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 ;

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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).  


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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.

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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

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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.