Wednesday, May 19, 2010

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



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