When This Market Said Goodbye
Natural gas
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PowerRating)
is still reeling from last week’s surprise revision by the industry group
American Gas Association’s weekly report that showed a huge build-up in
inventories of the fuel. The report was revised from the previous week,
which showed a surprising drop in supplies and spurred a 12% spike, the
largest of the year, in nat gas prices. Last Wednesday’s report
substantially turned around the fundamental picture of nat gas and drove
prices to erase all of the 12% spike and then to new lows.
The lingering effect
of the report is ramming home the notion that natural gas storage facilities
may soon be filled to the brim. The sharp revisions in the data also
brought into question data provided by the AGA.
Nat gas is on the
Implosion-5 List and even after trading lower in overnight trading made good on an
Off The Blocks
short entry.
Also in the energies,
unleaded gasoline
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HUV1 |
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PowerRating) had mixed signals for trading
action today, in that it registered on the Momentum-5
and
New 10-Day Highs lists and at the same time, registered a
Turtle Soup Plus One
Sell
reversal signal. Notice that one way to have played such a
situation would be to take the Off The Blocks
long entry on the breakout of its opening range, then to project the
potential distance this market might travel using a Fibonacci extension.
The 127.2% and 161.8% extensions of Friday’s afternoon swings suggested this
market could rally to .7852 or .7894, respectively. The high
on the session — and potential place to have covered, covered and
reversed in expectation of the TS+1 reversal, or to have defined as intraday risk for the remainder of the
day — came just above the 161.8% extension, at the intraday high of .7900.
Beyond utilizing such swing trading strategies, bear
in mind that unleaded gasoline did make new multi-month highs and that the
market is being underpinned by stronger-than-expected late-summer gasoline
demand and the outage of a refinery in the Midwest that is believed will
crimp the supply of reformulated gasoline, the grade deliverable on the
NYMEX.
From the Momentum-5
and Pullback From
High lists, euro FX futures
(
ECU1 |
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PowerRating) and Swiss francs
(
SFU1 |
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PowerRating)
pulled back for a third day and should be placed on watch lists for
intraday continuation triggers and/or for a move above today’s high, which
would trigger their Pullback From Highs setups. These contracts are also on
the Multiple Days Low
Volatility List, implying they will make a larger-than-normal move. This is
a somewhat infrequent case where a market is suggesting a big move and
indicating direction (volatility setups do not indicate direction, only an
impending large move).
Cattle followed through to the downside after large
volume from the past two days indicated heavy selling. Two days ago, October
live cattle
(
LCV1 |
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PowerRating) had its biggest volume of the current
contract on a decline of prices and followed through today with a move .375
lower to 72.550. Feeder cattle
(
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PowerRating) slumped .475 to 88.375 and had its biggest volume of the October
2001 contract month on Friday.