Thursday, October 28, 2010

Euro Update

Is the Euro move down over the last week finished or is there more to go on the downside? Is there more upside? The abc structure down from the highs suggests there may be one more higher high. BUT...
Daily
Note the MACD cross and roll over, as well as the RSI yet to be oversold.

Dec Hourly
click to enlarge
 Solid channel down, some sort of neckline underneath. The recent failure to make new highs is clearly corrective, and the action down yesterday looks like a 5 count. That last leg down labeled "a?" DOES equal .76 of the first abc down off the highs. However the MACD in the above daily chart , and time spent off the highs argue for another leg down perhaps to the channel support.

30 min.
   Lets see how this short term move up structures itself.
See what it looks like at  50%.  Starting to look a little tired already on the RSI.

Wednesday, October 27, 2010

API's and MasterCard- Double Whammy

SAN FRANCISCO (MarketWatch) -- The American Petroleum Institute on Tuesday showed a higher-than-anticipated increase in crude-oil supplies for the week ended Oct. 22. The trade group said the nation's stockpiles of oil rose 6.4 million barrels, against expectations of an increase of 1.5 million barrels, according to analysts surveyed by Platts. Gasoline stocks declined 1.8 million barrels, whereas the analysts had expected an increase of 900,000 barrels. Supplies of distillates, which include heating oil and diesel, rose 818,000 barrels; they were forecast to decline 1.5 million barrels. The API report comes a day before the more closely watched data from the Department of Energy.

 And

The following MasterCard report describes an acceleration of demand destruction. Please note that demand year to date is now negative vs. 2 weeks ago.


NEW YORK, Oct 26 (Reuters) - U.S. retail gasoline demand
fell 1.7 percent last week with the New England, Central
Atlantic and West Coast regions posting larger drops,
MasterCard Advisors' SpendingPulse report showed on Tuesday.
U.S. average gasoline demand fell 161,000 barrels per day
(bpd) to 9.097 million bpd in the week to Oct. 22.
Year-on-year, weekly demand declined 2.7 percent.
Over the latest four weeks, gasoline consumption in the
United States, the world's top oil consumer, fell 1.3 percent
from a year earlier.
Average retail prices for gasoline held steady last week at
$2.82 a gallon, MasterCard said, though that was up 8.5 percent
from year-earlier levels.
MasterCard Advisors estimates retail gasoline demand based
on aggregate sales activity in the MasterCard payments system
coupled with estimates for all other payment forms including
cash and checks.
 

Tuesday, October 26, 2010

Yen Breaks Trend

The Yen took out it's support trend line that it's been working it's way up for over a month;
Dec daily
 and

WTI- Leading Not Lagging

Of interest this morning is the relative weakness in WTI. With the SP and the Yen hitting new highs ,
the Euro coming close (in a likely "b" wave up with -c- = .62 -a- ), the WTI continued a pattern discussed in
WTI Roll Over Wed. Oct. 20 




click to enlarge
 Note the clear abc structure of -2- , retracing Fib. .84 of -1-, with  -c- nearly equal to-a- .
Both waves labeled 1 and -1- are equal, so eventually they may be labeled as an "a" and "c", but in the meantime they stand as labeled until proven otherwise. In any event even as an abc structure, if the the next abc down is equal to the 1st, it targets 78.04, and if the labeling is correct, a 3rd wave equal to 1.62 of the 1st targets 76.61 for -3-.
Shorter term there is a very similar pattern set up;
Dec 5 min
click to enlarge
I would suggest that rather than being perceived as lagging the other markets to the upside the WTI is LEADING to the downside.
Perhaps it has something to do with this:  

And this;
Or this:

That's Main St.




Sunday, October 24, 2010

All about the Euro

For a Friday with Fed POMO activity not much was achieved. SP's had an inside day on a so called "golden cross" with crap volume. Admittedly the POMO was a more modest 2.5 billion, but at a reported 30x leverage in use during a dead market, not producing a ramp is important to note. Perhaps the buying was done Thur. afternoon ahead of the well known schedule.... that felt like a ramp. Crude got a pretty good rip in after 11:30 so maybe the emphasis was on commodities. In any case it remains all about the USD and particularly the Euro/USD.
Dec 30 min
click to enlarge
And whatever the long term outlook this 30 min chart suggests a test of the highs if not more. The move down off the highs is a near c=a and into the range of the 4th of lesser degree's on the daily chart. . The initial move up from Tue.'s 1.3688 low, is structured as 5 waves and overlapped the beginning of the preceding leg down labeled b. So far it has only retraced a little over 50% to the 4 th of lesser degree to 1.3850. 
Does it get much above 1.4150? The last correction down of similar degree lasted from Aug.6 until Aug 25. This one has only had 3 days down if it ended at 1.3688. So maybe this is just a b wave up move. 
However if it does make new highs the fib .763 retrace of 1.5140 down to 1.1880 is at 1.4357
click to enlarge

Friday, October 22, 2010

All You Need To Know

 Goldman via Zero Hedge;

On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%.  in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%.  the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market's performance on the 19 non-OMO days: +70bps.
Was just wondering what the stats were myself. Certainly works for WTI . POMO days, Mon. and Wed. crude performance; 9:00 to 4:00;  Mon up $1.42, Wed up $1.99.  Natural Gas, as usual going it's own way, though it does seem to be a little more responsive to USD weakness lately.

POMO scheduled today from10:30 to around 11:00 am EST. today.
Fed operation schedule indicates Tue. and Thur. next week.
Of course a failure of this well known pattern will be an open demonstration of Fed impotence. Does it happen Nov.1 or Nov.4?  Or today?

Wednesday, October 20, 2010

WTI Roll Over

Not the spot month roll ,which will have negligible technical impact, but the repeated pattern of a "roll over", as seen in the following charts.
click to enlarge
( my placement of the B label is almost arbitrary, any of the Sept. to Jan lows could do)

 click to enlarge

Nov. 30 min









Tuesday, October 19, 2010

Euro Update

From Fri Oct 15,  All About FX
"At least in the short term it appears to have a -5- of 5 in place at the mornings high.
And 1.40 looks like support that needs to hold. " Broken and retested. Additionally today it overlapped the beginning of the last leg up from Oct.12th.

click to enlarge
In the short term it looks like it is in a 3 down beginning from the 1.40 resistance. Of course, if it traces out 5 waves down from 1.415, it will be a very strong indicator that the top is in place.
A 4 should not overlap the 1, so 1.3823 acts as an early resistance level on the above chart.

Longer Term a similar set up exists;
 Dec Daily
So far there are only 3 clear waves up off the lows ( I count as an abc); bulls do not want the termination of the 1st wave overlapped at 1.3325 (also a 50% retrace of the last leg up). Nearer by support , the Fibonacci .382 retrace, is at 1.3554.

Natural Gas Lows- Are We There Yet?

From Thur. Oct. 16, NG Update " Of course overlapping today's lows ( 3.617 as of writing) would be bearish and probably indicate a test of, and poss new lows for the season."
Well we have new lows, AND the risk of a  reversal and potential targets to the upside are high. See Natural Gas Wave Count
 The .763 retrace of the 2.40 to 6.11 move is at 3.28, and the head and shoulders neckline break projects to about 3.35.
Short Term there is a clear 5 waves down from the 3.76 high of last Thur. and according to the COT funds and  large speculators longs declined by 36 percent in the seven days ended Oct. 12.
click to enlarge
Probably have to take out the 50% retrace at 3.58 to get people at all excited.
New lows under 3.39 , and the  3.35/3.28 area waits to provide support. It needs to hold or 2.95 is back in the sights.

Friday, October 15, 2010

All About FX

So is there a blow off top?
Yen 5 min

Yen 60 min
click to enlarge
Early indication of a reversal looks like 122.5 and confirmation under the apex and month long trendline at 122.
And the Euro;
Euro 5 min

Euro 30 min

At least in the short term it appears to have a -5- of 5 in place at the mornings high.
And 1.40 looks like support that needs to hold.  There is neg. RSI divergence.

And longer term;
Euro daily
 click to enlarge
Also negative RSI divergence. Possible 5 up of greater degree to complete C.

Thursday, October 14, 2010

Those Numbers

From Zero Hedge;

Trifecta Of Economic Horror: Trade Deficit Explodes To $46.3 Billion, PPI Rises Above Expectations As New Jobless Claims Surge

"Today's economic data avalance is a trifecta of horror: the August trade balance came at - $46.3 billion (deficit, duh), on expectations of $-44.0 billion, with the previous revised to ($42.6) billion. This is the second highest trade deficit on record. This also means the Q3 GDP will be revised lower again. Oh yes, and Schumer is currently frothing in the mouth as the trade deficit with China was at a record $28 billion, as expected based on the reverse lookup from yesterday's China trade surplus (which dropped). Elsewhere, PPI came in at 0.4%, on expectations of 0.1%: congratulation Ben, you have your inflation, as the bulk of the increase was in food and gas. PPI ex Food and Energy was 0.1%, in line with expectations. Lastly, jobless claims surge from 445K to 462K, with the prior number revised higher for the 24 out of 25 times. And speaking of revisions, the prior week Continuing Claims number was revised from 4,462K to 4,511K: yes stunning, we know. Those on Extended and EUC claims plunge by 340,000 for the week ended September 25, taking away a few more pips from GDP. All in all, this further cements the economic suicide that is QE2." Expect more of the same.

As the last few days have demonstrated, an awful lot of people have bet on QE2. How much of whatever outrageous amount  of (ever cheaper ) dollars involved in the operation has been discounted is a guess. $1 Trillion? Perhaps the surging commodity prices, PPI, dissenting Fed voices and the rest of the world besides  Japan, will influence them to keep it to a mere 1/2 Trillion. Has THAT been discounted? Could be a disappointment. Last gasp desperate re try's have their own headwinds, being seen as an already  failed policy response.
In any case sure hope they get it right this time. Not betting on it though.

NG Update

The fairly deep retrace by NG  following the highs of yesterday raises the legitimate question re natural's turn up and it's sustainability. And when considering that the importance of the potential on the long term charts for an upturn of significance needs to be kept in mind. Please see yesterdays Natural Gas Wave Count .

 It DID break the mo. long trendline though of course it failed to close above. Five waves can be counted from the second 3.545 low. Alternatively the move up could also be seen as an abc with near c=a.
Given the NG propensity to structure itself in ABC's that does not  automatically  indicate weakness.
There ARE important Fibonacci targets under the lows at 3.30 and 2.95. and it's too early to entirely rule them out, on balance still pretty good odds the low IS in. 
So watching for some very short term confirming factor's here; like retaking the move over the trendline for starters. That will also take out some overnight horizontal resistance and the .382 retrace of yest afternoons drop. So resist. 3.69 and if  over 3.743,  as previous high and .763 ,  pretty much signals a test of 3.88 and 4.
 It does look like the little leg up from today's lows is a 5 wave structure.
Of course overlapping today's lows would would be bearish and probably indicate a test of, and poss new lows for the season.

Wednesday, October 13, 2010

Natural Gas Wave Count

Thought it might be timely.
First and foremost ; the short term (relatively speaking).
Is there a complete count down? Has that look..please see
 Natural Gas End Zone The month long trend line cuts around 3.70ish today and the 50% retrace of the last little leg down from 3.89 is at 3.716.  Note negative RSI divergence.
 Nov Daily
 click to enlarge
Some similar conditions on the daily chart; negative divergence on the RSI , and the count has a  complete look to it or nearly so.
 I believe that the 2.40 low last year represented the completion of a long term ABC structure down and we are now 1 year into a new ABC upside structure of potentially the same degree.
And finally;

The last ABC structure down took 4 years to complete, the B wave alone lasted nearly 2 years.
While this new ABC up doesn't need to equal that, .62 would take it to Dec of 2011.
The next C leg up equals last years A at 7.25 from the lows of 3.54, and C will =1.62 of A at 9.55. (I know sounds crazy, but so did a potential 1.95 target back in 2008 when NG was at 13.)

 Almost forgot. Check out the trendline on the Jan contract daily chart.


Tuesday, October 12, 2010

FX Wave Counts

This is a potential count in which the the c =.76 of a, and within c, the -c- = .77 of -a-. So looking for a potential completion of B nearby.

The Euro may well be in a slightly different inverse count but at the moment appears to have potential for intermediate term weakness.
Dec Daily 
 click to enlarge
Note the neg. RSI divergence and near c=a relationship (actually c=.92 of a) .
The interesting thing of course is the consistent climb up the trendlines, and the subsequent decline upon being
broken evidenced in the prior leg. Wonder if that will be repeated?
Shorter term the move off the highs looks a little overdone and a retest of that trendline as well as the tops would be completely expected.
The initial structure down from the nominal high is problematic as it cannot be seen as anything but an abc , so today's low is either a -1- following a failure or the -c- of a correction. The bounce will help tell and so could well be high even if merely a corrective -2- wave.

Monday, October 11, 2010

Hedge Funds Raise Bullish Bets on Oil (NG lowest f/ year)

Just in time....I was starting to think it might rally forever.

From Bloomberg;
" Hedge funds and other large speculators increased wagers on rising crude prices by 44 percent in the seven days ended Oct. 5, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the highest level since April 23....
 Net-long positions in oil held by what the CFTC categorizes as managed money, including hedge funds, commodity pools and commodity-trading advisers, rose by 51,634 futures and options combined to 168,540, according to the CFTC report.
Bullish bets on gasoline prices more than doubled to 50,354, the fifth straight weekly increase, the data showed. Net-long positions on heating oil rose for a sixth week, advancing 21,433, or 69 percent, to 52,699...."

Niice....esp like this part. 
"It was the highest level since April 23...."
Hhmmm, it did trade higher for 3 days after Apr 23 report before beginning a 50 cent. slide. 50 cents!!
 And 
Natural Gas ...
"Net-long positions in futures and options combined in four natural-gas contracts decreased by 19,828 futures equivalents to 31,479 in the week ended Oct. 5, the lowest level this year, the CFTC data showed."

Thursday, October 7, 2010

Heating Oil/ Gasoline

From yest. WTI ..
" this move is predicated upon a weaker USD and the efforts by the Fed and Treasury to stimulate the economy. Lots of talk about QE II being baked in already, AND discounted.  The new upcoming elections will no doubt produce a less deficit friendly Congress and one not shy of Fed bashing, at least at first. Between that , the accelerating problems in the Eurozone,  and inventory levels, there better be one REALLY cold winter."

And today with the blow off top in the Euro and sharp reversal, Heating Oil had it's biggest daily drop since May 6.
 Nov. HO
 click to enlarge
Rbob was not quite so severe, but it's 9.6 cent Key Reversal Day is nothing to sneeze at.
Both Rbob and Heating Oil have average seasonal highs in early and mid Oct. respectively. So with all the above in mind the Fibonacci retrace points will be looked to as potential support by the bulls, milestones on the way down by the bears. The avg. seasonal decline over 25 yr.s for Rbob is 27% into Dec. (ty WalterZ) and that puts it around 1.61, well under the May low of 1.85.
Nov Rbob
 Very short term these look a little oversold and it's possible there is a -1- down of some sort. In any event  rallies should certainly be viewed as -2- wave opps esp given the seasonal issues ..
50% would be tough to exceed.
Of course if the Euro goes to 1.60 this is all meaningless.

Natural Gas End Zone

From Fri. Sept 24  Natural Gas Elliott Update ,
"expect to see the lows taken out and longer term targets 3.28 and 2.95 ( the .76 retrace and the c=a respectively) come into play.However given the history for seasonal lows at this time of year, any new low under 3.69 that  looks kinda complete, should be all one is looking for."
From Thur. Sept. 30 Natural Gas 
"Still true, though it's getting rather late in the window for a seasonal low. "
Anywhere under 3.60 would look just about perfect.
So it looks like we are fast approaching the aforementioned End Zone...
NOT a time to be initiating shorts. In fact profit taking and preparing for the long play is the order for the day.
"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." see 
Natural Gas /Seasonal Lows

Wednesday, October 6, 2010

WTI

click to enlarge
Potential complete count for C and repeated negative divergence on the RSI.
A move below todays lows of 82.29 should be indicative of at least an intermediate retrace if not a resumption of the down trend.
There is a potential for the above count to have completed an ABC up from the  May lows completing a 2 wave or more likely a B wave of greater degree. 
Nov. 

Much of this move is predicated upon a weaker USD and the efforts by the Fed and Treasury to stimulate the economy. Lots of talk about QE II being baked in already, AND discounted.  The new upcoming elections will no doubt produce a less deficit friendly Congress and one not shy of Fed bashing, at least at first. Between that , the accelerating problems in the Eurozone,  and inventory levels, there better be one REALLY cold winter.

Inventories


 WOW.  Better not have a sovereign default event in Europe is all I can say.

Gold Anyone?

The universally beloved. The Hulbert Gold Newsletter Sentiment Index, is at 59.2 , and Market Vane’s bullish consensus is just over 80 %.

 click to sharpen and enlarge
Note the negative divergence on RSI, and 5=1.
There are other measuring methods that target 1450 roughly, including 5=.62 0f 1 thru 3, however it is highly 
likely that the BULK of the Gold move is over. Certainly the intermediate term is subject to serious retracement.

So at this stage of the parabolic moon shot ANY  overlap of previous pullbacks ie 1313 from Monday Oct 4., would look terrible.Even the .62 retrace of the last move up from that level 1328, would be an early warning of a reversal.