Wednesday, March 30, 2011

Crude Oil

Tagged the  .618 retrace.
Hourly
click to enlarge
Note the very minor 14 RSI negative divergence.
The move down doesn't really count easily as 5 waves, though it kinda looks like it might be if you squint. Maybe it's an "a". In any event the abc look of the recent move up stalling at the .618 retrace, suggests more downside.

Tuesday, March 29, 2011

Good News f Natty

Buy the dip....

Analysts at Goldman Sachs said they think consumer hedging
opportunities at the long end of the gas curve, particularly in
calendar 2015 and 2016 contracts has diminished after the recent
run up in prices.

"Although the renewed nuclear safety debate may add further
upside to longer term natural gas demand, we view the risks to
long-datedprices as more balanced now compared to earlier this year,"











Monday, March 28, 2011

Crudewire Archives

OK . I finally had to acquiesce to the hundreds of frantic requests from Crudewire fans for a
commodity specific chronological format . The idea is that this will allow an easy read forward in time and lots of belly laughs as it becomes apparent how far off the mark I am. Starting with Natural Gas. Click on the above title for link or find it under the sidebar "Blogs List".
Have fun.

Week End Take Away

Baker Hughes rig count is down a little this week thanks to Canadian rigs -157. The U.S rig count is still at very high levels not seen since 2008. The World Wide Rig Count is 3536, exceeded only once  in Sept. of 2008 at 3557.

Nifty charts courtesy of Reuters;



 Note the NG O.I. changes  above. This was highlighted in the Wed Mar. 9 Crudewire post 
Natural Gas Update and Reuters NA Power and Gas Forum interview on the same date.
"With short O.I. like this any number of events can trigger short covering...weather, cross commodity spread liquidation, margin changes etc.". Also from the same post,
"So a bounce ( at a minimum) could be expected. Fib retrace of that last leg of .618 is at 4.44 , and 50% 4.30, there is also a little gap i think 4.27/4.28."

Also over the Week End Zero Hedge posted a technical research piece by John Noyce of Goldman Sachs, Charting The Week Ahead: Triple Divergence In EURUSD, Fib Support Holds In S&P, And More
Here's his take on Natty;
 click to enlarge


Friday, March 25, 2011

Natural

 NG has run into a little resistance at the .618 retrace point of the last major leg down as well as the 200 dma just above. That would be expected.  The move up does have the look of an impulse wave up, which has not been seen for awhile in the NG.
Active Mo. Daily

click to enlarge
Note there is NO negative RSI divergence. 
The count above implies that a 5th wave will take out the .618 AND 200dma resist.
There is an important declining trend line that cuts in the mid 4.60's. and the .78 retrace of that last leg down is at 4.63, see below.
Of course overlapping the Jan 24 high of 4.88 will get ALL the shorts crazy.
Weekly
  click to enlarge
The above chart is the active month, but I am using the strict spot mo. high and low points to derive the Fibonacci retrace numbers.
On the Fibonacci extension note that the c=.618 of a at 6.04, just under the 6.11 high of 2010.
That 6.04 is probably too shallow for the c and so c=a would be more likely at 7.46. In either case not a ride to be on the wrong side of.
Hourly
 Shorter term, a pullback to the .382 or even 50%  retrace and 4th of lesser degree is likely, prior to testing the above mentioned resist in the 4.63/4.67 area. It's about time NG got exciting.





Wednesday, March 23, 2011

Update SP / CL / NG

SP 's have yet to produce much in the way of 5 wave counts, up OR down. I suspect it's going to keep us in suspense a while longer.

Hourly
 click to enlarge
Slight negative RSI divergence at the high as well as this mornings lows.
The move up , while overlapping the previous 1st wave at 1292.50, can still turn out to be the -2- of a 1,2, -1-, -2- structure. 

Crude is looking to challenge the 107  spot mo. high , made a bit easier by the roll . On the other hand the move down off the highs does have a look of 5 down and the move up the last few days still looks kinda like an abc...so maybe further consolidation under the highs?
 click to enlarge
Note the repeated negative divergence on the 14 RSI.
There is a near c=.618 of a.

Natty is starting to put in impulse wave structures on the upside, as discussed in the previous post
Natty Rebound .
"It would be very constructive for NG to hold the 50% retrace and put in new highs, giving a definitive 5 wave structure and crossing over those mov avg's. Overhead the gap and 50% retrace at 4.31" DONE.
 daily
click to enlarge
Note the Mov. Avg. crosses and lack of any negative divergence on the 14 RSI.. closing of said gap and tagging the 50% retrace point.
A little consolidation would be in order here.
Hourly
There is slight negative divergence on the 14 RSI looking back. That .382 retrace ought to get  a test.
P.S. there was SOME decline in the spec short open interest last week, about 5%. Lots more where that came from.






Sunday, March 20, 2011

SP..would you buy this?

Not exactly a facetious question. The high at 1344, is just shy of the .76/ .78 Fib. retace resist, and the 14 week RSI, while overcooked at 75%, shows no negative divergence. However....

Active Mo. Weekly
click to enlarge
The A wave is clearly structured as a classic impulse wave down with an acceleration during the 3rd wave. The B wave looks like a classic zig zag 5-3-5 with c=.618 of a. Volume on the B wave up was poor often pathetic. The internal structure of the sub waves, particularly the -c- waves, had none of the characteristics of an impulse wave 3, arguing for  labeling the rally as a corrective B wave.
Within the abc up each -e- wave is .618 of it's respective -a- wave.
Note the "b" of B retraced .382 of "a".
So is it really over or will there be another iteration, a change of Elliott Wave degree etc? Strictly speaking a B wave CAN completely retrace the A and even then some.
The nature of the move down will reveal the answer.

Active Mo. Daily
click to enlarge
 Firstly the labeling on the sub waves  above could be done a variety of ways  and the larger picture remains unchanged. . It really won't matter.
Please note the multiple negative divergence on the 14 RSI
Thus far the move down off the highs has yet to reach the .382 retrace and it looks like 3 sub waves down, with last week's bounce a 4th.  If that count is correct and this is not just another abc down you really can't have it overlap the 1 at 1293 which would is also the .618 retrace of the potential 3rd wave. So looking for a 5th wave.
Stretching even for a .382 retrace of the "c"  will give it new lows and presumably a 5 wave structure. If it is beginning a major "C" wave down ,  impulse waves ought to be showing up.
Bottom line the bears need this to put in another wave down with new lows under 1241 pretty soon
On the downside taking out that 50% retrace on the daily chart will also penetrate the trend line up from 666...( no doubt quickly reversed the first time) and the damage will be done.






Saturday, March 19, 2011

Be Afraid

No not of the Colonel (knew that was what you were thinking), but of something that does have the power to end life as we know it in the West....rising interest rates.
30 Yr Daily
click to enlarge
OK, 5 down followed by a weak zig zag retrace with near equal legs. Call it "b" or 2 of greater degree (of course it could turn out to be a double zig-zag). What else ya got?
Taking a step back;

30 Yr Weekly
click to enlarge
One of the first things of note is the support trend line going back to June 2007 (I'm coming back to that).
This counts rather easily as abc's, so for now lets use that. Note the similarity of the "b" waves ( circled ).
This count implies another "c" wave down will begin shortly to complete the C of larger degree. Various Fibonacci extensions are depicted above. Needless to say they all take out that trend line.
And yes, it is the neckline of a MASSIVE Head and Shoulders pattern on an upwardly sloping diagonal.
 Monthly
 click to enlarge
Reminded me of another diagonal Head and Shoulders pattern....this one was a reverse Head and Shoulders;

 click to enlarge
 Reverse Head and Shoulders formed by the '80 , '81, and '84 lows on the 30 yr. marking the beginning of an historic move up. It's almost a mirror image of the current set up, even taking roughly the same length of time, 4 years, to develop. Be Afraid.
The measuring rule for neckline breaks targets a catastrophic 85.














Friday, March 18, 2011

WTI Update

Corrective bounce or move to new highs over 107? Jury is still out and this mornings action could bring in the verdict.
 Hourly
 click to enlarge
The move down from the 107 high was very choppy, had lots of overlaps and difficult to count as 5 sub waves except on the daily bars. Move up from the lows looks pretty convincing , in fact almost machine like
 (yes Dorothy I said "machine").  But so far it is still only 3 waves and could end up being a deep zig zag 2 wave as mentioned in yesterdays
WTI post.
15 min
click to enlarge
If this is to be a 4th wave down , to be followed by new highs it cannot overlap the 1st wave.
Additionally holding the .618 retrace is critical.
On the upside new highs will target the 121 area as the next Fib. retrace@ .76 , see WTI Ballistic or 
on the downside 86 as a neckline break target mentioned yesterday.  

Natty Rebound

In the last post on NG  Wed. Mar. 9 and the Reuters NA Power Forum interview of the same date,  a number of factors were featured that provided support ;  the triangle or pennant trendline, 5 sub-waves down looking complete, and last but not least the very large spec short Open Interest.
"With short O.I. like this any number of events can trigger short covering...weather, cross commodity spread liquidation, margin changes etc." Tonight's O.I. numbers will be of particular interest.
 Daily
click to enlarge
Of note is the bounce to the .382 retrace point of the last leg down ( now appears to be slightly above) and the mov. avg. interplay at about these levels (not a fan of however).  
Hourly
 click to enlarge  
Note the neg divergence on 14 RSI. Very short term pullback likely.
It would be very constructive for NG to hold the 50% retrace and put in new highs, giving a definitive 5 wave structure and crossing over those mov avg's.
Overhead the gap and 50% retrace at 4.31.






Thursday, March 17, 2011

WTI

WTI is at an interesting tech point this morning; c=a and the reverse head and shoulders neckline.
In the first case look for resistance and possible reversal, in the second a break to the upside through resist.

Hourly
click to enlarge
The head and shoulders neckline break measuring rule targets 102.10 on the above chart.
  Daily
click to enlarge
Of course the daily chart is also setting up it's own head and shoulders formation ( I give more tech weight to this one).
It is possible to count -5- sub waves down off the highs on this chart for a wave1complete. Wave 2 can deeply retrace the 1, so looking for short term upside with a sharp eye for potential 2 wave completion and another leg  (at least) down. A break of the downside neckline targets 86.00....

Tuesday, March 15, 2011

HO Update

The most bullish interpretation of the wave count to detailed  in yesterdays Heating Oil post requires the front mo. to remain above  2.8543, the .618 retrace of the last leg up. Ideally it stays above the 50% at 2.9084 

Active Mo. Daily
click to enlarge

Hourly
Yesterdays false break above a downward sloping wedge resist line reversed of course.
Now there is a near c=a just above the 50% retrace support mentioned above, a good spot to stage a rally from. Again any new highs are subject to serious pull backs to 4th of lesser degree... right around here.

Monday, March 14, 2011

Heating Oil

In light of recent events the HO deserves a closer look.
 Active Mo.
click to enlarge
Of note is the .618 retrace of the entire impulse wave down at 3.08  and the c=a equal leg structure up from the lows at exactly the same point 3.08  . The above is on the active month chart. Using the strict spot month numbers of 4.1586 as the high and 1.1252 as the low, the .618 retrace comes in at 2.9998. So that significant Fibonacci resistance has been exceeded. The next Fib retrace point on the spot mo. is the .76 at 3.43
 Active Mo. Daily

click to enlarge
This is about the most bullish wave count I can generate and it has the first (4) just completed with a series of 5, 4 's of greater degree to follow, each putting in a slightly higher high. 
Hourly
 Here obviously it has just taken out the declining wedge resist line. Keep a careful eye on the count up as it puts in new highs as pullbacks to the 4th of lesser degree can be expected.
 

 

Sunday, March 13, 2011

Japanese Fuel Demand

 from Bloomberg

Refinery Margins Poised to Surge After Japan Quake Cuts Power Capacity 9%

Fuel oil’s discount to benchmark Dubai crude, a measure of the cost of turning oil into the refined product, shrank 12 percent in Singapore on March 11, the most in two-weeks, according to data compiled by Bloomberg....
Asian fuel-oil premiums doubled in July 2007 after an earthquake shut Japan’s Kashiwazaki-Kariwa nuclear plant, the world’s biggest, forcing Tokyo Electric Power Co. to consume 59 percent more fuel oil. Seven times more nuclear power capacity was shuttered by last week’s quake, according to Bloomberg calculations. Fuel-oil prices also surged in 2002 to 2003 after Tokyo Electric was forced to close all 17 of its reactors because it falsified safety documents....Demand may also rise for middle-distillate fuels such as diesel, as factories use their own generators to provide electricity, according to Akira Kamiyama, an energy derivatives trader at Mitsui & Co. in Tokyo. Diesel’s premium to Dubai crude, or the crack spread, rose for the first time in four days in Singapore following the quake. The difference was $19.77 a barrel March 11, according to PVM Oil Associates, a broker.
“This is a super bullish factor for the Asian middle distillates and fuel-oil market,” Kamiyama said. “Factories which have their own generating facilities will begin to buy diesel, while utilities will start purchasing fuel oil.”
 and
The quake has shut or disrupted supplies from seven of Japan’s oil refineries, accounting for more than a third of the nation’s oil processing capacity, or 1.6 million barrels of crude a day. Refinery utilization may fall to about 65 percent following the earthquake, from 88 percent beforehand, Wood Mackenzie said in a report on its website.
And courtesy of Reuters....

 click to enlarge

The WTI/ HO crack exhibits a clear 5 wave structure up to the highs. The last 3 days could be the beginning of a new impulse wave up OR merely the (c) of -b- of a larger consolidation. The Brent/HO crack looks a more likely candidate for new highs in the short term.

Wednesday, March 9, 2011

Natural Gas Update

Whats up with this triangle?
Active Mo.

First a little context;

The Rorschach ;

click to enlarge
The Natural is structured in ABC'c . The most recent major low at 2.40 was a Fibonacci 85%  pullback ABC from 15.70 lasting 44 mo.'s. The C = .97 of the A. The current move up is NOT a 4th wave as it overlapped the 4.05 low of the A. Therefore it is a fresh ABC structure up and has only run 17 mo. It is also shallow. These ABC structures  typically run years, and thus far the move up from 2.40 has not been big enough or long enough. Check out the mini fractal above.

With respect to the above "triangle" , the 2.40 low is very likely to hold. So when is it going to break up, and how far CAN it go down?
The low on Oct .22 of 3.28 was a Fibonacci .76 retrace of the 2.40 to 6.11 structure.
If it were to make a new low, the .78 retrace of that same structure is 3.22, and the .85 retrace 2.96.

 Active Mo Daily

Meanwhile the move down from 4.88 on Jan 24 can be described as having 5 waves, as can the sub wave down from 4.10 on Feb 28. So a bounce ( at a minimum) could be expected. Fib retrace of that last leg of .618 is at 4.44 , and 50% 4.30, there is also a little gap i think 4.27/4.28.
What the move up does at those points will be good indicators of potential nature of the move up, corrective or impulse.

Oh Yeah. How 'bout that O.I.?
With short O.I. like this any number of events can trigger short covering...weather, cross commodity spread liquidation, margin changes etc.



Monday, March 7, 2011

WTI Ballistic

Nice close Fri.. Right through the .618 retrace of the entire 08' impulse wave down. Weekly settle too.
It remains a "B" wave retrace of that impulse wave down however.
Active Mo.
click to enlarge
 The next most likely Fibonacci resistance point is the .78 retrace of the A wave @ 121.78
Additionally there is c= a resistance about there as well . This is a very likely reversal point for the B wave up.

Active Mo. Daily
 click to enlarge
Note that the 14 RSI , while in overbought territory for sure, is NOT showing any negative divergence.

The above C wave is comprised of a series of abc's that mimic a 5 count up, labeled w,y,and z.
The "y" is 1.382 of the "w".  The "z" will be 1.618 of the "y" at 119.25.
So serious cluster of resistance at 119/122.

How long can this recent thrust up last? 
Hourly
 The .382 retrace of the last leg up comes in at 104.29 ...traders may get nervous now, with record spec longs.
 At the highs it currently has an equivalent leg up structure. The 14 Hr RSI is showing minor negative divergence.

Tuesday, March 1, 2011

WTI Update

While the longer term question of whether a top is in remains open, the shorter term picture presents a clearer picture.
15 min.
click to enlarge
 There is a cluster of minor resistance around the 98.10 level, particularly if the mornings move up is viewed as corrective.
And a case can be made that even if higher highs eventually materialize, a presumably corrective move down is at best only partially complete. 
Hourly
click to enlarge

As the above count illustrates, another leg down equal to the 1st targets 92.27. That is also the area of the -3- of 3 of the preceding count up, an attractor given the speed of the move.
The big picture; the important .618 retrace of the entire move down achieved at 103.44 remains unchallenged. The longer that continues the more entrenched it will become.