Wednesday, May 25, 2011

Crude Oil Correction Redux

The correction is achieving in time, what it cannot in price. The count on the hourly chart is rather involved series of 3 abc's, on the daily chart it's a simple abc with c= .618 of a.
However the correction is counted, it's safe to say that the move up off the lows is NOT an impulse wave.
Please see the May 4 post  WTI Update or the May 12 Crude Oil Update  for the count on the B wave up ending at 114.83
Active Mo. Daily
click to enlarge
Note the RSI is back in neutral territory, and it never did generate a positive divergence at the lows.


The 3 down  can be expected to equal or very  probably exceed the 1 by a Fibonacci multiple; 1.382 or 1.618. If it is equal to the 1 then it puts it around  81 , overlapping the "b" low of Feb.15th.
Naturally any multiple of 1 takes it out, painting a really ugly picture for any bullish holdouts.
Longer term downside risk is about as high as it gets, see Crude Oil Targets

And a quick update on the Rbob count;
 Hourly
click to enlarge
Note the negative divergence on the  14 RSI.
c=a at about the .382 retrace




Thursday, May 19, 2011

Rbob Update

The  following count explains the severity of the bounce off the first move down in Elliott terms (it was really a 5th wave failure), and suggests the next new low will likely be in a -3- of 3 formation,  with potential to accelerate.

Active Mo. Daily
click to enlarge
Note that -5- of 3 up is .618 of -1- through -3-, a common relationship for a 5th wave.
This supports the interpretation of that last thrust up. that failed to make a new high, as being the 5 of c of B. Crudewire did pretty much nail the high though in the April 28 post ,
Rbob High
Active Mo. Hourly
click to enlarge
While not illustrated, the -2- has retraced .618 of the -1-, this morning. Expect the -3- down to be just starting (the degree labeling on the way down can be expected to change).
Likely targets for the C wave are below.
Active Mo. Weekly
click to enlarge
Note that the c=a on the B wave.

Though it works well, the above chart uses an active mo. that rolls a little vaguely. Using the actual spot month high and low for the A wave down of 3.6310  and .7850, the C = A @ 57.67 rather than .6612.
Whats 10 cents between friends.


Wednesday, May 18, 2011

Crude Oil Correction

Ok, looks like a very good possibility that the 2 wave correction up discussed in the previous post,
Crude Oil Update is complete.
Hourly
click to enlarge


Note that the second series of abc's is .618 of the first series.
I'm labeling this as a double zig zag 2, rather than a -1-, -2-, because the wave labeled x did not make any new lows.
Additionally the structure of the final c wave is also structured as -c- = -a-.
 15 min
  click to enlarge

Now looking for a 3 wave down that will have some relationship to the 1st wave's move of 20.23.
From 101.42 the 
3= 1 @ 81.19
3= 1.618 of 1 @ 68.69 
3 =  2.618 of 1 @ 48.46

Additionally from May 8 
Crude Oil Targets

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.















USD

Is the USD pause in its upward trajectory (powered by the largest short position ever) finito?
3 rd wave up anyone?
USD Daily
click to enlarge
(There was no negative divergence of the Daily 14 RSI at the highs .)
New highs would take out the .382 retrace point and get the Elliot folks excited. 
A test of that trend line could also be expected after the sharp reversal up from the lows.
 The overlap of the May 9 high by the May 13 low, opens up the possibility that we have  a series of 1-, -2-'s of 3 already, either that or a running 2 correction. In both cases it suggests a strong thrust up is imminent.
30 Min.
Note the -c- = -a- pullback off the highs.
 Early support for this view would be taking out the 50% retrace of the last leg down
at 75.62



Monday, May 16, 2011

Euro

The Euro has got a lot of eyes on it this morning and with good reason.  Leaving the news and fundamentals aside for the moment, from an Elliott Wave perspective, it is set up to potentially accelerate to the downside.
Daily 
click to enlarge
The 1.3995 / 1.40 area, as the .618 retrace , previous low, and key round number over the years, will no doubt be a magnet with stops just under to be expected. In fact, in light of that, today's low at 1.4038, if overlapped, ought to trigger a wave of selling.

Hourly (from May 12)
 click to enlarge
 This is an older chart from last Thur.s  morning (sorry my usual charting package is down) with the  Elliott count. Awaiting the wave 3 down.
Hourly (current)
click to enlarge

Shorter term the action down from Wed.'s  high of 1.43 can be seen as  a "1, 2, -1-, -2-" set up implying a subsequent 3 rd wave expansion down.  Fridays high cannot be overlapped or its an  irregular 'b" wave down of some sort, delaying the 3 down slightly.

So very short term the 4180/ 1.42 level will interesting to watch as the 50% retrace of Fridays dump and potential -c- = -a- of this mornings bounce off the lows of 1.4038.
Again new lows under 1.4038 will be very negative.

Monday Morning O.I.

The ever exciting Open Interest story continues;

Speculator net long crude oil positions are DOWN...13%.
And to get some perspective on that;
From Bloomberg

click to enlarge
It does seem there is correlation to the late spring seasonal high for crude (and subsequent sell off) as well.  In 2010 there was roughly a 62% decline in the net long position.

Rbob has seen about the same decline in net longs 1.1%.  Heating Oil declined significantly more at 19% to net long 32,565. Last summer it went to net SHORT 8,000.

Thursday, May 12, 2011

Crude Oil Update

Do we have a count down of 1 and 2 complete, with 2 ending late May 10th at 104.66 ? This is important because if the move down is a 3, it likely will accelerate, potentially extend, and certainly will pound through the lows to the next support area.

The rally up did stop at the 50% retrace of the whole move down, which is supportive of the argument  to label that move down "1".  I had originally thought it might be -1- through -3-.  Using the -1- through -3- count it retraced .618 of the -3-. A very deep and unusual retrace for a -4-. The question on the labeling arises from the slightly confused action immediately following the 114.80 high.

For now I am going with count of 1 and 2.
Active Mo. Daily
 click to enlarge

If we ARE in a 3 down then it can be expected to equal or very  probably exceed the 1 by a Fibonacci multiple; 1.382 or 1.618. If it is equal to the 1 then it puts it around 84, testing the "b" low of Feb.15th.
Naturally any multiple of 1 takes it out, painting a really ugly picture for any bullish holdouts.

Shorter term what does the move down from the 104.60 level look like?
Active Mo. Hourly
 Note the positive divergence on the 14 RSI, not as pronounced as May 6 low.
There is also a .618 Fib extension relationship at this mornings lows.
Could easily see a -2- up, and the 50% retrace is 99.93, near the overnight high of 99.72.

With the margin increases and political heat, it seems unlikely that a quick resumption of the rally is imminent.  Longer term downside risk is about as high as it gets, see Crude Oil Targets



Wednesday, May 11, 2011

Margin Hikes for Gas

CME hikes Rbob initial spec margin 21% to 11,750, effective close of business May 12.  Various product spreads increase as well.
CME 5.11

Note the announced crude oil margin hikes on Monday evening ( up 25%) took effect as of the close of business May 10, making today, the 11th, the first trading day with the new margins.
Presumably the first day trading with the new Rbob margins in effect will be Friday.

Rates Update

Not really my thang but can't resist...
30 yr Daily
click to enlarge
A classic double zig zag with equal legs retracing .382 of the preceding leg down.
A pretty good bet it gets another leg down, at a minimum, from here.
The reason this is of more than usual interest, is of course the massive head and shoulders set up; see 
Really.

Natural Gas Update

Finally! In all the excitement over in the USD/ Crude arena I've not posted on NG in over a week.
Please feel free to contact me for the most up to date thinking on the development of the wave count, and short term outlook etc.,  it is just not possible to post in the moment , all the time.

                                              guywbishop........ Yahoo I M
                                              guywbishopOTC... AIM I M
                                             
Last week it has to be said, while I was looking for a minor short term pullback I also thought it would see higher highs;
 "Shorter term there is likely a series of shallow pullbacks followed by slightly higher highs into the 4.80 / 4.88 level.", ( that's from the 4.73 high).
Never happened, the breach turned into a false break out, and Natty continues to crawl into the apex of
the triangle.
Frankly by early Thur. with the penetration below 4.55, and general commodity dump it was no surprise to see it dump 25 cents.

Currently it looks set up for another try at the upside break out. The below count is just about the most bullish interpretation , justified by the Fibonacci relationships between the legs, the lack of lower lows since Oct of 2010 and the long term significance of the 2.40 low. Arguing against a break higher would be that usually a triangle breaks down in this position, and the decrease in short spec Open Interest over the last month
 Daily

Monday, May 9, 2011

Rbob

Ready for a whack....
Hourly
click to enlarge
Pls see Apr. 28 post Rbob High for back story.
In the meantime Rbob has 5 sub waves down for a 1 down, an abc up for 2 , implying another 5 sub waves down for a 3 ( at least) .
This is occurring during the week in which Rbob's 25 year avg seasonal spring high hits.
Not to mention todays record high crack spread and Rbob / HO.
From Reuters;
the crack

Note the POST May high sell offs. Rather consistent.




Sunday, May 8, 2011

Crude Oil Targets

From Friday mornings post  WTI WOW
"A bounce up to the 101 area could be expected as .382 retrace. Since it's a 3 wave the 50%, at 102.85, should contain it."
So far so good; 102.38 was Fri's high and it reinforces the count outlined in WTI WOW. That implies another new low under 94.60 to get a complete 5 sub waves down for 1 of greater degree.
Hourly
 click to enlarge
Again as mentioned in the preceding post, "  degree labeling can easily be change so that -1- becomes (1) etc."  an extension can occur anywhere at this point.
But generally speaking a new low for the 5 of  I of C might find support at the 50% retrace of 70.72 to 114.80, or 92.83, at the .618 retrace, or 87.55. Note the Fibonacci extensions above of  50% hits at 92.35. 
It is important to ask how much bounce from a lower number like 92.35 WTI could achieve.
Most remember that during the summer of 2008, there were relatively shallow bounces for the first 5 weeks of the move down. It wasn't until the 9th week that a 35% retrace from 90 to 110, showed up.

Weekly
click to enlarge
 If the C wave down is anything like the A wave, Fridays highs may be tough to beat by much.

 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.









CFTC C.O.T., Heating Oil Fundamentals, etc.

Most recent COT,   as of Tues May 3, released Fri. after the close ;
spec long Open Interest in Crude, Rbob, and Heating Oil was virtually unchanged. In fact, lumped together it actually increased slightly.
Charts from Reuters;
Note the jump in crude oil O.I. back in the last week of Feb. corresponds to the break up above 93, which was nearly all retraced last week.


click to enlarge

The above charts benefit from a little longer term context....compare current levels to July 2008.

click to enlarge
 above from Mish's Global Economics Trend Analysis' Oil Consumption Demand Destruction vs. Speculative Futures Positions
there are some excellent charts there re the worsening (to be kind) Distillate demand.
Here's one just to get the flavor;

So next weeks O.I. numbers will reflect the liquidation of last week. But given a number of factors including the prevalence of paired trades esp vs USD and the dollar carry trade (I mean was ANYONE long USD?), the historic O.I. levels, and horrible fundamental demand dynamics ...Probably fair to say there is  more to go.  

Added Mon. 8:45 a.m.
OK seeing that O.I. INCREASED Thur. confirming the move down's longer term significance, esp coupled with the huge volume. 
There will certainly come a time when the longs liquidate, AND get SHORT (if they're still viable) for now it appears there is a lot of pain yet to be realized out there.






Friday, May 6, 2011

Playing the Trumpet

Hopefully everybody was on the right side of that move yesterday. Crudewire had been putting out  bearish interpretations of the move up rather consistently. I have always contended that we were in the B wave up, the corrective wave , and that it would be followed by the C wave down.
From Thur April 28; Rbob High
From Tue May 3  Crude Trend Line
From Wed. May 4   WTI Update
and    Did the Dollar finally bottom?

Additionally, yesterday morning on Reuters Global Oil Forum, I made the following posts;
9:08
"

TI tookout the Apr 13 low."
Reuters, "What's the next target for WTI?"
9:15
"
roughly 102.70 is really the next previous low, and corresponds with the.382 retrace of the 84 to 113 move"
Reuters, 
"What would the WTI target be after that?"
 9:18
"however if this is really a usd reversal thats still pretty high. (103)"
 9:24  


"the 96.20 to 95.60 area , another previous low and the .618 retrace of the 84 to 114 move"

It did trade below that 95.60 target, at 4 a.m.it hit 94.63.

You can get current intra day comments and great markets on Clearport options and swaps via I M's and the phone from myself and Mike Korn at Skokie Energy.

Guy Bishop  973- 462- 0005
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guywbishop@yahoo.com

Mike Korn  609-947-7556
mikekorn_yjenergy
Skokie Energy 71 Deerpath LN Princeton, NJ, USA  08540










WTI WOW

First of all....how often have we seen choppy hard to read bounces the day after? And it's a Fri. to boot. Lots of shell shocked, and possibly hung over, commodity traders of various stripes out there.
Tentative count;
Hourly
click to enlarge
Classic positive divergence on the 14 RSI. Looks like the -3-rd wave of 3 of what will probably be "I" of C down is complete . Beware the degree labeling can easily down a notch so -1- becomes (1) etc.
A bounce up to the 101 area could be expected as .382 retrace. Since it's a 3 wave the 50%, at 102.85, should contain it. (Note that 103 area was potential support yesterday and it blew through it.) 

This is very likely the beginning of the long overdue C wave down, targets are ALL catastrophically lower, even the conservative ones. More on that in a later post.








Thursday, May 5, 2011

All about the Eur/USD

When Goldman talks people listen....from Zero Hedge,
 Goldman Warns The EURUSD Surge May Be Coming To An End
They must have seen my post yesterday.
Euro
 click to enlarge
 Early thoughts on the count. If it is just beginning it's move and is in a very minor -3- of 3,
bounces from an oversold condition should be limited to 50% or less.



Wednesday, May 4, 2011

Did the Dollar finally bottom?

Talk about catching a falling knife. Still, if it's going to reverse, today's low is a pretty good candidate for that. -c- = .618 of -a-;
Weekly
click to enlarge
And the larger degree c = a just above at 73.26 .

WTI Update

Yesterday there was a slight penetration of the ascending wedge trendline, encouraging the bears looking for a B wave top. SeeCrude Trend Line
 Active Mo. Daily
click to enlarge
Note the negative divergence on 14 RSI.
 The above labeling depicts the abc structuring of the move up, typical of corrective moves and B waves. A wedge would be a classic ending pattern.
The "c" is a 100% extension from the "a" high.
Within the "c" wave the z = 50% of the y, and the y = 76% of the w.

Fibonacci relationships on the weekly chart;
 

 While the above does not represent my preferred count, I've often thought that the circled price behavior may well all have been the -B- wave. It sure was confusing enough.
Thought the near -C- = -A- interesting.
Below is the conventional and preferred count .
Weekly
click to enlarge
Negative divergence on the RSI.
The -C- high is a 50% extension from the -A- high. Overall the B wave retraced 72% of the A wave, in itself without Fibonacci significance. Oddly 114.80  is 32.2 under 147.

Shorter term;

15 min.
 click to enlarge
So far no real easy 5 count down. it could use an extension to encourage the bears. Penetrating 109.30, the .618 retrace of the last "z" wave, will raise a red flag for the bulls. Of course overlapping the 105.30  point will confirm it all.









Tuesday, May 3, 2011

Crude Trend Line

click to enlarge

Hourly

Overlap is important as early indication of a serious correction at a minimum....
But since I am looking for the termination of the B wave, this starts to look more like the beginning of a significant C wave back down . Labeling it all tonight.


SP 500- Are we there yet?

Well it hit the Fibonacci .78 retrace in any event.
MAYBE it can get to the .85 retrace but it's looking tired and complacent... the VIX was at it's lowest since 2007  at 14.27 last week.
Additionally, the move up from the 1002 level of last July, looks like a rough 5 wave structure. In actuality it's a series of abc structures that mimic a 5 count.
Active Mo. Weekly
 click to enlarge
Note the negative divergence on the Weekly 14 RSI.

Active Mo.Daily
 click to enlarge
Again negative divergence on 14 Day RSI.
Lets see if this can take out the trendline for starters. The next point of significant encouragement for the bears will be the overlap of the 1290 low.

A little nearer by taking out some previous lows on the hourly chart should shake out some of that complacent length.
Hourly
click to enlarge

 There is a cluster of support around 1340, the .382 retrace on the last structure up, and an area of repeated buying interest.

Just for fun, note the Fibonacci ratio extensions acting as resistance on the way up.

click to enlarge


Monday, May 2, 2011

Natty Again

As discussed in the last post Natural Gas Update 
"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."
 Active Mo. Weekly
 click to enlarge
That trend line has been pretty decisively taken out, and the probability of Natty being in a 3rd wave or C wave with MUCH higher targets is increasing. Note the resist at the previous 6.11 high coincides (roughly) with the Y=.618 of W . After such a lengthy basing period however I lean toward the Y=W structure at 7.45
Daily
Shorter term

Note the absence of any negative divergence on the 14 day RSI.
Back testing the break out is normal, even some minor penetration of it is to be expected.

Obviously the next milestone will be the 4.80 resist. cluster. Overlapping 4.88 will be a significant marker for more serious upside risk longer term.
Shorter term there is likely a series of shallow pullbacks followed by slightly higher highs into the 4.80 / 4.88 level.
Hourly




 Lots of divergence on the Hourly RSI. Holding above the 4.55 level will be very constructive for further upside work.
If this were to accelerate through the 4.88 level in the short term, it would signal a likely -3- of 3 structure and expectations of higher targets; 7.45 +