eruption, 10 times more powerful than another one nearby last month, showed no sign of abating after more than 24 hours of activity, a University of Iceland volcanologist, Armannn Hoskuldsson, told Reuters.

And over at the FT
Big volcanic eruptions send more than enough dust and gas into the atmosphere to have a meteorological impact. The most recent was the 1991 eruption of Mount Pinatubo in the Philippines, which cooled the world by about 0.5°C over the following two years.
This Icelandic eruption is not powerful enough to have such an effect, though it might do so in the future if the eruptions gain strength.

Sell summer buy winter?

Wednesday, April 14, 2010

Hurricane Season etc.

Dr. Jeff Masters' WunderBlog has an excellent wrap of the various hurricane predictions with details and links.

"The high March SST anomaly does not bode well for the coming hurricane season. The three past seasons with record warm March SST anomalies all had abnormally high numbers of intense hurricanes. Past hurricane seasons that had high March SST anomalies include 1969 (1.06°C anomaly), 2005 (0.93°C anomaly), and 1958 (0.93°C anomaly). These three years had 5, 7, and 5 intense hurricanes, respectively. Just two intense hurricanes occur in an average year. The total averaged activity for the three seasons was 15 named storms, 11 hurricanes, and 6 intense hurricanes (an average hurricane season has 10, 6, and 2.) Both 1958 and 2005 saw neutral El Niño conditions, while 1969 had a weak El Niño. So, even if this year's El Niño lingers on into hurricane season, it may not protect us from a hyper-active hurricane season--the weak El Niño year of 1969 had 18 named storms, 12 hurricanes, and 5 intense hurricanes."


Equities Revisited

Seems like the whole world is confidently looking for new highs. Even the bears, contrarians , and Elliott wavers are calling for likely higher highs (even if only by 10 SP points). Myself included.
Check this out:
click to sharpen
I mean how high can it go? 
Big Picture:
The INDU has retraced .59 of the crash at 11038. The .61 comes in at 11,183. The .62 is 11260.
















The structure up from the lows is also looking pretty complete, complex as it is.
The last leg up that began from 9835 is .50 of the first leg up from Mar 08. The structure up from the Jul 09 lows to the highs is 1.236 of the that same first leg up at 11059. 

In other words not exactly where you want to be buying. Re the short side; this trend line looks like it would provide confirmation.

Tuesday, April 13, 2010

Natural Gas Update

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."
 click to enlarge
The jury is still out. The above pattern might be merely a minor correction to the trend down with the c=.45 of a. 
On the other hand , that c is somewhat truncated, and the 3.82 fib. .618 is right on and significant support.
Certainly taking that out would be negative.

WTI Update

 click to enlarge

May
From Apr. 6 , "On the upside, the entire move down from 147 to 32.40 is retraced 50% at 89.70. That ought to be acting as a magnet, and no doubt it will be tested if the SP can get to it's.62 retrace around 1230.
In that scenario you just cannot have an overlap of the 79.51 point. While retesting the breakout at 83.95 might be expected, settling below 83.25, the 50% retrace really would be negative looking at this stage of the game."

If the abc correction down seen over the last week is complete, a move back up to the 50% retrace resist. and target of 89.70, will be .76 of the abc up from 78.86 to 87.09.

That target of 89.70, if achieved, should be viewed as potentially the high point of the corrective move up from 32.40, and the start point for another long term 5 wave down lasting years. Not exactly where you want to be buying production. 

Monday, April 12, 2010

WTI Short Term

    click to enlarge

 Thinking that the next little c might end up as .618 of the little a leg around 85.16 .Of course the  next most likely candidate as a target is the c = a , at 85.87, though that seems a little high as .76 retrace of the preceding leg down.

Friday, April 9, 2010

WTI Update

click to enlarge

Another abc structure down equal to the first targets 83.66. 
And while there may be another slightly higher high, as everyone expects  on the SP, this mornings corrective bounce offered opportunity for short and possibly long term positioning.


Repo 105 Etc.

Wednesday, April 7, 2010

Commerzbank Pulling Greek Repos

From Zero Hedge,
And so the Greek funding crisis shifts to a liquidity crisis yet again. Bankingnews.gr reports that Commerzbank, among many others, is now pulling its repos with Greek banks, essentially killing liquidity in the entire financial system. Cue Lehman Brothers and Sunday CDS trading. At least it's not Friday so OTC traders don't have to worry they will be pulled from their Hamptons retreat. The Greek website is reporting that according to sources, Commerzbank which is one of the biggest repo counterparties to Greek institutions, was dumping bonds in yesterday's sell off. Not only that, but it is now pulling repos, in essence starting a cascade of asset liquidation, in which banks, already experiencing a depositor run, will be forced to sell assets at any prices they can get just to fund their operations for one extra day.

Natural Gas Corrects .618

click to enlarge
Hmmm lets see whether this is got any more upside. There does appear to be a 5 up and that should be followed by at least another wave up. The move down off the 4.33 high also looks like an abc with the c = 50% of a. And of course so far holding .618 retrace.

USO... OH

click to enlarge and sharpen
This stock is not exactly ripping back up. The last nine mo.s have seen it basically range trade between the mid 30's and low 40's. At yesterdays high it had retraced 21% of the move down.
I'm looking at this chart to get some insight into the WTI count, which has been difficult to interpret. It's also of interest since GS, MS and China are the big stakeholders.
Anyway, the initial abc zig zag up was followed by a triangle ending Sept. 25 09. and then what appears to be a flat abc ending yesterday. The final flat abc was roughly 50% of the first zig zag.
Sorry no annotation.

Tuesday, April 6, 2010

WTI

 click to enlarge
Even if you are looking for a higher target, the recent run has been very steep, has a potential count of 5 up from 79.50, and RSI's are overbought and diverging. In other words expect at least some kind of pullback.

On the upside, the entire move down from 147 to 32.40 is retraced 50% at 89.70. That ought to be acting as a magnet, and no doubt it will be tested if the SP can get to it's.62 retrace around 1230.
In that scenario you just cannot have an overlap of the 79.51 point. While retesting the breakout at 83.95 might be expected, settling below 83.25, the 50% retrace really would be negative looking at this stage of the game.




"Mutual Fund Monday" Update: 16 Out Of 17 Winning Mondays; Two Standard Deviation Event

from Zero Hedge,


Time to update our "Mutual Fund Monday" analysis: since December 7, there have been 17 Monday, during which there has been just one down day. Statistically, this is even nuttier than Goldman's Q2/Q3 2009 profitable trading days. At 94%, we are two standard deviations away from statistically probable distributions. Furthermore, since the beginning of September, when the Mutual Fund Money phenomenon became especially pronounced (read our initial observations here), there have been 27 out of 31 profitable Mondays. There is no spoon. And this is considered perfectly reasonable market performance? It is time for Nassim Taleb to denounce the statistical wackyness that equity markets have become.

Monday, April 5, 2010

Euro Update

A .618 retrace of the last leg down, followed by a break of the support line.
Short term 1.339 is the next support area . Longer term 1.3050 to 1.29.