Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Nov (CLZ) Monday’s failure to reject Friday’s new high (as if a new high on Friday could be rejected on a Monday) confirmed the next higher target in-play at 88.40. Tuesday’s higher high came close, but retraced into the close. And post-close action reversed down sharply.
Had the post-close action happened intraday, then the rally would already be done and momentum would have reversed down. But the post-close dip was recovered by Wednesday’s open. Sellers did not gain traction. As evidence the recovery extended to probe Tuesday’s highs within 30 cents of the 88.40 target.
RSIs diverged negatively into Wednesday’s highs. It’s not a sell signal, but it does make the rejection of a higher high more likely to gain traction. Fulfilling the 88.40 target and reversing down to close under 85.60 86.50 would signal a new downleg underway.
Natural Gas Nov (NGZ) Tuesday’s recovery to a new high close was reward by Wednesday’s open gapping up even further to 4.25. The balance of the session trended down sharply to test 4.02.
The close under 4.15 jeopardizes the rally’s momentum. It could be recovered at Thursday’s open and continue rallying as if nothing had happened. More likely is a couple of days consolidating to absorb Wednesday’s shock to the system.
That shock to the system was a gap up above the prior session’s high that closed back under the prior session’s low. It’s an “outside day,” but not a reversal signal, since the reversal expended so much selling pressure already.
So long as Wednesday’s reversal doesn’t extend down Thursday, the rally targeting 4.40 could resume by Friday’s open.
Dollar Basket Dec (DXZ) Wednesday’s continuation pattern gapped up Wednesday at Wednesday’s open. Extending higher to 78.34 got was retraced back to session lows. The entire session developed in positive territory. This “ineffectual optimism” is not itself a sell signal. But the pattern is vulnerable either to dipping a little further Thursday, for a temporary correction, or else to quickly extending through Wednesday’s high.
Gold Dec (GCZ) 1380.00-1381.00 has yet to be probed as support. But it was retested Wednesday, just short of touching Tuesday afternoon’s attack on 1380.00-1381.00. This optimism chips away at support instead of reinforcing it. A bounce is still possible – if not likely – to fill the gap back to Tuesday’s 1417.00 opening gap up. But now neutralizing that attraction above is likelier to launch a durable downleg.
30-year Treasury Dec (USZ) The reaction to Wednesday’s pre-open econ reports triggered a drop that fulfilled the 128’14 and 128’03 targets. A bounce to 129’00 was rejected when the 1:00 auction results triggered a drop to 127’14. The fresh low was recovered immediately. The interim bounce was recovered eventually. The bounce should extend to 129’24-130’00 before retesting Wednesday’s lows, which its oversold RSIs make likely.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).