Thursday, April 28, 2011

Rbob High

Active Mo. Weekly
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In Elliott terms, it looks like a B wave in what will eventually become a flat correction, with the C retracing virtually all of the B if not actually exceeding it, as in C =A. The c=a is a highly likely candidate for a reversal. So far no negative divergence on the 14 Week RSI though it is mighty hot. And really. is it likely that the world economy can support higher gas prices than in 2008?
Daily
Here there is negative divergence on 14 RSI . Check out the Fib. retrace points of "c", and how they "coincidentally" line up with other important support.
Hourly
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And of course negative divergence here as well.
Wouldn't want to see the .618 retrace at 3.25 taken out if I was a bull.
OOPs, almost forgot, the seasonal high also hits around here somewhere.


Wednesday, April 27, 2011

Natural Gas Update

NG continues "crawling into the apex of a triangle" . Please see the last post for the pro's and cons.

 Active Mo. Weekly
 click to enlarge
Check out the convergence of support around the 3.80/ 3.82 area; the .618 retrace of 2.40 to 6.11, previous low 2x, triangle trend line support (depending on the date) and if the high at 4.88 is an X wave, that level will represent the second zig zag = .382 of the first zig zag.
Daily
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Both potential counts are represented by the labeling. If it's a 1,2 then it's going to take out the weekly trend line around 4.64 and overlap the high in the above chart at 4.88. Note the minor penetration of the tightest declining resist line. In this count it probably shouldn't get under the 50% retrace at 4.24 if it's in the early stages of a 3 wave.
If it is the alt count and natty has to continue further into the triangle the highs this morning are a good candidate for a reversal. Note the -c- = .618 of -a- in the above. 
Hourly
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The 14 RSI has repeated negative divergence.
So short term a likely pull back. Will the 50% retrace at 4.24 hold it?






Tuesday, April 26, 2011

WSI - Gulf at Sharply Increased Risk

Reuters ;  
U.S. may see several hurricane landfalls in 2011: WSI
WSI said its forecast numbers were similar to the 2008 season when Hurricanes Dolly, Gustav and Ike impacted Louisiana and Texas.





Gasoline and Recessions

 Zero Hedge has a very good piece "Tracking The Next Gasoline Induced Recession"
The charts are especially good.

click to enlarge

Saturday, April 16, 2011

In Case You Were Wondering

Heard a little story at the gym;
Guy is doing internal audit governance at a REALLY TBTF bank. Smart guy. In that function testing samples of the population  ( and it was not specified whether this was portfolio performance, or procedural compliance, or both)  it comes back a big fail. His superior goes back to the personnel responsible for the red flags and tells them to clean it up, make them go away. Cool. Now they pass. Except, of course, the sample is now invalid, and no longer reflects the larger universe at the institution in question. Guy sends out memo pointing this fact out. You know the ending..

Friday, April 15, 2011

Natty Again

First of all from the DOE storage report Other Market Trends;

EIA Forecasts Slower Production Growth in 2011. In EIA’s Short-Term Energy Outlook (STEO), released April 12, 2011, EIA forecasts that natural gas marketed production will increase 2.4 percent in 2011, considerably less than the 4.5 percent growth in 2010...
Natural Gas Rig Count Falls to 889. The natural gas rotary rig count, according to data reported by Baker Hughes Incorporated on April 8, fell by 2 to 889, which was slightly less than 50 percent of the overall rig count of 1,782. This is the first time since 1995 that rigs drilling for natural gas targets have fallen to below 50 percent of the overall rig count. During this time (as recently as four years ago, rigs drilling natural gas prospects accounted for over 80 percent of the rig count). The natural gas rig count has fallen about 9 percent from a high of 973 in April 2010 and by about 3 percent since the beginning of 2011. The large price difference between petroleum liquids and natural gas on an energy-equivalent basis has contributed to this shift towards drilling for liquids rather than for gas.

Note this is being filed under trends.. which have been decidedly lacking elsewhere;
Weekly
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Unless ever smaller moves and crawling into the apex of a triangle qualify as a trend. 
It is very possible that continues with another test of the resistance followed by a test of the support....

Daily
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The above is the most bullish interpretation of the count, implying a strong resumption of the move up is imminent, probably taking out the resistance trendline. Exceeding yesterdays highs (and .618 retrace) would be a good start, producing  a 5 count up from the 3.98 lows.

However that circled "d" wave has an easily identified double zig zag structure more characteristic of an X wave or "b" wave than "d". This implies further work into the the triangle structure at best prior to another significant ABC up.
The most bearish interpretation would be for a break to the downside out of the triangle producing new lows under 3.73 and possibly 3.28.
 I do not believe a new low under 2.40 is at all likely given the significance of that low discussed previously.

Another note; the seasonal high was made June 15th last year, still plenty of time to break high.

So keeping a close eye on yesterdays highs and lows for an early tip to the evolving count and possible triangle break.
 Hourly





Tuesday, April 12, 2011

Euro

click to enlarge
Unless the Euro is capable of new ALL TIME highs it has to run out of steam prior to that, and the .618 retrace is a good candidate for that. If it heads back down from here it should produce another a-b-c for a double zig zag.
The X wave up is a structured as a double zig zag.
Active Mo. Daily
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As are the sub waves a,b,c, and so far a case can be made that the final c wave is also a double zig zag.. with internal Fib relationships.
Hourly
Note the negative divergence on the RSI.
Here you can see the Fibonacci relationships between the sub waves.

On the downside if you are a bull, you really don't want to see anything under 1.43, esp an overlap of that first "a" wave up off the low. That invalidates a 1,2,3 interpretation.
The bears don't want a new high over 145, esp a settle over 1.46.
SO back to that big double zig zag down; another ABC equal to the first, ultimately targets 1.0375 from here.



Crude Oil

Yesterday the WTI sold off the most since Mar. 15. That may have been short term profit taking by the specs but the Mar.15 move didn't seem to make a big dent in the O.I.

The $5.60 move from the high to last nights 107.87 low will no doubt require some re exploration.



click to enlarge
Note the RSI, the divergence exists on the  hourly chart as well.
It looks like a 1-2-3 down so far. The leading 1 -2  however does not look like a clear impulse structure. It IS a small unit of time, and sometimes an initial reversal starts out with a corrective look. Time will tell on this. The bounce off last nights low DOES have an easy to see 5 wave structure. If this bounce turns out to be a 4th wave correction, and we then get fresh lows, it will go a long way towards signifying at a minimum, a longer term correction down, and perhaps the long awaited C wave.


 Weekly

 So far the B wave has retraced 70% of the A, with little Fibonacci significance. However if the above count on the structure is used, the -C- = .78 of the -A- at the 113.46 high.  Could be done, there's a ton of spec length, and I'm getting tired of looking for the reversal (bear exhaustion?).
Active Mo. Daily
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The entire "c" wave can easily be seen to be structured in a series of a-b-c 's, characteristic of a corrective B wave.
Ideas to the contrary will be seriously dented by taking out the trend line , not to mention overlapping 102.70






Monday, April 11, 2011

Rates Again

Getting there. See post from Mar 19. Be Afraid 

30yr. Active Mo. Weekly
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By far the important support is the diagonal trend line. 
Looks like it cuts around 117.20
Hourly
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Note the repeated positive divergence on the 14 RSI.
A corrective move up would seem about right prior to taking out the trend line.
If the trendline test comes first without a bounce here, beware a false break in an oversold market.  


Wednesday, April 6, 2011

Rates

The chart on the 30 yr. brings to mind a climbing story, took place on one of the big walls at Yosemite, can't remember which one. Nearly at the top of the climb my friend saw a guy  FALLING and heard him scream faintly, "FU^%*kkkk!!" , all the way down. Famous last words.
See the last post from Mar 19. Be Afraid 
Note the break to the downside on the following chart from a very corrective looking abc structure up.
30 Yr. Active Mo. Daily
 click to enlarge
Could be it fails to make new lows and it goes up again for a DOUBLE zig zag, but sooner or later it will be continuing it's trend. 

Monday, April 4, 2011

Crude and Natural Gas

In case you missed it Fri. night the COT numbers once again showed builds in Managed Money long Open Interest; about 4% in WTI,  6% Rbob, 1% Heat.  Natty continued to show decreases in the Managed Money
short Open Interst; down about 12%....on top of the last couple weeks decreases the spec length is now about twice that of the shorts.
Meantime crude has hit a potential pivot area mentioned in the last post,WTI- Where next?,

 click to enlarge

Of course a minor pullback COULD be followed by new highs with the 120 target looming overhead, but if WTI were to take out the .618 retrace above it would no doubt be signaling an itermediate degree correction at a minimum.

The NG pullback looks corrective and is pretty much what was to be expected after the recent gains, it is likely a 2 wave and the big question is how deep it will be. 

 Could get a 50% retrace of the natty move up if it breaks below the horizontal support, taking it down to 4.15. On the upside,  
" 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. Of course overlapping the Jan 24 high of 4.88 will get ALL the shorts crazy."
Keep in mind that seasonal highs typically come in between early April and late June.

On the road this week.

Friday, April 1, 2011

WTI- Where next?

Where next? FromMar 7.
WTI Ballistic " 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."
Still true. However...
Active Mo.
 click to enlarge
As you can see the Y= .76 of W just overhead at 108.75. 
This can also be viewed somewhat differently as;  

 click to enlarge
Y =W retracing .66 of the entire move down from 147 to 32.40 around 108.45
And on the hourly;


 5= 1 about the same point. Note the 14 RSI negative divergence.
So very likely short term resist at the 108.60 (roughly) level...perhaps a candidate for a reversal.
The big picture remains unchanged ...a B wave up from 32.40, to be followed by a C down.