Wednesday, May 2, 2012

RBOB Top?

Gasoline has likely seen it's high for the year. The spring seasonal high is, on avg., May 15 (27 year of data),  13 of the data points occurred in April, 7 in May, and 4 in March. The recent April 3 high is par for the course.  Both 2010 and 2011 peaked in the first week of May.
Weekly
 click to enlarge
Note the negative divergence on the RSI and cross-over of the MACD following negative divergence.
The above labeling depicts a double zig zag WXY, potentially completing the B wave up from the 2008 low of .78. The initial A wave down from 3.63 was a clear  5 waves .
The fact that the B wave has retraced 92% of the A wave move , makes the structure of the correction a  "flat " type.

If the B wave up is complete,  then the C=A comes in at .58,
The .78 retrace of the entire move up from the 1987 low of .30 comes in at .82, essentially a double bottom against the .78 A wave low. Double bottoms are characteristic of "flat" type corrections.

If the B wave is not complete, it is still possible to get another zig zag up for the the max allowed "triple zig zag", after another X wave down.
The first X wave retraced a modest 38% of the W. 
AS shown in the above chart a similar 38% X wave retrace of Y targets 2.40
So at the very least serious intermediate term downside risk, potentially catastrophic long term risk.

Daily


The Daily chart looks oversold shorter term, so a little consolidation, limited to a 50% retrace of the
last leg , around 3.22, would be consistent with expected continued weakness.
Taking out the Fibonacci points above will of course increasingly reinforce the negative   interpretation. 







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