Friday, May 28, 2010

Yen Again

The Yen has been the great tell on the direction of all other assets (inversely) for the last month.
It is challenging to count esp shorter term. But to review;
The 1995 high of 126 was followed by a horrific drop to 68 in 1998.  Since then we seen a series of abc legs within that range.
Weekly Yen Continuation
click to enlarge
The high of 1.1621 in late 2009 is the highest high since the 1998 low (though likely an x wave). Note the characteristics of a consolidation since the early 2009 high. 
Daily Yen Continuation
click to enlarge
New highs over 113.28 would strongly suggest that a challenge of the 116.28 high is underway and risk of a breakout is great. Nothing between 116.28 and 126.



Euro/USD Update

June Euro
click to enlarge
The C will equal A at 92. That would be consistent with the euro target of 1.12/1.14. Can the C=1.382 of A, at 99?
Why not?

SP Update

click to enlarge
Note RSI divergence.
Normally one would expect a low volume pre holiday ramp today, this count suggests quite the opposite.

WTI Fibonacci Points

Fast and furious short covering pushed WTI to high of 75.72 this morning. This point is a  Fibonacci .62 retrace on the July contract's move down from the May 12th 80.97 high ( perhaps a -3- wave) . AND the mornings high is ALSO the .382 retrace of the July move from 89.76 top to it's 67.15 low. AND it is also the 50% retrace of the spot month move down from 87.15 to 64.24. 

Thursday, May 27, 2010

SP Elliott 3rd Wave Alert

click to enlarge
This chart pretty much is self explanatory: No longer oversold, there is a .382 retrace of the last leg down, a clear abc corrective pattern on the bounce, and the count implies a violent -3- of (3) of 3 down to develop any minute.
It would have to take out the 1150 level to negate this current count.



WTI

click to enlarge
Note the RSI is no longer oversold.
So far there has been roughly a 50% retrace of the wave labeled 3 above. This count may actually be somewhat off and there is a complete 5 down (for the 1st leg down of larger degree),  but that count would leave the 5th really truncated. I prefer this for now and look to the nature of the next leg down to clear it up: if it's a 3 down it will likely be violent.



Wednesday, May 26, 2010

Euro Wave Count

The most likely Elliott count, following on from
Euro Elliott Update
as previously posted, May 13.
click to enlarge
So it may be that another abc up is required to get (IV), and it should be more significant in time.
But there is something about the legs labeled 4 and c that looks related, and the 5 took some work to count out as an impulse wave.
It may be that we are seeing the beginning of a rounding bottom with a diagonal 5th , or some other count even more bearish. 
Like:

The c = .93 of a, in the above, and the b = 1.6 of the a leg.
 Do you think the Euro can go to parity ie, C=1.382 of A at 1.00, or even C= 1.618 of A at .915 ?
Why not.





Eurozone/ China

from the ever excellent China Financial Markets,  found linked on my blog list below.
" In fact for many Europeans, the “silver lining” of the Greek crisis is that by pushing down the euro, it is making all of Europe, even countries like Germany that already have locked-in structural trade surpluses, more competitive in the international markets.  Europe’s trade surplus is likely to surge. So where is the countervailing trade impact?  Beijing argues that the depreciation of the euro has automatically forced an appreciation of the RMB, and with deteriorating international markets, there is no need for China to accelerate the process.  I would argue that with real interest rates declining in China, it is as if the RMB has been depreciating in real terms in order to protect China from the cost of the trade adjustment.  China (along with Japan) does not want to bear the brunt of the global adjustment."
and
"Tariffs in the US, Asia and probably in Latin America and Europe will rise.  These are big numbers and the risk is that the adjustments are likely to occur rapidly.  This means the rest of the world will also have to adjust just as rapidly."

Tuesday, May 25, 2010

Natural Gas

Here's the count on  the June/spot month:
 click to enlarge

Note the .618 retrace of -1- at 4.10 for the spot, makes the July contract and soon to be spot mo. look like a sale up here.


USO.. Oh... Sh@% !

Remember this post from Apr. 7? USO... OH

"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."
Here's what it looks like now. Annotated version.
 click to sharpen and enlarge
Obviously nailed that, and it was VERY useful in providing insight into the WTI wave count. Could never figure out what GS, MS and China saw in this dog, as it suffered from chronic under performance due to the roll and contango market.
Anyway the current count is as follows;
daily
 click to enlarge and sharpen
Perhaps it will serve to provide some simplified insight into where the WTI is as well this time.
Retracement to the area of the 4th of lesser degree around 32.70, and the .382 retrace of the 3 around 33.40 should contain any bounce.




WTI

WTI might be in the final stages of the 1st leg down from the highs BUT this mornings move up off the lows doesn't look like a reversal and has all the characteristics of a correction.
June minute chart
 click to enlarge
Choppy sideways action , overlaps etc., in fact it has yet to exceed the .382 retrace on the last complete minuet wave count  down.
 June 30 min.

Again  there is a potential for a -3- of 3 expansion so patience with calling it over and a view to the 65/66 support area is in order.


Monday, May 24, 2010

Rbob and Memorial Day W.E.

Memorial Day W.E.is coming up this week, and is often noted as the start of the summer "driving season". 
As we know, the seasonal spring high for Rbob hits in there somewhere. In fact, the high has occurred in the late April to early May window 11 times out of the last 25 years, with the avg. falling on May 15th. ( Walter Zimmerman @ United has done great work on seasonal cycles.)
 click to enlarge and sharpen

This year is right on schedule.  See Rbob Overview and Targets  from May 12. and from May 17
Rbob Update
 "The 50% retrace of the C on the weekly chart is at 2.025, the .618 at 1.93 and the overlap of c of C, of course, at 1.87.
Note the 200 week and 50 week moving avg. at 2.05 and 2.00 respectively."
June
 click to emlarge
Please note all the tech support points mentioned above have been taken out with the exception of the 1.87 c of C overlap.
That overlap will likely coincide with the -3- of 3 down, the moment of recognition, coming up any minute now. 
Just in time for the Memorial Day W. E.




Friday, May 21, 2010

Natural Gas

It's been awhile so:
Short and medium term the NG has got lower lows coming up. here's the count;
 June
click to enlarge

 Longer term, I have thought that the 2.40 low would hold, as an 85% pullback from 15.78, and an ABC down from there completed. There are measured moves to 3.22 as a Fib.78 retrace of the 2.40 to 6.11 structure up, and 2.96 as .85 retrace of same. 
And having said all that, looking at the long term charts, the move down from 6.11 sure looks like an impulse wave following a clear abc up from 2.40 to 6.11. It may be that the 2.40 gets taken out in this macro environment. The move down from 13.70 will equal the move down from 15.78 to 4.05 at 1.97. C=A at 1.97

So my count has gotten a little flexible.
BTW we have yet to put in new lows under my medium term support in older posts of 3.83, and we exceeded the short term target for the recent correction up at 4.42... by only .08.













Euro Update

First a little horn blowing....from Nov. 26 2009 Where Is the Euro , "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."  the Euro was trading 1.50 when that was written. And more importantly pretty much had it pegged all along the move down..see yesterday  morning's
Euro Heads Up .

The Euro bounce is corrective with a likely lower low still ahead of it to complete the move, ie 1.14/1.12. It is a crowded trade and the bulk of an obviously historic move, is probably behind us . Still risk from here to the downside at .14 , from 1.2674 to 1.12,  is significant and about equal to a 50% retrace of the whole move down from 1.5140 to 1.21, or .15, so tough call.

 click to enlarge

According to this Elliott count we are in an expanding 5th wave, with (III) likely complete and possibly (IV).  though it can certainly go to the 4th of lesser degree, and .618 retrace , at 1.31.
Point is it's still got further downside to go to complete a (V) of 5. 
 click to enlarge
 click to sharpen
This chart is from a post on May 13th and is NOT updated ...however it puts the above charts in context and the development of the Elliott count.


Thursday, May 20, 2010

WTI

From May 12,
WTI Update
"The WTI may have 2 up complete today as shown. If so the implication is that the next leg down can easily equal the 1st leg or more likely be a fibonacci multiple.
3=1 at 64.46 , and 3= 1.618 of 1 at 56.72.
Lets see if the move down exhibits 3rd wave characteristics."
 
So far that appears to be the case, however the above numbers need a slight adjustment;
3=1 at 63.81, and 3= 1.618 of 1 at 56.00, reflecting the eventual 2 count .
 click to enlarge
It IS taking awhile for the 3 of3 type acceleration to appear....AND it may be this count is overly aggressive.
Obliviously overlaps of the 2 would negate this particular subwave count. 
However the  overall context has us in very early stages of a move down that is very likely to be extensive. 
WTI Overview

 click to enlarge
The overlap of 69.50 on the spot chart is highly negative, and while the roll into the July contract provides a little lift, it too will likely take that point out after some fooling around. The next glaring milestone will be the 65.05 overlap. In addition there is a Fibonacci .382 retrace of the whole move up at 66.24.
My guess is that is where the 3 of 3 will be showing up. 66/65.







 

Wednesday, May 19, 2010

Euro Heads Up

From April 22 post
Euro Targets Update
"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. "
 
This support area needs to be watched carefully. Additionally c=.85 of A around 1.22 and of course the C=A at 1.14.
In other words the bulk of the Euro move is behind it.

WTI Roll

The WTI can easily be seen as being in an expanding 3 wave down, having made a new low this morning under the 69.50 spot month low from Feb.4.
 click to enlarge
June

 click to enlarge

If the above labeling is correct and WTI is in an expanding 3, the recent -2- of yesterday at 72.52 should not be overlapped on the spot chart above.
With the June July contract roll coming up tomorrow, watching the July performance relative to 72.52 will be important. My guess is limited upside potential on a corrective bounce.
 July
click to enlarge

In general there is a lot of bad news out there right now; dollar strength,  Eurozone viability, Thailand, China, US real estate both commercial and residential , the debt  refunding issues  private and public, not only abroad but in the US, and it is all now becoming a political and societal stressor rather than remaining a markets issue only. This cascade of bad news is usually a good contrarian buying opportunity... if it's at the end of a prolonged move down. Unfortunately that's not the case here.
 click to enlarge
Thanks to Daneric's Elliot Wave for this Bullish Percent chart.

So it seems to me that there is more risk on the downside that has yet to be discounted,  perhaps paradoxically, as a result of the dramatic extent of the rally over the last year.
PS the Yen correlation is very useful tell on the intraday action.
Yen Correlation



Tuesday, May 18, 2010

SP Update


click to enlarge
Note the trendline breaks and support resistence of the moving avg.'s .

click to enlarge
The recent bounce retraced Fibonacci .76 of the 3 down.  
I prefer  labeling the 1055 low as (1) of 3, given the extent of the retrace and potential for downside momentum exhibited recently.




Rbob Update

The above depicts a complete abc correction, retracing Fibonacci .63 of the initial 5 wave move down.
Yesterday it took out the trend line and the .62 retrace of the last c of C leg up at 2.09
The 50% retrace of the C on the weekly chart is at 2.025, the .618 at 1.93 and the overlap of c of C, of course, at 1.87.
Note the 200 day and 50 day moving avg. at 2.05 and 2.00 respectively.

 June
The 2 retraced .40, slightly exceeding the Fibonacci .382 retrace point.
Rbob is most likely in a 3 down, possibly having completed a -1- of 3 and the exact labeling will become more clear as it progresses.

So 3 = 1 at 1.879, and  3=1.618 of 1 at  1.662, from the 2.23 high of the 2 wave.
Longer term what could be expected of the next larger degree move down , the C from 2.44?
One thing for sure it's not going to equal A in $$ terms.
The initial A or 1 wave down from 3.63 was a Fibonacci .78 pullback. The C =A in % terms at .54,
and C=.618 of A at .676. .

Monday, May 17, 2010

Monday Ramp

See the April 6 post, "Mutual Fund Monday" Update: 16 Out Of 17 Winning ... from Zero Hedge

Make that 20 out of 22, profitable Mondays since Dec. 7, and 31 out of 36 profitable Mon.s since the beginning of  Sept.
The late Sunday night drop in the Euro, equities, crude , gasoline etc took out important levels in most cases .... BUT,
How often have we seen important previous lows overlapped only to be followed immediately by reversals of significance over the last year?
This time it may well be different as the size uses whatever bounces show up to get out. They should. BUT

Friday, May 14, 2010

WTI / SP Update

I've made a slight change in the chart labeling to reflect the intraday spike yesterday.
That move up was a little 5 wave and fits into the 'c' labeling confirmed by the overlap obviously.
 The very shallow 2 wave is a sign of extreme weakness.
The ensuing 3 wave down should begin accelerating shortly.

In the accelerating 3 scenario, there should not be a move above the 73.57 level as .618 retrace of the latest little leg down.
Of course it could turn out to be that even these new lows are part of a down and under b wave still continuing as part of a 2, but that is a low likelihood given all the outside factors.
Like the SP.

 CLICK TO ENLARGE

That line represents an overlap of the beginning of -c- and support.
Similar scenario, accelerating 3 wave down about to ensue.

And again would like to see a bounce contained by the .618 retrace , short term, in the accelerating 3 scenario.

Thursday, May 13, 2010

Euro Elliott Update

The Euro has taken out the minimal target zone of 1.30/1.2850, and failed to rally back above the 1.31 point.
See the last update posted May 5, Euro Update
 " So as we are approach the lower end of that zone it requires careful watching. Longer term I don't think it holds, but there is plenty of potential for a serious bounce. There is also plenty of potential for an extension of the 5th wave, common in major extreme moves...."
 The Euro is now in an expanding 5th wave.
 click to sharpen

June
 
click to enlarge
The labeling above depicts an expansion of the 5th wave of larger degree, and within that we are still in the (III)  wave.  Bottom line lower lows to complete the (III), and then the 5th of C.
Long Term targets are  1.2322 as the C=.76 of the A , and 1.14 as the C=A.


Wednesday, May 12, 2010

SP 3rd Wave Alert

                click to enlarge
Don't wait for it to prove itself. We've seen what can happen.




WTI Update

        click to enlarge
The WTI may have 2 up complete today as shown. If so the implication is that the next leg down can easily equal the 1st leg or more likely be a fibonacci multiple.
3=1 at 64.46 , and 3= 1.618 of 1 at 56.72.
Lets see if the move down exhibits 3rd wave characteristics.





Rbob Overview and Targets

The long term correction that ended at 2.44 had retraced .58 of the impulse wave down.
The structure basically was an abc with the "c" beginning in Sept.09 and achieving .63 of the "a".
click to enlarge
Note the cluster of long term support at the 2.10 area, last weeks lows.
Any guesses about what happens as that support is taken out?
        click to enlarge

The next leg down is likely to be either a 3 or c wave of C, or 1 of C. Taking out an important cluster of support is characteristic of 3's, "the moment of recognition".
So 3 = 1 at 1.867, and  3=1.618 of 1 at  1.65, from the 2.212 high this morning.
Longer term what could be expected of the next larger degree move down , the C from 2.44?
One thing for sure it's not going to equal A in $$ terms.
The initial A wave down from 3.63 was a Fibonacci .78 pullback. The C =A in % terms at .54,
and C=.618 of A at .676.






Tuesday, May 11, 2010

WTI Update

click to enlarge
The current count may turn out to be a 1,2,-1-,-2-, and that would change very little for short term expectations... another leg up to complete the 2 ( or -2-) followed by a 3rd wave down. Obviously in this count rallies are a sale. See May 6th post long term targets....
WTI Overview
The -c- = -a- at 79.36, roughly the .382 retrace of the move down.
The -c- = .618 of -a- at 77.84.

Monday, May 10, 2010

Live from Iceland

Live Feed of Iceland’s Eyjafjallaj√∂kull volcano

Very cool.

Cash for Clunkers

Run don't walk to the nearest dealer window near you to unload that piece of !@#4 that's been disfiguring your driveway (book) and annoying the wife (shareholders) and neighbors (auditors).

Events have had a certain velocity about them lately, lets see how long all this short covering takes, and if it doesn't create a vacuum of buyers under the market. 

Sunday, May 9, 2010

Fed Bails Out Europe

First this:

Europe leaders agree on emergency loan plan by Greg Robb
WASHINGTON (MarketWatch) -- European finance ministers agreed late Sunday on a package of loan guarantees worth as much as 500 billion euros ($670 billion) designed to keep the Greek debt crisis from spreading to other vulnerable countries, Spanish Finance Minister Elena Salgado announced. The agreement came after a full day of closed-door meetings in Brussels. The finance ministers held a joint press conference shortly after the opening of Asian markets to discuss the program. The package was designed to ease market fears that Greece, Portugal or Spain will have to restructure their debt, a move that would have hit European banks particularly hard. The International Monetary Fund will also contribute to the plan.

Immediately followed by this:

Fed to reopen dollar swap program, ECB says by Greg Robb
WASHINGTON (MarketWatch) -- The Federal Reserve is going to reopen a program set up during the financial crisis, to make sure foreign banks have the dollars they need, the European Central Bank announced late Sunday. The Fed will ship dollars overseas through the Bank of Canada, the Bank of England, the ECB and the Swiss National Bank. The Bank of Japan will be considering similar measures soon, the ECB said. The facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and other financial centers, the ECB said in a statement on its web site. The ECB said the first repurchase operations for dollars against ECB-eligible collateral would be carried out on Tuesday.

Friday, May 7, 2010

Yen Correlation

Mish has an excellent post, Equity Plunge Yen Connection; Reflections on Ponzi Markets and Program Trading

click to enlarge

"45 minutes before US equities went into a waterfall dive, the Yen went into a skyrocket rally vs. the US dollar (inverted on the above chart).

The Yen and the stock market magically stabilized at exactly the same time, right at the equity bottom."


China’s Oil Refining Rates Fall on Global Uncertainty, C1 Says

from Bloomberg;
May 7 (Bloomberg) -- Oil refineries in China, the world’s second-biggest energy user, cut operating rates by 4.9 percentage points from two weeks earlier because of uncertainty in the global markets, said commodity researcher C1 Energy.
The nation’s biggest refiners, including PetroChina Co. and China Petroleum & Chemical Corp., are operating their plants at an average 81.8 percent of capacity as of yesterday, the Shanghai-based unit of CBI China Co. said in a report. The rate is 1.4 percentage points higher from a year ago, according to the survey of 22 major refineries with total annual capacity of 269 million metric tons (5.4 million barrels per day)...
Benchmark prices of gasoline and naphtha in Singapore dropped a second day yesterday as China’s efforts to cool its economy added to concern fuel consumption in Asia will fall.
Refineries in eastern China were running at 81 percent of capacity, those in the south at 89 percent, plants in the northwest at 83 percent, and those in the north at 74 percent, according to the survey which is conducted every two weeks.
Gains in fuel consumption this year may lag behind the 31.5 million tons a year of refining capacity that’s expected to be added this year....

SP's ...the Morning After

From Apr. 28 Equities and the "Risk" Trade
....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.....
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."

 click to enlarge

More to go . At least a series of 5th waves of increasing degree until we complete the 1st wave down from the recent high.