Tuesday, December 16, 2014

WTI Targets and Tells

The Saudi's are playing the long game and the long game is to disable the competition and gain market share. They've always been rather good at that.
Historically one of the tells of a market top/bottom is the announcement of some whale hitting the wall,  Sem Group at the 2008 $148 WTI high, Chesapeake (Mclendan) at the 2012 $1.90 nat gas print etc.
Waiting with bated breath.
Meanwhile the .76 retrace of 32 to 114 is $52...be nice to get a dead whale, a couple CEO announcements re permanently cheap oil and a 52 print at the same time.
The .78 retrace is at $50.

Friday, November 14, 2014

Natural Gas .618 Retrace and Targets Higher

Yup, that ole Elliott .618 retrace back in the news.
Here's the looked for pullback and whether it pivots from here or the .76 retrace at $3.80 it's presenting a nice entry ahead of winter.
click to enlarge

The thrust up from 3.56 traveled .98 and counts as a 1 up of course.
The pullback is likely a 2 back and they can be deep.
Note the gap is closed perfectly at 3.96.

The next leg up , the 3, can easily be 1.618 of the 1 which targets 5.55
Even if it's a "c" wave and is equal to the "a", it targets 4.94 from here, taking out the previous high at 4.89.

Sunday, November 9, 2014

Greatest Bull Market in History - Almost!

Just a little look at the big picture;
SP500 Weekly Log Scale
click to enlarge
 I can forget the significance of the arithmetic when I look at 
 a log scale.
The SP 500 will have gained as much from the lows of 2009, as it did form the lows of 1975 to the highs of 2000, or 1465 pts, when it reaches 2131. Think about that, and compare the quality of the real economic gains during the two periods. 
(Some count the bull rally of the last century as beginning in 1982 from 104 so that would see 2090 as an equal move up from 666.) 

On the Dow Industrials we are there.
(charts courtesy of The Keystone Speculator) 

click to enlarge

The 2000 high of 11722 less the 1982 low of 784 produces an equal leg up from the 2009 low at 17574! Last Friday nights close.

Not just new highs but EQUAL to the greatest bull in history. Of course, it doesn't even come close as percent move, but hey.

Here is another interesting chart:

Note; like cycles, regression is interesting but very unreliable for timing trades.

Friday, November 7, 2014

Natural Gas Targets New Highs

First of all please see  Natural Gas Headed for Lows from Sept 4
It completely describes all the action in Nat Gas since that date.

In it I state, " Yes, new lows are likely and will offer a superb buying opportunity"
and "fresh lows ARE likely, but considering the seasonal factors and Elliott support not by very much.. $3.65 to $3.55 MAYBE."
click to enlarge

Another abc pattern up, which sure looks like it's underway, projects to what?
The last abc went from the late 2012 print of 3.05 to the high of 6.55 for a move of 3.50. An equal leg targets around 7.05, a new high.
On a wildly optimistic note; the last abc was 1.64 x the preceding abc up from 1.90 to 4.00.
If the pattern is repeated that targets 9.13.
A 50 % retrace of 15.78 to 1.90 is at 8.84.

Shorter term it's looking a little overdone.

click to enlarge

And if this thrust up is a 1, then the 2 could carry back down to retest the 4.02/ gap level,
as the 50% and .612 respectively, fall in there.
However there is some chance of slightly higher highs prior to a pullback and 
the .382 retrace of the move down from 6.50 to 3.53 hits around 4.65 as resistance.

Tuesday, September 9, 2014

WTI Crude...NOT a Sale

The party is over or nearly over for the shorts. This is NOT where you want to be short....
Spec Net Open Interest has fallen from the highs of the year to the lows of the year in just 3 months and now stands at roughly half of what it was.

Reuters ;

click to enlarge

Prices have eroded below the hoary, "head and shoulders neckline", but do not look in danger of accelerating. In fact, in my experience it is very rare for WTI to have follow through, after taking out obvious necklines; more often it reverses rather quickly ( I have no data on this).  


click to enlarge
More important is the .618 relationship between the A and the C legs of  what can be seen as a sideways consolidation. Coupled with the oversold condition of the market it will be expected to provide medium to longer term support.

click to enlarge

Note the repeated RSI positive divergence. While a cursory Elliott wave count would accommodate one or more further tests of the .618  support @ 91.68 the "end is near". 

Longer term all the action since the 2009 low at 33.20 has been very difficult to count, and has not displayed many of the characteristics of primary trending structures, like easily identified 3rd waves that exceed both the 1 and 5 waves in time and price, and 4 waves that do not overlap the terminus of the 1 wave. This strongly suggests that even though there have been tremendous gains in price, and will likely be further gains in the future, this is all part of a very long term Super Cycle 2 or B up.

Courtesy of Tradeview this chart is interactive

click to enlarge
There is no reason not to expect this choppy sideways structure to break to the upside for an attempt at the highs of $148, and STILL be corrective, and eventually failing.
The arguments AGAINST taking profits on the short side: the seasonal history of a decline from October into Dec. and the good ole USD rally. The USD move is probably the most significant. ( pls see USD and the 2008 high in WTI. ) 

Thursday, September 4, 2014

Natural Gas Headed for Lows

Yes, new lows are likely and will offer a superb buying opportunity for all the reasons mentioned here.


The long term .618 retrace of the entire multi year rally, from $1.90 to $6.52, is at $3.64. That level was close to being tested and held $3.73 on Aug 18. Unfortunately the subsequent $.35 rally has failed to follow through and the entire structure now has a distinctive "abc" look usually associated with corrective moves.  So fresh lows ARE likely, but considering the seasonal factors and Elliott support not by very much.. $3.65 to $3.55 MAYBE.

Today after a weak open the EIA storage numbers were released;

  Injections were slightly above industry expectations, but still lots of catching up to do.

Thursday, August 14, 2014

S&P- NOW it's a Sell

Equities are getting the looked for bounce after the initial move down off the highs. The low of 1902 was of course, a 50% retrace of the previous 3 month leg up. This sharp correction up of the last several days is, so far, exactly what you would look for in a "2" wave....a sharp "abc" structure that takes back a good deal of the "1" down, with most participants assuming it is a resumption of the up trend.
WSJ 8/14/14 .... " U.S. stocks rose on Thursday, extending the Dow's march back into positive territory for the year."

click to enlarge

This is potentially an important selling opp, and of course if the top is in, THE important selling opp. But even if there IS more upside to come, there is a high likely hood of at least one more leg down to give an "abc" type structure to what the bulls hope will turn out to be merely a correction down.
The 1953 high today is where the "c" = .618 of the "a". 
Unfortunately the "2" can be strong so a .82 retrace has to be allowed for. 
Of course "3" waves typically are the most significant moves and mark recognition by the market that the trend has changed.

These markets are so very different structurally from 5 yr.s ago when we made the low, that I've wondered whether "Elliott" is still a useful method. It certainly was useful then.

Monday, August 11, 2014

Natural Gas - Seasonal AND Elliott Support

 Gotta love it when Natural gets both Seasonal support AND Elliot support. These two factors are aligning now, and the fall seasonal rally has proven to be the big buying opportunity of the year over and over again.

The 23 yr. avg of spot prices has the seasonal low in mid Aug, followed by a significant rally exceeding 100% into mid Nov.

The major utilities and industrial users are well aware of the seasonal opportunity that presents itself in late summer, and with last winter's record low storage fresh in mind, they will be risking their jobs to miss it. 
EIA Storage
Storage still hasn't recovered. Praying for El Nino by now. Check out the last few years buying opps present at mid Aug.
click to enlarge
Perhaps as important, if not more important than the seasonal trend, is the fact of a .618 retrace from the highs having been put in.  This retrace looks like a simple "abc" down, nearly c=a, and is the most significant retrace since the 2012 low of 1.90 in terms of outright price.

If the low is in and it represents a correction to the preceding $4.60 move off the low of 1.90, than a retest of the highs at 6.50 would be a minimum expectation.
If the next move up is equal to the last, it targets $8.32.

click to enlarge
A short term pull back, not below 3.75 would be an entry opportunity, with 4.30, the 50% retrace of the last leg down, providing resistance the bears don't want to see taken out.

The implication here is for a seasonally powered move with a both a fundamental and technically supported target that is very high.

Tuesday, August 5, 2014

S&P- Not A Sale

The SP is now nearing support around the 1902 level and has had a decent flush in what was probably a "3" last Fri. This sell off then, is the tail end of the initial move off the highs. It is even conceivable it's a buy opp. 

click to enlarge
A bounce of 50% or 62% from the lows may present another sell opp especially if it is seen as an abc up. The 1950 area. But here it is looking oversold...all textbook btw and unfortunately bodes very poorly for the long run. Likely top is in.

Friday, June 13, 2014

Brent Breakout..taking out the .618 retrace

Finally...it's only been 2 years.   Last print I've seen was 113.20.

click to enlarge

So where does a break out like this project to? A test of the old highs is kinda easy to see,
if this leg up is .618 of the June '12 leg up from 88.50 to 118, it targets 125.80.
After that it's gets downright scary. How bout an old fashioned triangle break out measuring rule...
equal to the first counter leg ; 127.50 to 88.50 added to the breakout point on the descending line targets 151. NIIICE

Friday, March 28, 2014

WTI...Cushing Inventries Decline

Mind you it's just moving to Padd 3 etc. but it is still the futures delivery point.

Monday, March 24, 2014

Brent Breakout

Long overdue, the 2 year long consolidation by Brent may have completed Thursday morning. If so upside potential is very significant. The triangle formation allows a fairly easy and early buy signal on an upside breakout;
click to enlarge
Note the classic false break to the downside followed by the reversal..(can be seen more easily on the daily chart below).
click to enlarge
As you can see the 50% reversal of the entire plunge down from 128.40 to 88.49 is the immediate resistance around 108.44, and once above that hurdle Brent will likely test the .618 retrace area around 113.15, about where the downward sloping trendline hits on the weekly chart.


click on charts to enlarge
Note that 108.44 is also a 200 d MA point.

The really interesting question is: what are the upside targets when Brent breaks to the upside?
If it were to exceed the 113 area  the high from 2012, 128.40, would certainly come into the sights,
and a double top at 140 cannot be ruled out. In Elliott terms a B wave or 2 wave can retrace nearly all of the preceding wave, 140 to 30, from 2008/9

Additional upside help for Brent is also provided by the Crude and Gasoline Winter to Spring seasonal rally pattern. The Spring Rally history over 30 years avg.s into mid May.

The Brent Wti spread is also looking supportive. More on that later.