Friday’s Setups
Energy prices appear on track to continue imploding. December crude oil
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heating oil
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were on the
Implosion-5 List and collapsed to contract lows. Unleaded gasoline has
collapsed .0700 from “the next upside test comes at .6090 to .6110”
area identified in October 19th’s Futures
Setups. OPEC says it will cut production by a million barrels a day but the
cartel has a reputation for “cheating,” or producing more than their
quota, thereby increasing supply (and decreasing prices). Non-OPEC nations have
said they will not comply with requests to trim output and Russia, one of
the world’s largest producer, plans to expand
output.Â
Meanwhile, demand is waning as people stay out of stores,
hotels, airplanes, and cars. Four-star hotels in Downtown Boston can be had for
$50 and in some cases, as a recent Boston hotel experience validates, a $50
booking was the only booking for an entire floor of 20 rooms. Tenured maids who
haven’t been let go have been reduced to three days of work a week.Â
Tomorrow’s employment report will likely show a more
complete picture of the deteriorating statistics we have been getting in weekly
jobless claims. A rising number of jobless will curb energy demand even
more. A global economic slowdown will reduce OPEC income and enhance the
temptation to “cheat.”Â
Oil was $10 a barrel as recently as 1998. In the markets,
anything can happen. Oil and related products contracts are short-term oversold,
down six straight days, but have an early Elliot wave formation that implies we
could be just beginning wave three down of a five wave pattern. Consider
entering on pullbacks from lows setups.Â
It is an ominous sign
that the
Japanese yen
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of a head-and-shoulders top. Although this contract managed to rally more than
forecast in last night’s report, the pattern in the yen remains heavy and
appears to be commensurate with its negative fundamentals. The yen has gotten
some flight-to-safety buying of its currency, buying which could crop up again, but buying that likely would only endure in the short-term. But remember that the Sept. 20 “head” (of the H&S top
pattern) was a window-dressing buy, where money was repatriated to
make good on new accounting rules (upside down Japanese assets had to be
marked-to-market for the first time, meaning paid for in yen). That’s over.
Interest rates are at zero (.15%), exports are imploding, and domestic
tightfistedness continues to support deflation. Are you in the market for a VCR
or Toyota? Neither are the Japanese. Demand in the world’s second largest economy is sagging on several fronts. This market remains a Pullback
From Lows sell setup.Â
Given
December
copper’s
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signs of potential, nascent momentum, the
Turtle Soup Plus One Buy setup looks encouraging above its 62.08
trigger.Â
November soybeans
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soy meal
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PowerRating) logged outside expansion bars. They made new
New 10-Day Highs, making them eligible for Off The Blocks
setups. Long.Â
|
Contract
|
Symbol |
Setup |
Direction |
Trigger |
| ( CLZ1 | Quote | Chart | News | PowerRating), ( HOZ1 | Quote | Chart | News | PowerRating), and ( HUZ1 | Quote | Chart | News | PowerRating) |
Implosive fundamentals |
Down |
On Pullbacks from Lows |
|
| Japanese yen | ( JYZ1 | Quote | Chart | News | PowerRating) |
H&S top, Pullback from lows |
Down |
Below .8200 pivot |
| ( HGZ1 | Quote | Chart | News | PowerRating) |
Turtle Soup Plus One Buy |
Up |
62.08 |
|
| Soybeans |
( SX1 | Quote | Chart | News | PowerRating) |
Outside expansion bars, New 10-Day Highs |
Up |
Off The Blocks |
| ( SMZ1 | Quote | Chart | News | PowerRating) |
Outside expansion bars, New 10-Day Highs |
Up |
Off The Blocks |