Wednesday, March 15, 2017

Crude: Retrace or Trend Change?

The sharp drop in Crude over the last week suggests a new trend after a prolonged period of stability and relatively tight ranges. But is it?

 6 mo. chart
click to enlarge
Above we see the sudden widening of the Bollinger Bands, an oversold RSI, and a Fibonacci
.618 retrace. Short term risk of at least an upside correction appears high.

In this longer term chart please note the choppy nature of the up move, hitting resistance at the Fib 81% retrace of the last structure down. If the move up off the lows is an abc, c= 50% of a.
Some of this is discussed in the preceding posts of  Jan 30 and  Feb 15.
 The risk of a retest of the lows is high in this scenario.
1 mo. chart
click to enlarge
The fist hurdle for Crude to regain momentum will be the resistance at 50, but really it will need to exceed the .62 retrace at 52 to give the bulls breathing space. My guess is, a weighted avg for the spec length still out there, is just over that at around 52.50 as well.

Wednesday, March 8, 2017

The Real News; Bonds Resume Sell-off

Yup Sorry to folks but it's true; this morning the 10 yr. officially put in new lows for the month and year, after failing to break out on the upside. See Feb. 15 post Bonds Update.
 6 mo. chart
click to enlarge
The recent COT report suggests that the trade is pretty crowded with large specs and leveraged funds
definitely on the short side, and that may limit immediate follow through. 
The 14 day RSI is in neutral territory and showing no divergence.

 The recent low end of the range and previous lows from 2016 will very likely be tested in the short term. 
25 yr. chart
Measured 5th wave target comes in around 118, as does the support trend line and the .382 retrace is  around 119. IF it's a -5- and doesn't extend. The move down off the June 2016 highs could well be and most likely is, a 3rd wave of the new long term trend down. If that is the case then what we would be seeing is the possible sub wave  (1) of 3 nearing completion at the 118 target.

At the end of the day this may be the most critical news out there. A  reversal in the 35 year long trend of cheaper money will have global systemic effect. Some may identify this as a reflection of demand caused by an uptick in overall economic health.  Maybe. I suppose that"ss to be wished for and probably how it starts.