Gasoline’s Strategic Reserve
face=”Arial, Helvetica”>Due to a scheduling conflict, Dave
Landry will be unable to perform his usual sagacious
analysis of the futures markets in this forum. I will be
sharing my insights with you until he returns on Monday,
June 26. — Marc Dupee.
face=”Arial, Helvetica”>The energies have staged powerful
rallies both preceding and in the aftermath of OPEC’s
meeting this week on output policy. Crude and heating oil
have powered ahead out of 1-2-3-4 pullback setups to new
contract highs. Still, people are mainly worried about
gasoline shortages. And although unleaded gas
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closed at a new contract milestone, it still lags the rest
of the energy complex after the Department of Energy’s
recent release of fuel from the Strategic Petroleum Reserve
left the impression that the government would step in to
fill spot shortages. As the release from the SPR falls into
the background and as Americans hit the road in force for
the summer driving season, unleaded gasoline, now back on
the
List, could play catch-up with crude and heating oil, or
even resume leadership in the energy sector. Unleaded
gasoline went out on its highs Thursday, so look for a
buying opportunity.
face=”Arial, Helvetica”>Although natural gas closed at a
contract record, it has left a third spike high and a
Soup Plus One Sell signal, leaving it vulnerable to a
correction from a brisk three-day run-up. Further, a
multi-day, intraday chart shows that it has completed its
objective (twice the distance from its head to neckline) in
an inverted head-and-shoulders, another indication that the
contract’s short-term up-move is done. Turtle Soup Plus One
setups are often low-risk plays because the stops are tight.
Currently, the protective buy-stop-loss would go at 4.550,
the old 20-day high. Eventually, if the past decade’s
history repeats, this market will decline by one-half, as it
has on the handful of other occasions when it’s spiked to
its current, lofty levels.
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face=”Arial, Helvetica”>Orange juice
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leader on the
List, is tracing a bullish pennant. Consider entering on
the long side with limited risk by initiating on the
breakout of the pennant (stop goes below the formation), or
by using the Off The Blocks Method that I describe in a
recent trading lesson. The Off The Blocks Method would have
kept one from initiating a trade during the past two
down-to-flat days in this market and in others not following
through in their directional momentum Thursday, such as
coffee top the downside.
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face=”Arial, Helvetica”>As the price of energies heats up,
inflation is becoming a concern. Higher inflation could
cause interest rates to tick up, even as higher fuel costs
help the Fed do its job by mopping up excess (financial)
liquidity. With the possibility of higher rates — and a
reviving stock market — the dollar is coming into
traders’ crosshairs once again. The
10-Day Highs List and
10-Day Lows List often serve as your advance-warning
mechanisms for markets that are gathering momentum. Here,
the right mix is in play: September dollar index futures
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euro FX
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new 10-day lows. Look to go short the ECU0, as it is the
most liquid contract of the three.
face=”Arial, Helvetica”>Also in the currencies, the Japanese
yen
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I have been describing in the Futures Markets Recaps and
Mid-Day Futures Alerts. Today’s expansion bar in the yen
could have legs, as Tokyo wants to do away with its
near-zero interest rate policy. The yen is another new
member of the
List. The yen’s thrust reduces the odds of the contract
trading back below its old 20-day high at .9685 and
triggering Friday’s Turtle Soup Plus One sell reversal, but
you may want to keep your eye on this level if the overnight
activity gaps this future down to that figure and makes a
downside play viable.
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