Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Jun (CLM) Corrective bounce target met. And held. Tuesday night’s rally peaked upon filling the gap back to 110.00. The rally extended higher Wednesday to fulfill the corrective bounce’s 111.65 target. A downleg is now free to begin, any immediate weakness could extend down. That said, the hesitation at 111.65 smells of pessimism, so a more credible start to the downleg would first reject at least one more fresh high.
Natural Gas May (NGK) Buyers get a benefit of the doubt. [Rolling coverage to Jun after today, trading at a 4-5 cent premium to May] Tuesday’s close above 4.25 [4.29 basis Jun] was confirmed Tuesday, so a rally gets every benefit of the doubt for extending higher. Closing back under the signal Thursday would not only invalidate the signal, but also reverse momentum down.
Dollar Basket Jun (DXM) The bigger they are… Monday’s rally was substantial, but it was no more likely to extend higher while leaving unfinished business below at the gaps back to Thursday and Friday’s closes. Tuesday immediately retraced back to Monday’s post-open low. But Wednesday’s open gapped down substantially below all prior lows. Similar to the same problem that undermined Monday’s rally, Wednesday’s opening gap will need to be retested from above before any rally could be credible to gain traction. That could be done immediately, since Wednesday’s session only ranged narrowly sideways after the open.
Gold Jun (GCM) Sellers starting to gain interest as buyers start losing it. Tuesday night’s probe above the 1500.80 minimum target for this leg was retraced somewhat into Wednesday’s open. The gap up eventually did extend a little higher into the afternoon. But the overnight high’s retest sent price down sharply to nearly fill the gap back to Tuesday’s close. Nearly. An entire session spent in positive territory, probing prior highs and a target, closing back under the morning’s highs. That’s “ineffectual optimism.” Considering that Tuesday’s narrow ranging already suggested that buyers were losing interest, sellers should soon start gaining it.
30-year Treasury Jun (USM) Still suspicious of the confirmed buy signal. Wednesday’s gap down didn’t extend down, and only ranged narrowly just under Tuesday’s close. That’s not inappropriate for the day following confirmation of a breakout, which Tuesday confirmed by closing positive after Monday’s close above 120’25. But the rally should resume Thursday to fresh highs since the breakout itself was already suspicious. Closing back under 120’25 would negate the breakout.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Weekender (Fri).