Crude Oil - Long Term
Last week I headlined this long term review section "A Correction in the Making?" I chose these words because of concern over the foreboding appearance of the Japanese Candlestick bars and the negative divergence on the RSI. And correct we have - in a mighty fashion. What happened this week really serves to underscore the value of technical chart analysis. I encourage readers of this week's report to delve deeper into the phenomenon of Japanese Candlestick charting. Very few people in the financial world use this method because they view it as foreign and perhaps a bit strange. For my regular subscribers, I will be making it a point to illustrate some of the finer points of Candlestick Charting in future newsletters.
So, where do we stand as of now? Well, the RSI is suggesting momentum is negative yet. On a closing basis, this week's close at $71.14 puts us even below the closing price back in April of $71.88. Not a very hopeful situation. In order to reverse this situation, we need to have a re-test of July's highs near $78.
We remain in the boundaries of the up-trending linear regression channel. So, for all intents and purposes the long term trend on Crude remains in place. But, considerable damage has been done to this argument. Going forward, if we take out this week's lows, we could well test the bottom of the channel at the $65 level.
Natural Gas - Long Term
This Elevator is Going Down...
Well, 18 days gone in August and we have now failed to hang onto price gains made in July. The up-trending line at about $6.23 is looming large on the horizon. The 18 period moving average remains well overhead and the RSI remains below "50".
Tropical storms and Hurricanes - where are you? We have at best 6 weeks or so left in the official Hurricane season and the experts calling for 8 or 9 Atlantic Hurricanes or Tropical Storms this season are now probably looking over their shoulders at the critics lining up and taking aim.
For quite some time now, I have been only cautiously friendly to the Natural Gas market. I am keeping this position again this week. My concern is that we go into the September/October time frame with ample Gas in storage and continue to build from there.
Crude Oil - Intermediate Term
Breakdown !! ...
Last week I stated, "...We are getting squeezed into the apex of this wedge and as is the case with every wedge pattern, at some point a decision will be thrust upon the market. Last week I wrote of several issues that could influence the price of Crude higher. Now, as I write this week's comments I am undecided. The next week will be key in revealing which way Crude will go from here. Watch carefully..."
Well, a decision was thrust upon the market but the result was a downside breakout. As the above chart shows, we are now well below the Lower Keltner Band (1.67 std. devs from the 18 day moving average). The RSI is deeply oversold also. Does this mean a dramatic turnaround is in order? Not necessarily. Take a look at the far left of the above chart and you will see evidence of how price action can stay weak and actually follow the declining Keltner Band to much lower levels. I am also concerned that we may break the pivot swing low at $69.50 made back in mid-June. Interestingly enough, markets flirted dangerously with this pivot point this week, falling to $69.60 at one point before staging a bounce back. If we take out this pivot low, there is really nothing on the charts until we hit the next pivot point at $65 made back in March.
So, we are definitely on shaky ground. Keep your head up, keep your eyes open and watch carefully.
Natural Gas - Intermediate Term
No Staying Power Here...
Another week gone by. Still, no compelling evidence that Natural Gas wants to work its way higher. Price action remains stuck below the 18 period moving average and RSI has slipped below "50" from its position last week where it was clinging to the "50" mark.
As I noted above in my Long Term views, we need to see some storm activity to get this market excited. Until we do, I fear Natural Gas is going to remain mired in the mid-$6 range.
Thus, I remain cautiously optimistic and cautiously friendly towards Natural Gas in the Intermediate term.
This Week - For my Regular Subscribers
Cuba. Sunny beaches, Cuban cigars, Cuban Rum. And now, the possible next political hotspot in the world. This week, for my regular subscribers I elaborate on this idea.
Also for my subscribers this week I introduce a foreign energy company that is producing 1 million boe/day. This company is already taking steps to position itself in Cuba. Some of its other investments around the world will be sure to impress you also.
Six wells and almost 6000 boe/day. Now, that's impressive. This week for my subscribers I profile a Canadian based firm that may have stumbled onto a truly prolific basin in the Southern Hemisphere.
Unleaded Gas. Will the 200 day moving average hold? Should a person consider selling some Call Options to earn some premium? This week I offer some specific money making trades to my subscribers.
How have equities stood up to this week's drubbing in the energy markets? This week I take a look at the 3 ETF's I have chosen as a proxy for the energy equity markets.
This week in Technically Speaking, I look at several Natural Gas companies including one that is building 3 Liquefied Natural Gas offloading terminals along the Gulf Coast.
Look up. That glowing orb you see is the Sun. And, the Sun is capable of helping us generate electricity. This week I introduce 3 firms that are involved in the solar business. Two are oversold and are candidates for a recovery bounce. Subscribers are being encouraged to take long positions risking only a small break below support.
To keep fully abreast of what is happening in the energy markets, consider subscribing to Merv's Energy Central with Meridian. Visit www.themarkettraders.com for details.