Daily Spot

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

Crude Oil Jan (CLF) Tuesday’s gap down had closed under the morning’s low, signaling that momentum was reversing down. Confirmation was still needed Wednesday, simply by not recovering 85.15. It was recovered, and then some, by the open gapping up to 85.37.

Providing all elements of a signal without triggering it can signal the opposite. More so after invalidating a triggered signal. That’s how Tuesday’s trapped shorts were squeezed Wednesday to fuel a rally through the balance of the session. It extended intraday to 86.95, just short of retesting 87.10 resistance.

There is no requirement to fill the gap above 88.00 before resuming the decline. Filling it anyway would likely also probe 89.00 resistance.

Natural Gas Jan (NGF) A substantial recovery Tuesday back to 4.31 would confirmed Monday’s drop was only a correction. But Tuesday only dipped further. Its intraday low was recovered to close back above Monday’s low, signaling that sellers didn’t gain traction for their efforts. That gained another day for buyers to perform.

A strong open Wednesday would signal that buyers were exploiting the hesitant sellers. The open did gap up slightly, and it extended higher to test 4.31 at the session high. The rally’s health doesn’t depend upon extending higher without delay. Most important was just to prove that Monday’s drop had not gained traction.

The pullback’s bottom formed an inverted Head & Shoulders pattern. A pullback to its neckline should resume the rally the following day. Regardless, EIA reports Wednesday morning, so closing the session above 4.31 would set the tone for a rally into and out of the weekend.

Dollar Basket Dec (DXZ) Tuesday’s “ineffectual optimism” warned of an impending correction. Rather than reject fresh highs first to trigger a 3-5 day correction, Wednesday’s open gapped down into Tuesday’s range. The impatient selling should help the correction to run its course within 1-2 days. Recovering from probes under 80.70 and 80.50 would signal the correction had ended.

Gold Feb (GCG) Buyers didn’t gain traction Tuesday because the session’s intraday highs in the afternoon highs were retraced to close back under the morning’s high. Wednesday’s gap up also probed fresh highs in the morning and again in the afternoon. But Tuesday’s high was still not recovered into Wednesday’s close. It’s still not a sell signal, which would be triggered by closing under 1381.00. Extending higher could fill the gap back to 1407.00.

30-year Treasury Mar (USH) Tuesday’s “ineffectual optimism” could have extended higher temporarily Wednesday. But the open already gapped down. Bad news thtoughout the day drove price sharply lower. Last week’s overly optimistic bounce that originated above 124’18 was fully retraced. This was expected in the context of the retracement extending down uninterrupted. Next lower low is targeting 123’02-123’06.

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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) A gap up back to 1374.00 was possible after Monday’s gap down failed to extend. Tuesday’s open took that bounce potential and squeezed hard. The gap up to the 1374.00 area extended higher, although an afternoon higher high was retraced back under the morning’s peak.

Rejecting the afternoon’s higher high meant that buyers gained no traction for their efforts. Extending higher Wednesday would require gapping up above Tuesday’s highs. Extending higher would also put into play the three-week old gap back to the 1407.00 area.

Otherwise, closing back under 1381.00 would signal the retest of last week’s highs had ended. A close back under 1367.00 would trigger a new downleg.

Dollar Basket Dec (DXZ) Tuesday’s gap up to new recovery highs didn’t extend higher. The session ranged exclusively in positive territory, but its close was struggling to hold above Monday’s high. It’s not a sell signal, but it does reflect buying pressure waning. Rejecting temporary intraday strength on Wednesday would likely trigger a 3-4 session pullback. Gapping down Wednesday would limit the pullback to 1-2 days.

30-year Treasury Mar (USH) Tuesday’s gap up spent the entire session in positive territory, without closing above prior highs that were probed intraday. This is “ineffectual optimism,” and it confirms the rally is only a corrective bounce. Its sponsorship is probably motivated by fear instead of by accumulation, in a flight-to-safety as stocks drop. The decline should resume when stocks bottom.

Crude Oil Jan (CLF) Gapping down Tuesday wasn’t likely to gain traction, not immediately. Gapping down under Monday afternoon’s lows made it unnecessary to fill the gap back to Monday’s close, but Monday afternoon’s lows still required a test as resistance up to 85.15. That test held, and produced a close under the morning’s 84.63 low to signal momentum reversing down. A second consecutive lower close Wednesday is still needed to confirm the reversal.

Natural Gas Jan (NGF) Monday’s break wasn’t recovered, which would have been bullish. Monday’s break extended, but that was still bullish. Ranging narrowly would have created mass to inhibit a rally attempt. But dipping further only stretched the rubber band tighter. An explosive open Wednesday would confirm Tuesday’s extra dip created pent-up bying pressure.

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

Dollar Basket Dec (DXZ) Monday was the first day since Friday fulfilled the pattern’s 80.50 target. The second consecutive gap up to new highs is stretching the rubber band tightly.

It should be noted that the potential for a bottom was discussed for several weeks as price ranged sideways. The recovery of 76.65‘s test for 77.00‘s recovery to trigger the rally has already lasted almost four weeks. This rally is not new, despite it being recognized only recently.

So long as 80.70 holds as support, the rally remains intact and next targeting 82.35 and 83.00. Otherwise, a correction back down to the 78.50 area would be likely.

Gold Feb (GCG) Still testing the lower-end of 1367.00-1374.00 (1365-1372 basis Dec). There’s potential to fill the gap back up to 1374.00, but its not required before resuming the decline. A close above 1374.00 would not necessarily trigger a rally leg.

30-year Treasury Mar (USH) The bounce limit’s room to 126’18 (128’00 basis Dec) was fully tested Monday. The session closed while in the process of testing it. Its immediate rejection is needed to resume the decline next targeting a test of 124’18 (126’00 basis Dec). And having delayed 124’18‘s test makes it likely to break lower instead of holding. Otherwise, not resuming the decline at Tuesday’s open would extend the bounce to test 129’16.

Crude Oil Jan (CLF) Monday’s gap up corrected early and filled the gap back down to Friday’s close. The opening gap attracted price back up with plenty of time to extend higher, which it did. Almost any weakness at this stage would be credible for extending down sharply, provided that the weakness comes intraday and not from gapping down.

Natural Gas Dec (NGZ) Monday’s gap up was suspicious since Fridays usually repeat and this was not Friday’s action. In fact, the session soon reversed down and extended sharply lower. The earlier that Tuesday can recover 4.31, the likelier that Monday’s sell-off was only a correction. The rally need not extend higher immediately from there – it is only important to quickly reject most of Monday’s drop.

Share your questions and comments on this post in the blog, or in the chartroom…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 Dec (DXZ) Friday’s opening gap up fulfilled the 80.50 target and then ranged narrowly through the close. Pullbacks must now hold 80.10 on a closing basis to maintain this leg’s potential to 81.50.

Gold Dec (GCZ) Friday’s gap down under 1365.00 spiked down to 1350.00 and spent the rest of the session edging back up to 1365.00. A Close under 1356.00 would signal the downleg had resumed. Otherwise, there is potential for filling the gap back up to 1372.00.

30-year Treasury Dec (USZ) Wednesday’s steep intraday decline encompassed Friday’s range to form an “inside day.” Despite it gapping up and closing positive, buyers gained no traction. The “ineffectual optimism” is in-line with Wednesday’s premature bottom that failed to test 126’00. The bounce has room to test 128’00 (+/- 2 ticks) without jeopardizing the downleg that is otherwise underway.

Crude Oil Jan (CLF) The room for a dip down to 83.00 was used by Friday’s opening gap down. The balance of the session bounced to fill the gap back up to Wednesday’s close. Now a downleg would be triggered by closing under 83.30 without also probing and recovering 83.00. Closing above 84.25 would trigger a bigger bounce.

Natural Gas Jan (NGF) Friday’s opening gap up was retraced entirely, but that wasn’t bearish. Rather, its dip filled the newly created gap back to Wednesday’s close that might otherwise have inhibited a rally. Sellers have yet to regain traction, so the rally is free to resume without delay. That said, Mondays in Natty Gas often duplicate Friday’s action.

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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]

Crude Oil Jan (CLF) While awaiting the next downleg to begin, the ongoing consolidation continues to contain price action. Its potential to test 83.75 resistance was fulfilled Wednesday. And it extended slightly higher. Pullbacks have room down to 83.00-83.10 before signaling the bounce had ended. A close under 82.10 would signal a new downleg underway.

Natural Gas Jan (NGF) This week’s EIA data sparked a spike up that came within 2 cents of the long-standing 4.52 target (4.40 basis Dec). Its reaction down was substantial, but it didn’t undo the surge’s positive effects. Indeed, a lot of selling pressure was absorbed Wednesday afternoon without sellers gaining traction. That doesn’t prevent a deeper dip and retest of 4.30 as support, but it makes that deeper dip’s recovery likely. Assuming that 4.52 were met, the next higher target would be 4.75.

30-year Treasury Dec (USZ) Tuesday’s close was still in the process of testing the 128’14 bounce target. It was not clearly recovered to put any higher target in-play. Wednesday’s open gapped down easily on the morning’s economic reports. The gap opened at Monday’s 128’00 close, neutralizing any attraction back into Tuesday’s range. And the balance of the session slid easily to attack 126’00 support within 10 ticks. Avoiding an actual test of 126’00 despite having ample time to do so (circled green) reflects optimism that makes its test likely to break lower. The next lower target is 124’16-124’20.

Dollar Basket Dec (DXZ) Having finally produced the required new high Tuesday, any delay in extending higher would suggest the pattern was Double Topping. Wednesday’s fresh high extended into the close. The rally’s momentum remains intact and next targeting 80.50 so long as 79.62 holds as support on a closing basis. Wednesday’s strength is especially impressive considering it happened against the backdrop of a story that China and Russia may have “quit the Dollar.”

Gold Dec (GCZ) Global tensions eased, which allowed Gold to soften. But it only dipped back into the 1365.00-1372.00 range intraday, without closing under either 1372.00 or 1365.00. There is otherwise no signal that the rally’s momentum has peaked, or that momentum is reversing down.

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