Friday, July 29, 2011

WTI

It's been a LONG time between WTI posts, since July 8, at which time WTI was trading 96.66.
And it's been an indecisive and dull 3 weeks, with the creeping upside move putting a dent in bearish sentiment, as WTI retraced just over .78 of the previous leg down. The potential for another test of the highs as discussed in the last post, Crude Oil Update, could not be ruled out.
 Active Mo. Daily
 click to enlarge

However, the very choppy action, and abc structuring of that move up,  was not really encouraging.
Additionally, you will note the failure to get back above the 100 dma and the 50/100 cross.
All in all, it leaves the count of 1, 2, -1-, -2-, intact as the most likely Elliott Wave count.
Risk of an accelerating -3- of 3 down remains high.

Looking at the above chart, overlapping the 93.55 low certainly raises the odds of a test of the 89.65 lows. And overlapping 94.69 leaves the 93.55 begging to be tested.


Active Mo. Hourly
click to enlarge
Since the first half of this post the GDP numbers came out. Looks like the (3) of -3- of 3 starting. Volatility about right. So far no posiitive RSI divergence, though it's in oversold territory of course.
Not far away from the 94.69 level.

On the upside, an overlap of the (2) at 98.01, would change the count.


Tuesday, July 19, 2011

Natural Gas Elliott Wave Count

The Natural Gas has been going it's own way since Jan of 2010. Divorced from the influence of USD weakness, it has reflected the overall domestic macroeconomics of over capacity with little growth.
That may be about to change. 
Natty has slowly but consistently been making higher lows and higher highs for the last 9 months and in the process it has taken out  one descending trend line after another.

Active Mo. Weekly
click to enlarge
Meanwhile it has held the ascending trend line and begins an upward sloping channel.
Active Mo. Daily
 Click to enlarge
Note the recent "c = .78 of a"  Fibonacci relationship of the legs at B; likely completing a second series of abc's.  While there could be a third series of abc's, taking natty even deeper into the apex of the triangle, downside opportunity is limited given the current structure and the long term significance of the 2.40 low.
Here's the Elliott count.
 Active mo. Weekly
 click to enlarge
As can be seen above even a rather modest "C= .618 of A" delivers a 42% pop from  here. 
And C=A, to roughly retrace 50% of the preceding leg down around 8.00, would not be an unusual outcome. 
Active Mo. Hourly
Note the negative divergence on the 14 RSI at the highs.
This could be an abc up or a 1,2,-1-,-2- set up. Holding the 50% retrace of the last leg and fresh highs would help the bull case obviously.
PS. Last weeks spec shorts were getting back to the high end of the range. 




Friday, July 8, 2011

Crude Oil Update

Geez, go away for a few days and the place goes crazy.
The relentless early July ramp during the holiday period reopens the possibility of alternative counts on the Crude. The move down since May has taken on the look of an abc structure, but that does not  necessarily mean new highs will be put in, even if that is the ultimate count. Additionally there is some evidence of continued 1,2 development.

WTI Active Mo. Daily
 click to enlarge
Of intermediate term importance is the  "c = a " structure of the move up off the 89.61 lows, labeled (2) or x.  That wave also retraces both .382 of the entire move down off the highs of 114.83, and  .78 of the wave labeled (1). If the recent high of 99.42 is a (2) we can expect an acceleration down for new lows, if it is an x wave, it will likely be a choppy abc type structure to new lows. Taking out 93.44 will be an important overlap lending weight to the above counts.

 There are 3 basic scenarios from here; the move down is done and Crude is headed to new highs after an abc type correction down to 89.65, or the move down is winding up to accelerate after significant  retracement of the 147 to 32.50 collapse, or the corrective retrace is itself only partly done, and the 114.65 high is the eventual "W" of a double or triple zig zag correction  (OMG). 
Two of these scenarios describe very serious downside risk.
And, all in all, the highs May 2  at 114.83 were important enough in the very long term, that the third scenario of higher highs is slightly less likely.

On a fundamental note the continued negative feedback loop of the macro economy on demand, and higher petroleum prices on the macro economy, makes the prospect of higher highs somewhat hard to picture, particularly in light of the absence of Fed QE 3.