Daily Spot

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Crude Oil Feb (CLG) The two-week old opening gap at 91.10 (circled green) should be filled before a durable downleg can begin. The two immediate sessions following it (highlighted green) were failed sell signals, confirming that sellers weren’t going to gain traction soon. Buyers haven’t rushed to try gaining traction themselves.

The extended range is too narrow to be a base capable of launching a durable rally. But the attraction above, and the inability of sellers, have combined to attract price higher.

The high’s retest alone would not be a sell signal. A reward for delaying the high’s retest is likely to be a slightly higher high, probably to 93.15.  That alone would not be a sell signal, either. But a sell signal prior to retesting the highs would not be credible.

Natural Gas Jan (NGF) Last week’s decline bottomed at the 161.8% measurement of the prior week’s Head & Shoulders. This is natural support, if the pattern’s 61.8% target doesn’t hold. The strong rally from there was appropriate for a bottom.

1-2 more strong rallies would have been appropriate, too. Tuesday’s sizable drop threatened instead to extend the decline, and to destroy the multi-month basing pattern that preceded it. A reversal setup Wednesday was required to reinstate the recovery’s potential.

Wednesday’s strong rally recovered from probing the lows, and it closed above 4.11. A close above 4.24 Thursday would be helpful confirmation that Tuesday’s drop was absorbed, and that a new upleg was underway. Thursday’s EIA report could be a catalyst, preferably without the session opening optimistically.

Dollar Basket Mar (DXH) Tuesday’s reversal from negative territory back up to fresh recovery highs had failed to close above the prior session’s high. Buyers did not lose traction, but did need to refuel. Wednesday’s shallow dip could have satisfied that requirement, and renewed buying would be credible for extending higher intraday.

Gold Feb (GCG) Tuesday’s recovery from testing 1381.00 support intraday had closed only modestly positive. This vulnerability to reversing down could be neutralized by extending higher. Wednesday’s session only avoided reversing down. The 1407.00 area’s retest is probably in-play, but any more hesitation to trend up would become vulnerable to another probe under 1381.00.

30-year Treasury Mar (USH) Wednesday’s relatively narrow range held Monday’s lows again as support. A correction underway is targeting at least 123’06. The correction should resume without much delay Thursday, and in obvious fashion, if it remains valid. Any lower low in reaction to econ reports should be recovered almost immediately and converted into an intraday rally.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Gold Feb (GCG) Closing Tuesday above Monday’s high confirmed that Monday’s close above 1381.00 did put into play a retest of the prior week’s 1407.00 test. Tuesday’s low even held an attack on 1381.00, making the close’s recovery that much more potent.

It is potentially a problem that Tuesday’s close was only modestly above Monday’s high, and could have been more decisive. But buyers get benefit of the doubt.

Dollar Basket Mar (DXH) A pullback Tuesday had room down to 80.60 without sellers gaining traction. The dip to 80.60 recovered to close positive on the day. The close was still in the process of testing  Monday’s high, instead of breaking it clearly. Buyers may not have gained any traction for their effort. The rally should resume aggressively immediately at this stage if its valid.

30-year Treasury Mar (USH) Tuesday’s pullback held Monday’s low, forming a little triangle that should produce at least one more higher high targeting 123’06 and potentially 124’00. Friday’s

Crude Oil Feb (CLG) Tuesday’s action firmed a little further back towards the two-week old opening gap up at 91.10. Narrowly ranging sideways doesn’t equate to basing, being extended but not wide. A test 91.10 could extend higher temporarily, but not durably.

Natural Gas Jan (NGF) Failed to close above 4.21 Tuesday, whose recovery Monday had helped to forecast 1-2 strong up-days. Closing under 4.11 signaled momentum reversing down. Closing while in the process of testing 4.06 allows for another recovery attempt. Without it Tuesday, the recovery scenario is very much at risk. Wednesday’s close must reject Tuesday’s drop either by closing back above 4.21, or back above 4.06 after probing Friday’s low. Otherwise, new lows are in-play, and  new lows would destroy the multi-month basing pattern.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Dollar Basket Mar (DXH) Extended higher Monday to close above 80.90. It wasn’t that impressive because 80.90 was probed early in the day, and its resistance already chipped away on Friday. Buyers still get a benefit of the doubt for resuming rally, which would have great consequences. But confirmation above 81.10 would help, without delay.

Gold Feb (GCG) Sunday night’s gap up to probe 1381.00 was maintained through the close. Fresh recovery highs were probed intraday, and 1379.00 held a test as support. The afternoon’s recovery already expended what would have been pent-up buying pressure. Extending the recovery and fulfilling the 1381.00 buy signal depends upon extending higher Tuesday without delay.

30-year Treasury Mar (USH) Having extended sharply higher Friday, the recovery attempt needed only to avoid resuming the decline. Fresh recovery highs Monday were retraced back down to Friday’s open. The pullback can also test Thursday’s close in the 119’18 area without sellers gaining traction.

Crude Oil Feb (CLG) Not much to comment on until the 91/10 gap open is filled. Or, not until a break lower. But there have been so many opportunities to break lower not exploited, meaning many decisions not to break lower.

Natural Gas Jan (NGF) Friday’s narrow recovery back above 4.06 follow-through Sunday night and Monday to further confirm last week’s drop was only a product of the prior week’s Head & Shoulders pattern. Testing 4.21 intraday required a close above, which 4.24 fulfilled. The recovery’s character should be steep and substantial if valid – 2-3 consecutive sessions of surging.

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A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Dollar Basket Mar (DXH) Thursday’s probe of prior highs didn’t follow-through intraday. But Friday’s did. Its intraday test of 80.90 (up to 81.00) held resistance, stopping short of signaling that the correction from Nov 30’s high had ended. Just closing above 80.60 was already bullish, and Mondays in this market tend to duplicate Fridays, so the rally should extend higher so long as 80.60 holds as support.

Gold Feb (GCG) Thursday’s close was still in the process of testing 1372.00-1374.00 prior lows as resistance. Friday’s session recovered from another dip to attack 1380.00, stopping short of recovering 1381.00 which would target 1407.00.

30-year Treasury Mar (USH) Thursday’s recovery of Wednesday’s new lows under 119’12-119’20 needed to extend noticeably higher without delay Friday. It did, gaining nearly 2 points on the day. The corrective bounce’s minimum target is 123’06, and potentially also 124’00, so long as pullbacks hold tests of 120’26. (By the way, Barron’s this week includes the following item: “Larry Jeddeloh, chief investment officer of the Institutional Strategist, notes that it’s a “double cycle” day, with both a full moon and a lunar eclipse, which sometimes can indicate turning points in markets. Though he’s not a “moonie,” he says bearish sentiment on bonds is near extremes of 2007, and that could be a setup for a potential bond rally.”)

Crude Oil Feb (CLG) Rolling coverage to Feb, which trades at a 70-cent premium to Jan. An overnight dip to 87.70 probed under 88.20, whose break would target the 86.25 area. Its complete recovery into the open left all hint of volatility behind for the day. The extended narrowing range is likely to break falsely first, so a more durable downleg would be likely if 91.10-91.35 were tested next.

Natural Gas Jan (NGF) Thursday’s close at 4.02 was initially probed overnight but recovered to close Friday above 4.06. This was the minimum objective that limits the week-long drop to being a product of the prior week’s Head & Shoulders. Extending last week’s downleg to close any lower would target new lows under the multi-month basing, and invalidate the basing, which would be bearish.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

30-year Treasury Mar (USH) The 119’12-119’20 area is an inflection point in the longer-term decline. Its current test should either launch a multi-point correction, or else the rate of descent would likely steepen significantly. Intraday probes under the 119’12-119’20 area can still bottom if recovered at the close.

Closing under the 119’12-119’20 area can be recovered the following day, but with a catch: follow-through. Wednesday’s close under the 119’12-119’20 area was recovered Thursday. So, Friday must follow-through and extend noticeably higher. Otherwise, Thursday’s recovery would be suspicious.

The bigger picture points down ultimately. Its path is in question. The 10-point drop from this summer’s highs don’t necessarily need to be retraced. Rather, a paradigm shift in perception is entirely capable of attracting new sponsorship among sellers. Ending this week on a lower note could be very bearish going forward.

Dollar Basket Mar (DXH) Thursday’s close was in the process of testing Wednesday’s high. Wednesday’s high was already probed intraday, after recovering from a gap down. That undermines the recovery leg only to leave no unfinished business above if Friday begins selling off again. Otherwise, the recovery still gets a benefit of the doubt.

Gold Feb (GCG) Last week’s 1372.00-1374.00 prior lows were being tested as resistance at Thursday’s close. Their recovery along with 1381.00 Friday may be the last opportunity to prevent the drop from becoming a new downleg targeting a probe under 1320.00.

Crude Oil Jan (CLF) Wednesday morning’s recovery from its gap down did not improve throughout the entire afternoon. And it did not improve Thursday. While a close under 87.50 might be able to gain traction, I am otherwise still waiting for a test of 90.65.

Natural Gas Jan (NGF) Thursday’s EAI report was not a catalyst for trapping extended shorts. Not a very good one. Instead, the market reacted down sharply to test 4.02. A lot of selling pressure has been expended to travel from one end of the multi-month basing pattern’s range to the other. Closing any lower would threaten to resolve in a new downleg.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).