Wednesday, December 14, 2011

Euro Takes Out Fibonacci .618 Retrace

The previous Euro post from Nov 23, Euro Breaks Down 
says it all, so it is republished in it's entirety, followed by an update.

"
From last Fri Nov 18 post
The Trillion Dollar Question ..Eur/USD

"It needs to accelerate one way or the other.
  
Breaking out of the range will signal the tell; 138 and 134. Again right in the middle of it.
Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108."

It broke down this morning to new lows under 134. That's the tell mentioned above.
Additionally, the Euro has broken below the .78 retrace of the lesser x wave. Just.
Daily
click to enlarge
Next milestone on the downside is, of course, the overlap of the previous low and beginning of the x wave, at 131.42

The support at 134 was not only horizontal support from Nov. 18 as seen in the daily and hourly chart, but also a 50% retrace of the entire X wave, of larger degree , as labeled on the weekly chart.
 Weekly
click to enlarge
Note that overlapping the 131.42 low would leave very little between it and the next support, .618 of the X wave , at 130.33.
Below 130.33 no real support before the previous low of Jan 10 at 128.70.
Overlapping that level and you're really looking at the lows of 118 for support."

Dec. 14
And it HAS taken out both the overlap at 131.42 and .618 retrace of the preceding abc up, at 130.33, in the last 24 hr.s.
 Weekly
 click to enlarge
Note how long it travels along the lower Bollinger Band following a test of the mean back in May. 
Perhaps that will be repeated this time.
Hourly

click to enlarge
Note the positive divergence on the hourly RSI.
The labeling above is quick and dirty, and intended to suggest the risk of a corrective bounce in here, possibly retesting the break down around 131.40.
In any case lower lows would certainly be expected and bounces likely of short duration.



Thursday, December 8, 2011

SP Update

Naturally it's a big moment coming up Friday and no doubt the market is going to be disappointed with the réalité.
Time to examine the SP chart. 
Daily
click to enlarge
I've labeled the first move down from the spring highs 1, but it can more easily be counted as abc's.
In the long term this will matter, in the next year or so, not at all.
Of more immediate concern is the top today and if it is the completion of c and the correction up as labeled, or if it is merely an "a of c "
Hourly
click to enlarge
Note the repeated negative divergence on the RSI.
Additionally there is a classic false break up over the resist line, followed by a reversal that overlaps the beginning of the last leg up.

So in the short term, even if the move down is some sort of b wave that gets followed by another move up, it likely will be deep, say, to the .618 retrace.
However it's important to look at the volume and "look" of the move down; is it choppy on lower volume with lots of reversals? Or is it impulsing w volume?
If it has the latter characteristics than it is much more likely that the top of the move up is in and the next move down will be either a 3 or C;
seat belts everyone.

Thursday, December 1, 2011

Natural Gas Update

Just a quick look at the pullback and potential Fibonacci support.
Hourly
click to enlarge

The 3.50 is double Fib. support, and then the .618 retrace level of the 1 up is right around the c=a and gap close point at 3.45.





Monday, November 28, 2011

Natural Gas Makes a Comeback

Natural Gas makes a comeback after months of  boredom with a technically significant pivot. Additionally there was the usual giant spec short position in last weeks COT report.

 Active Mo. Weekly
click to enlarge
Two items of particular note; the low last week at 3.285, was just above the c= .618 of a, and was also at the .76 retrace of  a. 
Additionally there was previous horizontal support at 3.29

If we care to look at the Jan 11 contract over the last few years it looks quite different but holds it's own pivot potential.
Jan Weekly
click to enlarge
In the above the last leg ; 5 = .618 of 3 at the lows last week.


 Active Mo. Weekly
 click to enlarge

On the above chart are some longer term Fibonacci retracements of the entire ABC move down from 15.78 to 2.40, and some Fib extensions of the -A- as targets for -C-.

Shorter term;
Hourly
click to enlarge
Easy to see a probable 5 waves up accompanied by negative divergence on the RSI; a pullback would be  normal here.
Holding the gap and .382 retrace would be very constructive.



Wednesday, November 23, 2011

Euro Breaks Down

From last Fri Nov 18 post
The Trillion Dollar Question ..Eur/USD

"It needs to accelerate one way or the other.
  
Breaking out of the range will signal the tell; 138 and 134. Again right in the middle of it.
Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108."

It broke down this morning to new lows under 134. That's the tell mentioned above.
Additionally, the Euro has broken below the .78 retrace of the lesser x wave. Just.
Daily
click to enlarge
Next milestone on the downside is, of course, the overlap of the previous low and beginning of the x wave, at 131.42

The support at 134 was not only horizontal support from Nov. 18 as seen in the daily and hourly chart, but also a 50% retrace of the entire X wave, of larger degree , as labeled on the weekly chart.
 Weekly
click to enlarge
Note that overlapping the 131.42 low would leave very little between it and the next support, .618 of the X wave , at 130.33.
Below 130.33 no real support before the previous low of Jan 10 at 128.70.
Overlapping that level and you're really looking at the lows of 118 for support.

Monday, November 21, 2011

From the D.O.T.- Miles Driven

click to enlarge



Higher prices, less discretionary income per household in an inflationary environment, and an aging population.

Meditations for Traders Who Worry Too Much

New book I'm writing;

Meditations for Traders Who Worry Too Much

By Don Corzinowski


Jan 1
Thought for the Day
Some days we wake up to find ourselves thinking about all our troubles, real and imagined. Our heads feel like they are on a treadmill going faster and faster;  “ what about the papertrail?, are the Feds coming today? , how will I look on the perp walk? “
Sometimes it’s natural to think about the coming day, and it’s demands and obligations, but needless worry never got anybody ahead in this world. I mean, with thoughts like those running around , who would want to get out of bed?
So first thing ; Don’t worry be happy.

Meditation for the Day
Today, when I start to worry about the paper trail, I will remember the universe cares about me, 
when I catch myself looking out the window to see if there are any Crown Vicks pulling up, I will remember;
“Don’t worry be happy”



Friday, November 18, 2011

On Spreads

After hitting a couple of home runs on the WTI/ Brent, it's probably time to re assess.
The posts on WTI / Brent, if read properly (or written properly) should have indicated 2 great moves -26.50 to -16.50  and -19.60 to -11/-10.

 Brent vs WTI

WTI / Brent

 WTI / Brent Update

I do not believe spreads lend themselves, under normal conditions, to technical analysis and Elliott Wave in particular, unless there is a condition of extremes.
Those with deep physical trading insight have a huge edge on spreads....
so while there may be whole lot more in the WTI/ Brent  ....I'm out.

The Trillion Dollar Question ..Eur/USD

Where is the Euro going?
The long term and intermediate term  direction for Euro is anything but clear from an Elliott Wave perspective. It is basically structured in abc's and it has had a significant ABC down at the 1.18 low.

Active Mo. Weekly
click to enlarge

The structure up labeled X is obviously an abc, otherwise it would be simple...a 5 wave impulse wave would justify a very bullish interpretation. Instead it's a corrective structure, so X it is. However the move down has yet to assume a 5 wave structure either...so the question of exactly how this resolves is very much still open.
 Euro is nearly in the middle of this giant trading range. 
Daily
click to enlarge
The daily chart is of little help in clarifying the long term direction, except to note the very choppy nature of the last leg down with overlaps rife. It needs to accelerate one way or the other.
 Hourly

Breaking out of the above range will signal the tell; 138 and 134. Again right in the middle of it.

Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108.

On the other hand if the Euro breaks up, holders of dollars are going to rush to get long hard assets.



Monday, November 14, 2011

WTI / Brent Update

Please see the preceding  2 posts on this topic, Brent vs WTI, and WTI / Brent, from Sept. 6 and Nov4 respectively.
In those posts I was looking for the spread to narrow from -26.50 at the time of the Sept. 6 writing to a more historically normalized relationship.
In the Nov 4 post I noted the potential for a widening of the premium to the resistance, at around -20 , from -16.50 at the time of writing. It did.
It was also noted that ,

"Longer term plenty of room to come in....-10/-11 looks like resistance, also roughly a 50% retrace."

After hitting -19.67 , the Brent premium to WTI has hit fresh lows.
from Bloomberg;
1st Mo. WTI - Brent

  click to enlarge
If this current move up is equal to the first leg up off the lows it would target -7.50 (roughly).

5 Year

Friday, November 11, 2011

WTI Update

This presumed X wave, has now retraced a Fibonacci .618  of the entire move down from 114 to 74.90.
Spot Mo. Weekly
click to enlarge
This is, obviously an important point. With the general difficulty of the move down to produce 5 wave extensions, it's abc structure, upside overlaps, and 50% retrace of 32.40 to 114, the WTI pretty much needs to quickly find resistence and head back down to maintain bearish interpretations. The .618 resist is a prime candidate.
Spot Mo. Daily
 click to enlarge
Note the slight negative divergence on the RSI today.
The y=w at 99.50.

Friday, November 4, 2011

WTI / Brent

With the official announcement of the re weighting of the SP GSCI Index, it might be timely to take another look at WTI/ Brent spread.

From the Sept 6 post, Brent vs WTI when the spread was -26.50
"Given the set up with a -3- of 3 coming up, Brent could well see a lot of that premium to WTI go bye bye.
I'm thinking the Nov contract. Maybe the terrible conditions in Europe motivate maintenance in the North Sea, maybe QE III ain't what it used to be."

 Here's the current chart from Reuters;
click to enlarge

The re weighting is as follows,

* Brent weight rises to 17.35 pct vs 15.9 pct
* WTI weight cut to 30.25 pct vs 32.6 pct
Apparently it was widely expected and announced last night.

The 50% retrace of the last leg up is around -20.

Longer term plenty of room to come in.
from Bloomberg;

 -10/-11 looks like resistance, also roughly a 50% retrace.




Crude Oil Elliott Update

Not much has changed on the Elliott count since the Oct 25 post , Crude Oil Rip
despite the avalanche of news. There has been a slight extension of the X wave structure, by 9 cents.
Bottom line, downside risk is extremely high from here, whether this move down turns out to be the C wave, or b of B, and these levels in the low 90's represent a gift.
 Active Mo. Daily
click to enlarge
Note the negative divergence on the 14 RSI.
The X wave retraces 50% of the entire move down and the X wave can be seen as being structured
as an abc with c=a.

Most likely the recent X wave is of a higher degree than the preceding x wave and subsequently another 2 series of abc's wouldn't be a surprise.
Unfortunately for the bears, the down move, whether C wave, or b of B, ain't gonna be easy, as we've seen.On the downside if that turned out to be the structure, it would equal the first 2 series of abc's, from 114.83 to 74.95, at 55.05.
Longer term however targets for a C wave should have some significant Fibonacci relationship to the A down, as below;

The A wave came off 78% from the highs, so in percent terms C= A at 25.26

The C wave =  .78 of the A  at 25.41
The C = .76 of the A at  27.70
The C= .618 of A at 43.98.
The C= .50 of A at 57 ( though that would represent an extremely truncated C wave)
Note the 55 target discussed above.

The extreme correlation between markets also suggests extreme downside risk ...











Thursday, November 3, 2011

MF Global Customer Pain

 The MF Global debacle's been heavily covered elsewhere, however 
Reuters reports tonight;

" Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades. Come Friday, with the mass transfer of commodity trading accounts from Jon Corzine's fallen firm to six of its erstwhile rivals, margin clerks will be wrapping up a reckoning of how much additional money is needed to cover millions of positions. Clients who can't quickly meet their margin will have to liquidate, possibly making for a tumultuous day's trade.


Clients of MF Global involved in the mass transfer say they'll need to find around 40 percent of their existing margins from funds that are often still locked up in the bankrupt firm. Some will be able to do it but others -- some holding illiquid contracts far out the curve -- face a forced liquidation."
 Haven't seen this reported elsewhere.

Tuesday, October 25, 2011

Crude Oil Rip

The Crude's big rip, as per the prior two crude posts,  Crude Oil Update
and Crude Oil Targets, supports the alternate count; an abc structuring of the longer term move down, and this rip up is likely an X wave, that has reached significant resistance.

 Active Mo. Daily
 click to enlarge
The 50% retrace of the entire move down, at the morning highs, if proven as a pivot,  supports the interpretation of the move up as an X wave and the move down as an abc structure, as labeled,  rather than 5 wave. That interpretation implies another series of abc's down, most likely two more, at least.

Hourly
 click to enlarge
Note the RSI negative divergence, and extended overbought run.
The bulls want a 5 wave count up, and therefore do NOT want to see more than a .618 retrace of the above 5 structure, or 89.79.
Unfortunately for the bears, the down move, whether C wave, or b of B, ain't gonna be easy, as we've seen.

Could the move down over the summer have been it for a correction in a continuing B wave up?
Anything is possible BUT the relatively short time, 6 mo. vs 29 mo.s, the importance of the top at 114 for Crude, and 1373 for the SP argue against it. The bounce off the 50% retrace of the 32.40 to 114 move argues for it.




Wednesday, October 19, 2011

Crude Oil Update

From the last crude oil post Oct. 4
Crude Oil Targets
"Note the repeated positive divergence on the RSI.
It is easy to count the structure down as 2 equal series of abc's.
AND
the 50% retrace of the 32.40 to 114.70 move up is at 73.55, on the active mo. chart it comes in at 74.36.
So short term could well see a significant bounce , as an X wave, if this alternate count becomes good."

Definetly got the bounce. Is the C wave down going to be structured in abc's ? That interpretation is gaining traction.
Lately,  abc structures tend to mimic 5 waves as a series of 3 abc's, ( see the entire B wave up as an example), so for now lets use the (still ) prevailing primary count....

Active Mo. Daily
click to enlarge
 Note the cluster of resistance at the highs yesterday; the 50% retrace of the 3 wave, and the 4th wave of lesser degree previous high at 90.60 So here it might be "a of 4" with b down and c  up still come.

Alt count:
Active mo. Daily
 Again a cluster of resistance just overhead; the .382 retrace of both abc structures and the .618 of the last one, at 90.80.

Again from
Crude Oil Targets "this move down could potentially become the "b of B",  this is a  result of the spot month overlaps and frequent choppy corrections back up..However even in that scenario, there is no reason why a double bottom cannot be made at 32.40, a "flat" correction."

Friday, October 7, 2011

And the Good News Is...

You got the bounce you'd been waiting for.

A review of the Big Picture on Equities might be timely. But first;

SP Active Mo. Hourly
click to enlarge
Note the very minor negative divergence on the RSI.
The Hourly displays a series of 3 abc structures mimicking a 5 count with the last series = .618 of the preceding 2.
Risk is clearly to the downside.

Current Count on the SP;
Daily
click to enlarge
Please note the down and under "b" waves in both the -2- and the (2) waves.
In the first it is 1.18 of the "a" and in the second it is 1.38 of the "a".
Looking for a (3) of -3- of 5 down. And so far this count down has yet to extend in any of the subwaves. 
The 3= 2.23 of the 1.

 Will the 5= .618 of the 1 thru 3 at 1048 for barely a new low?
Or does it extend and  5 = 1.618 of 3, for instance, for a target around 800 ?

Downside Targets from Aug. 8 post
SP 500 "So hows about some downside targets;
 The A wave low of 666 was a .61 retrace of the 1530 point move up. The C wave will have some sort of Fibonacci relationship to the A wave.
C=A @ 452.50
Also the next lower Fibonacci retrace of the 1530 point move up comes in about there;
.76 = 425
 C=A in % terms, ie a 58% pullback, @ 590
 C=.618 of A @ 804"

Note the double support at around 800.
That's the good news.

Now for the bad news;
DJIA 1900 to present
 click to enlarge
Looking at this chart from an  Elliott Wave perspective it's not hard to see the 5 waves up from the 30's. Nor is it hard to see that it is currently virtually at the highs.
 The 4th wave low is around 610 in 1975 with 1000 generally describing the top of it's range. A pullback into the area of the 4th of lesser degree is actually a rather pedestrian correction.
The thought of 800 on the Dow ought to be good for survival equipment sales anyway.

Reverse chronological list of Equities posts
August
 
 
March
Update SP / CL / NG
 
Take a read forward and see how I did.



Tuesday, October 4, 2011

Crude Oil Targets

The following was first posted on May 8 , after the first sharp move down from 114.71 to 94.60 and the subsequent bounce to 102.
From Crude Oil Targets

"Longer Term targets for the C wave;
The A wave is a 5 count down and the B wave is noticeably below the high and was a complex series of abc structures. So as unlikely as it may seem,  the most common outcome is that the C wave is  going to consist of 5 waves, and carry below the termination of A at 32.40, for a simple zig zag structure.
 The A = 114.60, so C will equal A at  23 cents. Now that seems a little unlikely ( the symmetry there is interesting though).
 
The A wave came off 78% from the highs, so in percent terms C= A at 25.26

The C wave =  .78 of the A  at 25.41
The C = .76 of the A at  27.70
The C= .618 of A at 43.98.
The above 43.98 = a 76% retrace of the 10 to 147 final move up in the previous structure as well.

Doing some scouting around I was unable to find ANYBODY going public with very low targets like these. All were calling for a resumption of the up move, including JP Morgan and Goldman. I saw one call for touching 90 first."

So far there is NO reason to change the labeling of this move down. It is still most likely C of Supercycle degree, leaving all the measured targets published May 8 intact. The minimum target for a C would be 43.98

Check out the Dec 2011 chart
 Weekly
Note there is as yet no positive divergence on the RSI, though it is in oversold territory.
The B wave is a textbook c=a , and the C wave has overlapped the beginning of the "c of B", confirming that the move up from 57.10 is complete at 114.60.
The C= A at 29.

There is an alternative count developing as a possibility,  and that is this move down could potentially become the "b of B",  this is a  result of the spot month overlaps and frequent choppy corrections back up..However even in that scenario, there is no reason why a double bottom cannot be made at 32.40, a "flat" correction.
In the spot mo. chart
The .78 retrace of 32.40 to 114.70 is around 51
and
The .618 retrace of  32.40 to 114 shows up around 64.50 as does an equal leg Fib. extension.
So next big milestone on the downside is around 64.50.

Alternate
Active Mo. Daily
click to enlarge
Note the repeated positive divergence on the RSI.
It is easy to count the structure down as 2 equal series of abc's.
AND
the 50% retrace of the 32.40 to 114.70 move up is at 73.55, on the active mo. chart it comes in at 74.36.
So short term could well see a significant bounce , as an X wave, if this alternate count becomes good.

So new lows this week getting under 73.50 and the alt count recedes.
Back above 85 and it starts to look like a lead count.

Monday, October 3, 2011

Investment Bank Carnage and Crude Oil

Ugly. Bank of America down almost 10% at 5.53, Citi down  9. 78%, Morgan Stanley down nearly 8%, JPMorgan almost 5% !
GS was only down 4.5%.
Volume punched up as they closed on the lows.
Some of this was being anticipated in the CDS market last week, as noted in various places like Zero Hedge.
Speculation was that exposure to a China hard landing weighed heavily on MS , see Hang Seng and Shanghai overnight, or was it the exposure to French Banks? I'm losing track. You can't turn around without bumping into a fresh or recently revived threat to TBTF banks and their guarantors (us).
But the point of all this, aside from the imminent destruction of civilization as we know it (more on that later), is the huge % of Crude Oil and Products Open Interest carried by the Investment Banking sector.
The combined Nymex and OTC notional Open Interest (not net) in Crude and Products held by Investment Banks was 54% in July 2008, pls see Sept. 16 post,
In Case You Were Wondering .
Morgan Stanley was way out in front. Doubt that has changed much....so far.


Meanwhile WTI is heading for new lows overnight along with the Euro, and with so many looking for the 75ish area to provide support, it ought to prove a very interesting week.

Thursday, September 29, 2011

Crude Oil Short Covering and the Wave Count

Last Fridays (expected) short covering has continued well beyond the minimal, having exceeded 84.01 AND the 50% retrace of the entire move down from 90.61 at 83.87. The .618 retrace of that move down awaits overhead at 85.46
 Additionally the c= .764 of a @ 85.49.
 Hourly
 click to enlarge
This extended short covering in both time and price is characteristic of this market ( equities as well),
and it has been seen in all the Elliott degrees; the B wave up off the 32.40 low, and all the legs since the May 3 high.
Active Mo. Daily
 click to enlarge
Again note the cluster of resistance around 85.45, including the .382 retrace of the last leg down at 85.24....could this be a c wave in the consolidation beginning Aug.9?

This very difficult to count Elliott pattern is reflecting global central bank and government efforts to stimulate the economy and support markets worldwide, naturally. Nevertheless the overall action as seen above over the last 5 mo.s is lower.
Labeling the waves is difficult, the time spent moving up or sideways, and the overlaps of previous lows tends to take away from the easy counting of an impulse wave down as might be expected of a C wave of super cycle degree.
I am still going with that count ...WTI in C down...given the significance of the 114 B wave high.

An alternative COULD be that the 114 was -A- of B and WTI is chopping down in -B- of B (the time spent in B vs. the 4.5 mo.s of the A wave down argues against however.) .
Either way downside risk is extremely high.....a -B- of B could easily produce a double bottom around 32.40, as part of a "flat" correction.

Weekly
click to enlarge

The .618 retrace of  32.40 to 114 shows up around 64.50 as does an equal leg Fib. extension.
These measuring tools are now on everyone's desktop and simple to use. No doubt the 65 area is
begging to be tested.

As these area's of consolidation (buying) get taken out it is important to remember that there is huge spec LONG Open Interest...still. See below post. The short open interest is relatively light and the move up since last Thur. will have reduced those shorts further in this weeks COT report.







Saturday, September 24, 2011

Speaking of Open Interest

from Zero Hedge,
 Bullish Dollar Sentiment Surges By Most In Years, As CFTC-Based Rumors Of Euro Demise Are Not Exaggerated
 "the euro is now massively oversold explaining why even the smallest of rumors initiates a furious short covering squeeze. And yes, the next bubble is now not in silver, not in gold, but in the dollar. The first sign of moderation of European stress, or a Hilsenrath piece on the next round of QE by the Chairsatan, and watch the DXY and the various USD pair collapse (and gold surge). "


No doubt.

But. A little context PLEASE.
click to enlarge
The above chart is from June 21 but still illustrates the increasing size of the open interest swings.
Very possible that spec longs in the USD increase to some new extreme of 40,000++.
We ARE in an extreme global sovereign event.

But while we are here ....Friday night's WTI spec. O. I.

 and context,
Do you think it overshoots on the short side too?

Friday, September 23, 2011

Friday Short Covering

On the run today, but the end of week short covering showed up nice and early this morning. After all it's been a very generous week.
My guess is there will be further to go on this move down. Yet to see an extension anywhere since the May 4 highs, so one is overdue.
If there is enough retrace by the close, say .382 / 50% , probably a good opp. at the respective Fibonacci levels to position prior to the week end .

Active Mo. Hourly
click to enlarge
Either way it's going to make for a pretty negative look on the weekly charts - this will be the low settle for this move down and for a year.



Thursday, September 22, 2011

Big Surprise

NOT.
Not by the Fed. If only. There were rumors of course, setting the stage for the disappointment, and as it turns out, it was a perfect sell the news announcement.

The Big Surprise seems to be handed to the oil specs... last Fri.s COT report shows specs added to net longs to 229,695  vs. 50, 148 short. Too bad.


 Doesn't look that bad?  Put it in context..


 This is a couple mo.s old but look at the explosion in spec longs mid 2010.....lots of liquidation to go.

If you are a regular reader you know that this move down is no big surprise in fact it's exactly what was expected
driven by the USD .

Monday, September 19, 2011

Crude Oil Big Picture

Since May 3rd post  Crude Trend Line 
Crudewire has seen the likely price direction of WTI as moving significantly lower in an Elliott  C wave of at least Super Cycle degree. 
Active Mo. Weekly

click to enlarge
 The evidence so far bears that out .
 The move up off 32.40 to 114.87, has a distinct abc corrective look, and the labeling and Fibonacci relationships can be found at WTI Update from May 4.
The move down from 114.87 has, at it's lows of 75.71, retraced 89% of the last "c" wave of B. That is too deep a retrace not to confirm that THAT structure is complete and there is an extreme likely hood of 70.76 eventually being overlapped as the C wave down continues.

Note that there is a cluster of support around that 70.76 area: the C= .382 of A @ 70.88 ...

A "C" wave that is .382 of the A wave would be very truncated and frankly unlikely.

So it is likely that the support in the 7077 area will be taken out.
As new lows are made under 70.76 attention will turn to the next levels of support/ previous lows..ie 67.15 low from May 24 2010, and the .618 retrace of the B wave at 64.46... the mid 60's area.
However, in my view, a C wave of this degree will MOST LIKELY be at least .618 of the A for a minimum target of 44.

Bounces should be taken advantage of...
And we just had a big one....

Active Mo. Daily
click to enlarge
Note that at the recent 90.60 high there was slight negative divergence on the 14 RSI (not shown).
The rising support trendline was penetrated today.
The 50% retrace of the choppy corrective structure at 83.15 is also horizontal support. 
Taking the 81.41 .618 retrace level out ought to mark an acceleration down that will also take out the 75.71 low.

Labeling  to follow...












Friday, September 16, 2011

In Case You Were Wondering

In today's Washington Post, an Op Ed by Bernie Sanders, Senator from Vermont; 
What Wall Street doesn’t want us to know about oil prices

Sanders objects to Wall Street holding the vast majority of the positions during the 2008 spike to 140 for WTI crude. 



And the pertinent data refered to in the piece;

Percentage of US oil market by type - NYMEX and OTC long
and short positions combined (not net) Investment banks 54 pct
Commodity trading houses 15 pct
Hedge funds or investment houses 09 pct
Producers 07 pct
Oil major trading arms 03 pct
National Oil Companies (of consuming countries) 02 pct
Airlines 02 pct
Shipping 02 pct
Refiners 01 pct
-------------------------------------------------------------------------------------------------------------
Total 95 pct 

Wednesday, September 14, 2011

Natural Gas- Seasonal Low ?

Could Natty finally be showing signs of life? Is there a hint of overcoming the relentless sideways action defining this market? I mean 79 of the last 81 weeks the front mo. has traded between 3.80 and 4.80.....
There might be...first of all the recent low of 3.78 occurred on Aug. 30 ...right in line with the historic 20 yr. average seasonal low, of Aug.15. The avg. gain of the rally into the early winter seasonal high is 115%.

Natural Gas pricing is highly weather sensitive, and is insulated from geopolitical and currency risk.
So first of all the weather;

NOAA Climate Prediction  Nov. Dec. Jan (made mid Aug.)

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 Looks like a toss up.

Gas in storage going into Winter is not overwhelming, and not causing panic as in years past when storage capacity was actually an issue. Compare current levels with 2 yrs ago.

From Sept.9 EIA 
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From Baker Hughs Sept. 9 Rig Count;



 Given the historic tendency to rally from Aug. 30 to Nov. 20, 115% (based on avg of 20 yr.s), how are the spec.s positioned? Is everybody already long?

 From Reuters;
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Nope. Obviously very short.

Lets go to the Wave Count;
Active Mo. Weekly
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RSI MACD etc are all neutral on the weekly, so not included.
The most important and striking feature is the .618 Fibonacci retrace of the -A-, acting as support at 3.81. That support has shown up time after time, both exactly at 3.81 ie Mar 29 2010, and at later multiple times with some wiggle room down to around 3.75... The very difficult to count action over the last year is characteristic of a -B- wave structure, and an .618 retrace of the -A- is an ideal potential reversal point.  
The other striking feature is the low made on Aug. 30 2009,  exactly 2 yr.s ago, and the 154% rally that followed, for an -A- wave (of  $3.71).  If the -B- wave did indeed finish up at 3.79 on Aug.30, the -C- = -A- ,   at 7.50. And for the very optimistic, -C- = -A- in percent terms at 9.62.
Even if the -C- = .618 of -A- it targets 6.08.
 Active Mo. Daily
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Note the positive divergence on the RSI. And the c=a on the structure down from 4.98 to 3.78.
There is basing action evident with slightly higher lows. This chart looks like the USD chart did back on Sept 1.  from Signs of Life

                                        USD Daily


 We know what happened there.

So a little more upside momo taking out the 4.25 area and we might get a seasonal rally here..


 Hourly

Slightly overdone, note the negative divergence on the RSI. Good news is there is a 5 wave structure up from the Sept 12 low of 3.82.  However at this point a pullback to the 4th of lesser degree around 3.95 would be expected .

So I am bullish on NG over the next couple mo.s , in contrast to my completely
bearish expectations for crude oil, equities, etc.
It is possible that the spec short positions currently open in NG are forced to close in the event of a collapse in the other markets, resulting in a contra move up, or it could be weather related. In any event Natural Gas has truly gone it's own way now for a couple of years and shows little indication of  ending that now.