Tuesday, May 12, 2015

WTI hits Target as Products/ Seasonality Weigh

The recent sharp rally of nearly 50% has achieved measured targets AND is now encountering a seasonal drag from the products. The cracks are wide, and of course there is no lack of supply. In fact supply is breaking records every week. Great report by Howard Weil on refining fundamentals as of May 6 here.

Seasonal trends in gasoline are very regular and prices on average top out in May.
Unleaded Daily
click to enlarge
Note the RSI negative divergence and trendline test. On the June contract its a c=a;



Heating Oil not very different on the charts; c=a the common corrective targeting measure.
Weekly
 click to enlarge

Daily

The last leg up on the WTI chart does not count easily. There is no clear 5 wave count in the structure; too many overlaps of wave 1, and 3rd waves that are too small. There is little in the way of fibonacci relationships between the sub waves. We are left with a possiblity of a triple abc x structure.
That could change with another new high but for that the bulls need $55 to hold.

There is a potential Fibonacci relationship in the following structure; c=2x a
The above count conforms to my early call for the 43.58 low Jan 30 bottom as the actual termination of the preceding leg down .

Given the drag of products and seasonality this looks like a very high probability short.
Downside targets are 42.50, 40 and 32.


No comments:

Post a Comment