Tuesday, August 31, 2010

SP Update

Do you think the low will hold?
 An abc up to retrace .618 of the preceding leg. Looks kinda like a 2 wave to me.
After a whole series of 1, 2's of ever lesser degree....like  18 mo's worth,  it's definitely going to be interesting to watch the 3 unfold. At some point way down the road this will of course make pinpointing the penultimate 5 of 5 etc that much tougher.
A 1.6 x the last leg down targets 972.
The .382 retrace of 666 to 1218 is 1002,  the 50% is 942.
New lows on the day, and we're in motion.

Natty Update

Since Sunday Nite's post  Natural Gas /Seasonal Lows , there has been the beginnings of a move up with some consolidation near the highs.

 clcik to enlarge
 The  5 min bar chart depicts what probably  is a 5 wave move up that could be a 1 up. If this consolidation is a 2 wave back, it can be deep and .618 or .76 is common as a retrace.
It did take out the initial trendline yesterday; 
 
It's a little early to tell whether NG has a bottom in place (this could still turn out to be merely a flat , sideways consolidation). However the initial move up off the lows looks like it will need some sort of additional leg up even if it's merely a consolidation. Additionally the late summer seasonal  low history cannot fail to be 
influential. SO
On the upside if yesterday was an "a" than the "c" will roughly  equal it at about 25 cents (spot mo.). There will obviously be resist. at the 4.00/4.08 area.
On the downside 3.35/3.30 and under that 2.95. Cannot be ruled out....it is the target area after all and has not been met yet.



Monday, August 30, 2010

Morning Yuk

Crude Oil May Rise After Failing to Drop Below Support Level, Survey Shows

This came out Fri. after the close , and yes I know I've used it before but it's hard to resist...

"Crude oil may rise next week after failing to break through a technical support level, a Bloomberg News survey showed. Twenty of 49 analysts, or 41 percent, forecast crude oil will increase through Sept. 3. Seventeen respondents, or 35 percent, predicted that futures will be little changed, and 12 projected a decline. Last week, 39 percent of analysts forecast a drop."

So... 47% predict unchanged to lower?

and the best part...
The oil survey has correctly predicted the direction of futures 48 percent of the time since its start in April 2004.

All ya need is a slight edge.

Sunday, August 29, 2010

Natural Gas /Seasonal Lows

Natural Gas is nearing targeted lows of 3.35/3.28, see  Natural Retesting .618 Retrace  from Aug.25,
Natural Gas from Aug. 10, or any of the previous Natty posts.
It is very important to note the consistent history of Natural Gas  making seasonal lows at this time of year;  last year's important 2.40 low was made on Sept. 4th.
The subsequent rally typically runs into the Nov/Dec period, and has averaged 115 % over the last 18 years.  (Walter Zimmermann)
Last year's rally went right to the very end of the year and was a gain of 153%. 
Friday's low was .27 above the minimum 3.35/3.28  target.
NOT a great time to go to the beach unless you've already placed your call spread orders.
An average rally of 115% up from 3.30 would take to it to 7.09, the .382 retrace of the 13.70 to 2.40 level is at 6.72, and an abc up equal to last years from 2.40 to 6.11 , targets 7.01 beginning from 3.30.

click to enlarge
Slight corrections are likely and not out of order right here, but taking out the trendline at this time sensitive point probably signals more to go.

Friday, August 27, 2010

WTI Elliott Count

click to enlarge
pretty straight forward, BUT

The larger degree count  puts WTI in a 3 down from the April highs and if this is a sub wave 1 of 3 than it would be nice to see it put in new lows below the termination of the 1 of greater degree, for Oct. 70.33, for the spot, 64.24. So it may be it sees an extension of the current wave and that would explain the relatively anemic correction the last few days.
Post close ; correction done




Yen Again

On Tues. the Yen hit it's high of 119.75 and I suggested that it was overdone  long term and short term successfully taking out the break out  level would signal its reversal. It is testing that now.
So far no Joy...and the move lower is not clearly an impulse wave...in fact it's very choppy and corrective looking.

Thursday, August 26, 2010

Euro Update

click to enlarge
This is the current count on the move down from the recent highs. Why isn't  it just an abc correction that is now going to resume the uptrend? Well it may be of course, but the shorter term -2- wave is so far kinda choppy, just into the 4th of lesser degree retracing 50% of the-1-.  Textbook.
On the 5 min bar taking out the 50% retrace of the last leg up , prob. the tell for a resumed down move.

Wednesday, August 25, 2010

Natural Retesting .618 Retrace

The spot month rallied from 2.40 to 6.11, in the 4th Qtr. of last year. In Mar. it retraced .618 of that move up exactly at the 3.82 lows.
It is now  retesting that level as the Sep contract makes new lows.     See any of the previous posts.    


    
Note how different this looks from the daily spot continuation chart;

There is a good chance that the spot chart will eventually also make new lows and take out the .618 , 3.82 level. The neckline break above targets 3.35 and there is a  Fibonacci .76 retrace at 3.28.

click to enlarge

It may very well may consolidate ahead of taking that level out, or better yet, just barely take it out then bounce .

VERY short term it's looking a little overdone here.


Just in Case You Were Wondering

HFT Firm Faces Charges For Causing "Oil Trading Mayhem"

Infinium placed 2,000 to 3,000 orders per second before its flooded order router "choked" and was "dead in the water" a few seconds later, the developer's notes said. The algorithm was shut down five seconds after it was turned on.

By then, the documents show, the firm had sent 4,612 "buy limit" orders into the market. It quickly offset the position, mostly with large "block" trades in the next few minutes, leaving it with a $1.03-million loss.

NIIIIIICE!

 The algorithm was turned on at 2:26:28 p.m. (Eastern) on February 3, less than four minutes before NYMEX closed floor trading and settled oil prices. It immediately started uncontrollably buying oil futures, according to the documents, which include letters from Infinium's lawyer to the regulation unit of CME Group, and cite notes from a company developer.

and

The documents did not suggest that Infinium was suspected of what is known as "banging the close" -- an illegal practice in which traders try to move the futures market by flooding it with orders just before it closes.

LMAO

DOE Inventories

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.1 million barrels from the previous week. At 358.3 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 2.3 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 1.8 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories increased by 1.1 million barrels last week and are in the middle of the average range. Total commercial petroleum inventories increased by 8.9 million barrels last week.




I really like the last one , it's like so counter seasonal dude.

API Inventories

SAN FRANCISCO (MarketWatch) -- Crude oil inventories declined 1.85 million barrels for the week ended Aug. 20, the American Petroleum Institute said Wednesday. Stockpiles of distillates and gasoline, however, increased by 1.88 million and 692,000 barrels, respectively, the trade group said. The API report on inventories comes ahead of the more closely watched government report, scheduled for release Wednesday at 10:30 a.m. Eastern. Analysts surveyed by Platts had expected an increase around 1.1 million barrels for oil. Gasoline stocks were seen down 875,000 barrels, while stocks of distillates, which include heating oil and diesel, were forecast to go up by 950,000 barrels. Oil finished at an 11-week low on Tuesday, whereas gasoline ended at an eight-month low.

Nikkei Gaps to New Lows

It was a bad night for the Japanese;   
click to enlarge
It's already below the 50%,  the .618 retrace is at 8667 .
Here's the overnight ;
click etc






Tuesday, August 24, 2010

Yen Long Term Elliott Count

First tings first.
click to enlarge
This HAS to hold the recent breakout. A reversal below and overlap of the .618 retrace spells finito.
So lets move on to the longer term implications for this very crowded trade if that happens.
Intermediate Term;
 click to enlarge
A reversal below 117.73 would obviously imply a completed 5 count up from 105.20, and so one needs to look again at the longer term context to see what THAT might imply. But in the meantime the above Fibonacci milestones will be looked for as retrace targets and support. And my guess is that a lot of longs got in on the break up above 112.50 (coincidentally the 50% retrace) so want to see that level hold.
Longer Term;

Unfortunately the above chart does not capture the beginning of the wave up starting in 07 at 80.59.
However note the first leg up (labeled a) carries to 103.33 or 22.74. the next leg , the c, is 24.29, and e is currently 14.30 at today's high of 119.66. That makes the e =.63 of the a , and .59 of the c wave. So there are some fib. relationships linking the legs up from 80.59 and it is therefore possible that if/when the current leg exhausts itself, a deep pullback could be in the works. A .62 retrace targets .95.

Very Long Term;


Note the massive volume at the  2007, 80.59 lows .
Anyway there is a clear 5 wave move up from 1971 to 1995. The pullback to the lows of 1998 can be seen an A wave, and the entire structure up from there as a B wave within the longer term consolidation, most likely an Elliott flat type. That would imply the current move up be contained by 124 and a retest, or close, of the 1998 67.87 lows as the C wave target.
The volume seen above is a little tricky for this count as it's the opposite of what one would expect at the b of B. Still this trades as part of a pair and the other currencies were actually topping.














Monday, August 23, 2010

Hedge Funds Cut Bullish Gasoline Bets by Most Since 2006: Energy Markets

Bloomberg reports Hedge Funds Cut Bullish Gasoline Bets by Most Since 2006: Energy Markets
.....
Net-long positions held by money managers in gasoline futures and options combined decreased by 28,940, or 74 percent, to 10,219 in the week ended Aug. 17, according to the CFTC weekly Commitments of Traders report. They have declined 80 percent this year......Hedge funds and other large speculators cut net-long positions in heating oil by 87 percent in the week ended Aug. 17, the most since February 2009. The price of the fuel fell 2.97 cents, or 1.5 percent, to settle at $1.971 a gallon on the Nymex on Aug. 20. It has declined 7 percent this year.
Net-long positions held by money managers in futures and options combined decreased by 27,427 to 3,940, the lowest level since February, the CFTC data showed. Net long positions have tumbled 86 percent this year.

Ouch...too bad they didn't read Rbob Update on July 26 or Rbob Outlook on Aug 11.
 So they kicked out longs between the 13th and 19th....



Praying for the Apocalypse

Back in the day a local I knew would answer "I'm prayin' for the apocalypse",  when asked how it was going and he was way long in a falling market. "Prayin for the Apocalypse"  caught on as a tagline.

Lately there has been a lot of that going on over at Zero Hedge, which re prints every article that surfaces on Israel hitting Iran. This weekends; Israel Knesset Member Declares "We Are Preparing For War" 
a good example.

So how has this sort of thing worked out for those petitioners in the past? 
The original  Israeli strike against IRAQ's nuclear power plant occurred on June 7, 1981. 
And while obtaining monthly price data is a little sketchy from that period, it can be seen that prices generally peaked in that year 1981 around 38/40 (depending on source) and fell for the next 5 years to 9.75 in April of 86.
Looking at the London gold fix, which is well documented ,  there is barely a bump in prices to interupt its down trend on that date.

How 'bout the first Iraq war?


click to enlarge and sharpen
Note the gap open down on the morning of Jan 17, following the initial aerial bombardment. 
It WAS quoted  much higher overnight in Singapore cash trade around 35/36 for about 30 sec. with only one cargo done (probably Goldman right?)  before the buyer disappeared. Plenty of sellers.


And of course there was the most recent Iraq War with combat operations beginning Mar. 20 to May 1.
 That time it bounced a little before selling off to new lows. 

This year with world wide oil inventories at pretty much record levels, any strike against Iran will result, I suspect, in a repeat of that pattern with some minor variation. 
Those "Prayin for the Apocalypse" will hit the market with all they've got. 

PS 
I'm told by a participant, that the actual cash high in 1981 was $41 for a cargo of Ekofisk, bought by the rock group ABBA as an investment. That was a great sale.










Friday, August 20, 2010

Nikkei

Looks like the support just a hair over 9000 is important.
 Daily
 Not too far away now.
Of course maybe the Yen will crater.

Euro Update

From Tue. Aug .17
The Euro move down clearly counts as a 5 wave move. Therefore there will be at least one more leg down ( if it's an abc structure) and potentially 2 more (if it's a full count of 5 ). This bounce then is corrective, which it looks, and likely contained by resistance represented by the previous highs and Fib. retrace points. 1.2910 to 1.2960, the .382 retrace."
It topped out at 1.2922

 click to enlarge
Anything is possible in this market (plus it's Aug.) and maybe we are looking at a down and under "b" wave, with a "c" to the upside waiting in the wings to complete the 2, but I doubt it.

Now longer term instead of a 1, 2,  it may turn out to be an A and B and the C=A point at 123.22 will have to be watched.


 And so far I don't see any impulse wave up.


This mornings fundamental news "reason " for the drop;   
LONDON (MarketWatch) -- The head of Germany's Bundesbank surprised economists and investors Friday, indicating in a television interview that the European Central Bank would continue to provide a range of emergency loans to euro-zone banks through the end of the year......
"Axel Weber's comments are clearly dovish and negative for the euro, as they indicate no further exit from the ECB before Q1 2011 at the earliest," said Lars Tranberg Rasmussen, economist at Danske Bank in Copenhagen. "This is a new Weber, who is running for the top job, so the uber-hawk has gone on vacation."
"I really get the impression that he's doing a good job in presenting himself as electable as the next ECB president, which raises concerns about how much he will keep his hawkish bias if he is the next ECB president," said Ulrich Leuchtmann, currency strategist at Commerzbank in Frankfurt. "

WTI

Weekly
click to enlarge and sharpen

Daily

Thursday, August 19, 2010

Natural Gas Stasis

Wow, it's so boring it's exciting. Any minute NG might break out 10 cents.

 click to enlarge
Is this the new normal ? 
As depicted believe the tension between terrible fundamentals and seasonal factors will resolve to the downside.
Added after the injection number: 
Unfortunately the very slight  choppy moves seen over the last 2 weeks can be counted any number of ways.
The above is relabeled and  a good illustration of why I stated on Monday "The short term resistance at 4.37  may or may not actually get tested one more time, but the strong possibility of a "false break" to fish for stops is likely here. Bears should prefer that the highs get taken out by .5 cent and then reversed rather than an early test of the lows. "
  Natural Gas Consolidation Pattern
Meantime it now looks done and time to test 3.82

Morning Yuk


Bundesbank boosts German growth forecast: report by MarketWatch
LONDON (MarketWatch) -- The Bundesbank on Thursday lifted its forecast for German growth in 2010 and said it saw little chance of a double-dip recession in the United States, news reports said. In its August report, the central bank said it expects 2010 German growth of 3%, up from its previous forecast of 1.9%, Dow Jones Newswires reported. Official data last week showed second-quarter gross domestic product expanded by 2.2%, the largest quarterly rise in 20 years. The Bundesbank also said the risk of a double-dip recession in the United States is "low."

I suppose if the Euro goes to parity , Germany will benefit.

Wednesday, August 18, 2010

API Inventories

Tuesday night Bloomberg reports;
"Oil declined for the sixth day in seven after an American Petroleum Institute report showed crude supplies increased 5.87 million barrels and gasoline inventories rose 2.03 million barrels last week."

That's a pretty good sized build, particularly vs. expectations of draws. If the DOE numbers are even close it's going to make for some pretty charts.
The following are LAST weeks charts;




The blue band is the 5 yr. avg. range.
Crude and products are excellent examples of the current world wide economic dynamic.
Over capacity and production financed by cheap credit, storage ditto, market price ditto.
One of the great things about commodities is that the physical fundamentals cannot be ignored forever.

Tuesday, August 17, 2010

Euro Bounce

The Euro move down clearly counts as a 5 wave move. Therefore there will be at least one more leg down ( if it's an abc structure) and potentially 2 more (if it's a full count of 5 ). This bounce then is corrective, which it looks, and likely contained by resistance represented by the previous highs and Fib. retrace points. 1.2910 to 1.2960, the .382 retrace.

SP Elliott Count and Fibonacci Retrace

Believe we have an expanding triangle correction for the 2 wave. The  b = 1.23 of a, and the c = 1.4 of b,  and 1.74 of a. And of course the whole thing has retraced 50% of the 1.
Expanding triangles usually precede an explosive move...which would make sense in this position at this time.
It's interesting that the 1,2 of larger degree had a similar structure with a down and under b wave. See
SP Top?

Monday, August 16, 2010

SP Update

Late on Mutual Fund Monday 3:25 EST   see

Mutual Fund Monday?
The pattern seems to be continuing more often than not lately with 7 positive vs 3 not since early June.
And though a  positive close may be eeked out, the above count  calls for a resumption of the downtrend and risk of an accelerating 3 of III etc is high.

Natural Gas Consolidation Pattern

click to enlarge
The consolidation continues...for now. Above reflects one potential labeling variation on an obvious series of abc's. The eventual outcome of a pattern like the above would normally be a resumption of the preceding trend of course. 
I have been looking for a series of choppy abc structures down to some level between  3.82 and 2.40 ever since the 6.10 prints, with a likely target of 3.30 / 2.95. The above is exactly what you might expect.
The short term resistance at 4.37  may or may not actually get tested one more time, but the strong possibility of a "false break" to fish for stops is likely here. Bears should prefer that the highs get taken out by .5 cent and then rehearsed rather than an early test of the lows. 


Saturday, August 14, 2010

Thursday, August 12, 2010

SP500 Collapse on Weak Fundamentals/ Strong Dollar

A nice start to the week with the Euro breaking below the trend line that has defined support for the last month or three, see Euro Breaks Month Long Trend , followed by Tuesdays Asian weakness , Asia Overnight , and disappointing FOMC announcement ( "is that all ya got?"), and of course yesterday's Trade Deficit Surges To Highest Since October 2008, Trounces Expectations; Q2 GDP To Be Revised To Sub-1%.
All contributed to this mornings SP 5th wave down on the employment debacle.
Measured targets  for the -5- would be 1070 as -5- = -1-, or 1054 as -5- = .618 of the -1- thru -3-.

after close add ..the great thing about 5 waves down is of course it goes a long way toward defining expectations for the near and intermediate term.... today's bounce has so far been as could be expected ...into the range of the 4th wave of lesser degree, choppy and quiet, 1091.50 is a .382 retrace and should hold any rally. I would guess squeezing the shorts out over the last couple mo.s will prevent deeper retracements now.

Wednesday, August 11, 2010

Rbob Outlook

Rbob is a bit simpler than crude....much less ambiguous on the chart. Note todays action has been penciled in by me on the spot continuation chart.
click to sharpen/enlarge

The above depicts a clear resumption of the downtrend, most likely a 3rd wave down, after a choppy double zig zag 2 up.  
And in the larger context that down move is potentially the 3 of III, and I'd say a 10 cent move down on the day is perfectly in character. It should eventually be expected to be a Fibonacci multiple of the 1 , say, 2.62, that targets just around .95, if you only get a 1.62 multiple that would target around 1.33.



WTI Review

The last post, WTI now C=A etc , from Mon. Aug. 9 , details the Fibonacci and Elliott importance of the 82.97 top, and some of the problems with the move thus far on the downside. But let's step back a bit ...
From May 6, WTI Overview    will put the current move lower in context...as the potential resumption of a downward structure that can take out the 32.40 low from 2008.
click to enlarge
Thus far it's exhibited a very common Elliott pattern, though the corrective moves are time consuming (not a surprise really considering the world wide CB interventions).So the confirmation of that resumption down has more than the usual importance. Even if you think the current move down from the early May highs is corrective, the C=A at around 60.30 (Sept).
 As mentioned previously the overlap of the .618 retrace and  of the "a" at 78.58, will go a long way toward confirming the  reversal.  Of course it really needs to overlap the 75.86 level, the "b", and take out the lows of 69.60, unfortunately that's 10 bucks away.
Note how the 69.50 level continues to be very important.