Monday, November 28, 2011

Natural Gas Makes a Comeback

Natural Gas makes a comeback after months of  boredom with a technically significant pivot. Additionally there was the usual giant spec short position in last weeks COT report.

 Active Mo. Weekly
click to enlarge
Two items of particular note; the low last week at 3.285, was just above the c= .618 of a, and was also at the .76 retrace of  a. 
Additionally there was previous horizontal support at 3.29

If we care to look at the Jan 11 contract over the last few years it looks quite different but holds it's own pivot potential.
Jan Weekly
click to enlarge
In the above the last leg ; 5 = .618 of 3 at the lows last week.


 Active Mo. Weekly
 click to enlarge

On the above chart are some longer term Fibonacci retracements of the entire ABC move down from 15.78 to 2.40, and some Fib extensions of the -A- as targets for -C-.

Shorter term;
Hourly
click to enlarge
Easy to see a probable 5 waves up accompanied by negative divergence on the RSI; a pullback would be  normal here.
Holding the gap and .382 retrace would be very constructive.



Wednesday, November 23, 2011

Euro Breaks Down

From last Fri Nov 18 post
The Trillion Dollar Question ..Eur/USD

"It needs to accelerate one way or the other.
  
Breaking out of the range will signal the tell; 138 and 134. Again right in the middle of it.
Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108."

It broke down this morning to new lows under 134. That's the tell mentioned above.
Additionally, the Euro has broken below the .78 retrace of the lesser x wave. Just.
Daily
click to enlarge
Next milestone on the downside is, of course, the overlap of the previous low and beginning of the x wave, at 131.42

The support at 134 was not only horizontal support from Nov. 18 as seen in the daily and hourly chart, but also a 50% retrace of the entire X wave, of larger degree , as labeled on the weekly chart.
 Weekly
click to enlarge
Note that overlapping the 131.42 low would leave very little between it and the next support, .618 of the X wave , at 130.33.
Below 130.33 no real support before the previous low of Jan 10 at 128.70.
Overlapping that level and you're really looking at the lows of 118 for support.

Monday, November 21, 2011

From the D.O.T.- Miles Driven

click to enlarge



Higher prices, less discretionary income per household in an inflationary environment, and an aging population.

Meditations for Traders Who Worry Too Much

New book I'm writing;

Meditations for Traders Who Worry Too Much

By Don Corzinowski


Jan 1
Thought for the Day
Some days we wake up to find ourselves thinking about all our troubles, real and imagined. Our heads feel like they are on a treadmill going faster and faster;  “ what about the papertrail?, are the Feds coming today? , how will I look on the perp walk? “
Sometimes it’s natural to think about the coming day, and it’s demands and obligations, but needless worry never got anybody ahead in this world. I mean, with thoughts like those running around , who would want to get out of bed?
So first thing ; Don’t worry be happy.

Meditation for the Day
Today, when I start to worry about the paper trail, I will remember the universe cares about me, 
when I catch myself looking out the window to see if there are any Crown Vicks pulling up, I will remember;
“Don’t worry be happy”



Friday, November 18, 2011

On Spreads

After hitting a couple of home runs on the WTI/ Brent, it's probably time to re assess.
The posts on WTI / Brent, if read properly (or written properly) should have indicated 2 great moves -26.50 to -16.50  and -19.60 to -11/-10.

 Brent vs WTI

WTI / Brent

 WTI / Brent Update

I do not believe spreads lend themselves, under normal conditions, to technical analysis and Elliott Wave in particular, unless there is a condition of extremes.
Those with deep physical trading insight have a huge edge on spreads....
so while there may be whole lot more in the WTI/ Brent  ....I'm out.

The Trillion Dollar Question ..Eur/USD

Where is the Euro going?
The long term and intermediate term  direction for Euro is anything but clear from an Elliott Wave perspective. It is basically structured in abc's and it has had a significant ABC down at the 1.18 low.

Active Mo. Weekly
click to enlarge

The structure up labeled X is obviously an abc, otherwise it would be simple...a 5 wave impulse wave would justify a very bullish interpretation. Instead it's a corrective structure, so X it is. However the move down has yet to assume a 5 wave structure either...so the question of exactly how this resolves is very much still open.
 Euro is nearly in the middle of this giant trading range. 
Daily
click to enlarge
The daily chart is of little help in clarifying the long term direction, except to note the very choppy nature of the last leg down with overlaps rife. It needs to accelerate one way or the other.
 Hourly

Breaking out of the above range will signal the tell; 138 and 134. Again right in the middle of it.

Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108.

On the other hand if the Euro breaks up, holders of dollars are going to rush to get long hard assets.



Monday, November 14, 2011

WTI / Brent Update

Please see the preceding  2 posts on this topic, Brent vs WTI, and WTI / Brent, from Sept. 6 and Nov4 respectively.
In those posts I was looking for the spread to narrow from -26.50 at the time of the Sept. 6 writing to a more historically normalized relationship.
In the Nov 4 post I noted the potential for a widening of the premium to the resistance, at around -20 , from -16.50 at the time of writing. It did.
It was also noted that ,

"Longer term plenty of room to come in....-10/-11 looks like resistance, also roughly a 50% retrace."

After hitting -19.67 , the Brent premium to WTI has hit fresh lows.
from Bloomberg;
1st Mo. WTI - Brent

  click to enlarge
If this current move up is equal to the first leg up off the lows it would target -7.50 (roughly).

5 Year

Friday, November 11, 2011

WTI Update

This presumed X wave, has now retraced a Fibonacci .618  of the entire move down from 114 to 74.90.
Spot Mo. Weekly
click to enlarge
This is, obviously an important point. With the general difficulty of the move down to produce 5 wave extensions, it's abc structure, upside overlaps, and 50% retrace of 32.40 to 114, the WTI pretty much needs to quickly find resistence and head back down to maintain bearish interpretations. The .618 resist is a prime candidate.
Spot Mo. Daily
 click to enlarge
Note the slight negative divergence on the RSI today.
The y=w at 99.50.

Friday, November 4, 2011

WTI / Brent

With the official announcement of the re weighting of the SP GSCI Index, it might be timely to take another look at WTI/ Brent spread.

From the Sept 6 post, Brent vs WTI when the spread was -26.50
"Given the set up with a -3- of 3 coming up, Brent could well see a lot of that premium to WTI go bye bye.
I'm thinking the Nov contract. Maybe the terrible conditions in Europe motivate maintenance in the North Sea, maybe QE III ain't what it used to be."

 Here's the current chart from Reuters;
click to enlarge

The re weighting is as follows,

* Brent weight rises to 17.35 pct vs 15.9 pct
* WTI weight cut to 30.25 pct vs 32.6 pct
Apparently it was widely expected and announced last night.

The 50% retrace of the last leg up is around -20.

Longer term plenty of room to come in.
from Bloomberg;

 -10/-11 looks like resistance, also roughly a 50% retrace.




Crude Oil Elliott Update

Not much has changed on the Elliott count since the Oct 25 post , Crude Oil Rip
despite the avalanche of news. There has been a slight extension of the X wave structure, by 9 cents.
Bottom line, downside risk is extremely high from here, whether this move down turns out to be the C wave, or b of B, and these levels in the low 90's represent a gift.
 Active Mo. Daily
click to enlarge
Note the negative divergence on the 14 RSI.
The X wave retraces 50% of the entire move down and the X wave can be seen as being structured
as an abc with c=a.

Most likely the recent X wave is of a higher degree than the preceding x wave and subsequently another 2 series of abc's wouldn't be a surprise.
Unfortunately for the bears, the down move, whether C wave, or b of B, ain't gonna be easy, as we've seen.On the downside if that turned out to be the structure, it would equal the first 2 series of abc's, from 114.83 to 74.95, at 55.05.
Longer term however targets for a C wave should have some significant Fibonacci relationship to the A down, as below;

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 C= .50 of A at 57 ( though that would represent an extremely truncated C wave)
Note the 55 target discussed above.

The extreme correlation between markets also suggests extreme downside risk ...











Thursday, November 3, 2011

MF Global Customer Pain

 The MF Global debacle's been heavily covered elsewhere, however 
Reuters reports tonight;

" Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades. Come Friday, with the mass transfer of commodity trading accounts from Jon Corzine's fallen firm to six of its erstwhile rivals, margin clerks will be wrapping up a reckoning of how much additional money is needed to cover millions of positions. Clients who can't quickly meet their margin will have to liquidate, possibly making for a tumultuous day's trade.


Clients of MF Global involved in the mass transfer say they'll need to find around 40 percent of their existing margins from funds that are often still locked up in the bankrupt firm. Some will be able to do it but others -- some holding illiquid contracts far out the curve -- face a forced liquidation."
 Haven't seen this reported elsewhere.