Analyze This

Thinking about the WTI propensity for whipsaw and what a very tough chart it's generated , last week being a very good example. Take a look at the longer term chart, leaving the Fib retrace points in from the last leg . You can see how they hit a lot of previously important points. And speaking of points, how about $75.00 . WTI has been pivoting around that number for a year now. Way overdue for a little expansion of that window. Hows the Yen doing? click to sharpen Chopping sideways in a shallow consolidation just under the highs, after a settle above the long term break out point.

Spot Continuation Daily   click to enlarge/sharpen Couple of interesting things here; an obvious head and shoulders neckline break ( measured target 4.22),  an overlap of what some might have hoped was the 1st leg up at 4.55 ( more apparent on the August contract chart @4.66)  and penetration of the 50% retrace point. Aug. Daily  click to enlarge This chart looks obviously weaker with a penetration of the .618 retrace and overlap of the internal  1st wave of lesser degree. 30 min.  Shorter term it's looking a little oversold this morning and an attempt at a  back test of the neckline would be common. Note that at today's lows there is a c=a relationship of the legs down off the highs. The bear case would be helped along if , after a minor consolidation , the lows are taken out and another leg down materializes to create a 5 wave structure. Ideally it would stall out out south of 4.66/4.70. Oh and BTW if this thing gets back above 4.94 it's definitely doing something diff

IBEX slammed,  -4% Maybe had something to do with this, IBEX Down 4%, BBVA And Santander Both Plunge Over 5%, As Euro Panic Forces 2 Year UST Yield To All Time Lows or maybe this Quick look at the Euro  click to enlarge As readers here know I believe the bulk of the Euro move is behind us , from April 22nd; "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. " and May 19th; '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. "  See Euro Heads Up   It is possible that it will trace out a diagonal ending 5th wave (like the USD did at IT'S botto

Shanghai slammed,  -4.27% Maybe had something to do with this, China Leading Index Gain Cut to Smallest in Five Months, Hammering Stocks   or this  But readers here will know that I have been pretty focused on the Yen strength, it's imminent long term break out, and the implications for the risk trade. See June 15 Yen Look Out  That break out is in process; click to sharpen  Sept. 30 min click to enlarge The weekly and daily charts have not been updated, but it is clear from the Sept. futures chart that the 113.28 level is being challenged and that the declining resistance line on the weekly chart has been taken out.  A pullback to 112.50 /112.39 , the resist break out point, as well as fib. retrace, could be expected and would be very normal. Needless to say a close over 112.50 would look pretty strong tonight.

I was on the road Friday, and will be again most of today so updates will be infrequent. However the massive reversal from a near confirmation of the down move Friday certainly changes up the Elliott count for the short and possibly intermediate term. There were several "news" events, a Hurricane possibility over the weekend..(remember Katrina), War w/ Iran rumblings, rumours of BP  unwinds taking place, all in all a tough Friday to go home short.   click to enlarge From here the high put in 79.38 early this morning IS a new spot high over the July contracts 78.92. So far that has retraced .66 of the 87.15 to 64.24 decline. At this point the lows from Friday at 75.90 would probably need to be overlapped and the channel taken out to get the bears in control again. SP click to enlarge This is of course the problem. SP are verging on confirming a resumption of the down move with very serious potential risk. See  Crux Point And so far theis morning there is no reason to think

Check out the current Crux Point moment in SP's and JPY etc.  click to enlarge and sharpen Most would probably agree that new lows under the 1035 area will signal a serious move down is underway,  if not a resumption of the crash of 2008.  Taking out the .618 retrace point on the above advances the probability of new lows. See last nights post. Dead Cats. And the JPY is also at rather interesting point.  click to sharpen etc Looks like the 112.25/112.50 level is the break out on the long term Weekly chart.  Hourly Here's the hourly as of 3:30 EST

In this Global market in which the risk on / risk off trade seems to predominate across all asset classes,  it appears the risk off is resuming with a  key reversal day yesterday and long term tech break out on the JPY The probability that we are resuming the downtrend begun in April is high. Whether you use Elliott or something more mundane like the head and shoulders pattern found on equities and WTI , the measuring methods target lows significantly below current levels, like 850 SP's and $48 WTI. click to enlarge and sharpen Until the VIX exceeds the previous highs around 48 this is a technical situation that has limited upside risk and substantial downside risk.. Equities anyway. The Fib. .618 retrace on the SP will be the next marker.

NG has of course run into trouble at the .618 retrace of this year's high to this year's low.  click to enlarge and sharpen Note the RSI divergence and MACD rolling over and about to cross over. I believe that there are 2 series of abc, x's up from the lows completing  a corrective structure up within a corrective structure down from 6.11. Shorter term the most recent structure up over the last month beginning May 24 looks done. An overlap of 4.615 ought to confirm that.

SP's , the Euro and Gold  had Key Reversal Days to the downside, the USD had one to the upside of course, and Natural Gas nearly had a key reversal down, but had failed to make a new high by 2.5 cents. All in all an interesting Monday. And Mondays in general have proved to offer up a lot of trading opps (sell side) as low volume days that  proved easily gamed the night before. See links "Mutual Fund Monday" Update: 16 Out Of 17 Winning ... In general, not that crazy about low volume signals of the traditional sort, but this simultaneous reversal of the "risk" trade is a great attention grabber. I mean every Central Bank in the world has now had a go and the markets are responding for shorter and shorter periods... Lets see if there's a little follow through tomorrow. For the Euro taking out 1.2178, the 50% retrace and a previous support point, ought to put the boot in it. WTI did not get a Key Reversal, but it also looks done, having retraced 64% o

Mon. Jun 21.; I hate it when that happens! A surprise over the weekend DOES have the advantage of generating extreme prints in a thin market. The Yuan announcement has of course taken the USD  to fresh lows and all other assets higher. So far however it's effect has been limited to short term tech points rather than intermediate or longer term game changers, ie JPY retrace has yet to reverse the triangle break out, merely retracing it deeply. Could well be a sell the news opportunity. Any USD overlaps of previous high points , like 86.20 and 86.80, should be seen as signaling renewed strength in the face of global efforts to  halt the move.  Euro  Too many overlaps to count this move up as a 5 wave.

From Zero Hedge:   COT Weekly Data Discloses Biggest Euro Short Covering Episode In History The CFTC Commitment of Traders is out and, it's a doozy: the amount of short covering in net spec EUR short positions hits what is certainly an all time record, as just under 50 thousand (49,585) short contracts are covered. This represents a huge 44% of all outstanding EUR net shorts (-111,945) as of the prior week. No wonder the EUR surged, and no wonder Goldman downgraded the EURUSD - in tried and true fashion we wonder how many banks tightened up margin requirements only to force the biggest short squeeze in history. And also ; SNB Loses 8b on Euro Intervention. Folds.  " The Euro/CHF cross closed in NY at 1.3732 Friday. I believe that is an all time low close. I am still scratching my head how this could happen during a week where the Euro did a five big figure move to the upside. The Swiss National Bank has been intervening in the FX market to slow/stop the ap

After the break out , the back test. So far looking good .  This part of the eur/jpy pair, currently ruling all other assets, looks set to make some meaningful gains, ie all other assets collapse. Pls see previous Yen posts.

If you are a bear the 78.13 high is a pretty good candidate for the completion of this corrective move up. The July WTI contract had a 50% retrace of it's entire move down and the corrective abc structure up had a perfect c=a . If you are a bull it really needs to hold the .618 retrace of the last leg up, 72.80. click to enlarge VERY short term it looks like it would need to overlap the 76.18 area to look good again. Meanwhile on the downside  just what are the risks? If you are really into catastrophic scenarios see the May 6 WTI Overview "The last impulse wave saw a Fib. 78% fall in the outright value from 147. to 32.40, and the next Fib. level would be an 85% deterioration from 147 for a target of 22.05. The C is equal to A in percent terms at 19.17. The C is equal .618 of A at 16.27."  click to enlarge But an alternate scenario might be an ABC down to retrace some % of the recent rally up from 32.40. The spot month A  leg, in this scenario, from 87.15 to 64

Please see Yen Look Out click to enlarge 5 min bar Early indications of a break out on the longstanding triangle formation. However because of the significance it will probably dance around a little here. Want to see a settle over 1.1075 at least, to get committed. Be nice if the very short term 50% retrace held.

click to enlarge And the c=a exactly.  Note the RSI divergence. The spot mo. 87.15 to 64.24 move is retraced .618 at 78.39

click to enlarge The final -c- wave up looks to be structured in 3 series of abc's , the max allowed. I have to say I was overly bearish on this last move down labeled -b- , as was everybody else.,  and my wave count interpretation reflected that at the time. But note that this is certainly no longer the case.

Please see the June 8 Natural Gas Review On the upside the .618 retrace of 6.11 to 3.82 is at 5.24. On the downside a .78 retrace of 2.40 to 6.11  is 3.22 July hourly  click to enlarge   Note the RSI divergence.   BTW taking a look at the charts of NG contract months further out on the curve presents a very different pattern but consistent , I think, with the general premise.  Jan Weekly I think that what we've got on the Jan is a 1.2.3, and we are currently in a 4th wave, to be followed by a 5th putting in lower lows under 5.25 (that number again). The 4th will retrace .382 of the 3 at 6.11.    So as we go forward over the balance of the year I think most of the action will be contained by the current recent ranges + somewhat higher highs and somewhat lower lows ie. 3.22. Seems really counter intuitive writing this with a hyper active hurricane season forecast and all that's going on in the gulf, but that's the way it goes sometimes.

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. ( From May 29 Yen Again )  click to enlarge/sharpen 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 triangle consolidation since the late 2008 high, narrowing ranges, overlaps, flattening of the MACD, and RSI. Sept Daily And the triangle within the triangle.  click to enlarge New highs over 110.75 would strongly suggest that a breakout and challenge of the 116.28 high is underway. Nothing between 116.28 and 126.

Overheard Sat nite: Wharton Bus School student 1 " When I become a trader I wanna create something like a CDS and CDO and just rule that market whether it goes up or down"  Wharton Bus Sch student 2, "Dude do you think that Brazilian chick likes me? Hey, don't puke on my shoes man" You can't make this up.

June SP click to enlarge The -3- of 3 down next. And of course; the Euro I believe Euro may be tracing out a diagonal triangle 5th wave to complete the move down, which would give us two more abc DOWN structures. WTI