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.