Monday, May 28, 2012

CLN12 - Update for May 25th, 2012

Price analysis for the week of May 25th, 2012:

(updated Tuesday, May 29th, 2012)

Market Overview: The old cliche of 'Sell in May and walk away' seems to be playing itself out rather 'normally' this year. When it comes to energy, the seasonal trade usually closes into the Memorial day long weekend at the end of May. In simplest terms, refiners sell unleaded gas to wholesalers (from February to May) in anticipation of the summer driving season. Once the official start to the summer driving season arrives (usually memorial day long weekend) wholesalers have all the unleaded gas they need to meet normal seasonal driving demand. As a result, a small vacuum develops every year around this time when buyers are done and sellers seek price to liquidate. This year is no different.

Trading Strategy (1 week): We have officially hit our target zone for this correction. The target zone is based on the 1 year and 2 year 50% levels and currently sits between $89.445 and $92.75. It should not surprise us then to see that the market has basically consolidated around these levels for the past few trading sessions. Indeed, into this US holiday session, price was able to get back into the $92.00 area but has subsequently fallen back below the significant 91.52-.54 level. Considering the fact that the daily 50% level currently sits just above $100/barrel, there is substantial upside risk at the moment. I shall be looking for a quick rally back into resistance (around $100/barrel) over the coming weeks as I feel a 'dead-cat-bounce' is long overdue. Having said that, we have yet to officially bottom so as long as we keep making lower highs and lower lows, I will look for short side scalping opportunities...

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca 

http://crisdaytrading.blogspot.ca/

Sunday, May 20, 2012

CLN12 - Update for May 18th, 2012

Price analysis for the week of May 18th, 2012:
It is roll week so we are going to move to July contract


(as of Monday May 21, 2012)


(as of Wednesday May 23, 2012 5:30AM PST)


(as of Thursday May 24, 2012 10:30PM PST)

Market Overview: In a week that saw another build in North American crude inventories and a continual unwinding of the seasonal bull unleaded trade, crude oil prices themselves continued to sage. The daily price chart had been calling for a downside move into the 96.35 area (bear flag pattern) and that has been hit. The next target was a move to the one year 50% retracement level (92.75) and now that has been hit. The next support zone appears to be in and around the two year 50% retracement level (89.445) and that shall be my downside target going forward. I would also point out that there is a candle gap that ought to be filled in and around the 86.80 level too. Having said all that, this market is very oversold and any justifiable excuse could lead to a dramatic one or two day rally. Be careful being short, that trade (in my opinion) is almost done.

Trading Strategy (1 week): As was the case last week, while we are pointing lower I will still look for lower prices to come. I expect the 90.89 level to be tested in earnest as two current bear flag pole patterns have targets in that area. As suggested last week too, try to establish short positions on rallies rather than selling on stops to new lows. I am trying to incorporate Gartley type patterns into my trading to better fine tune entries (for more on harmonic trading please visit http://www.harmonictrader.com/)...

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca

Sunday, May 13, 2012

CLM12 - Update for May 11th, 2012

Price analysis for the week of May 11th, 2012:

(Added Monday May 14th)

(Added Tuesday May 15th)

(Added Wed. May 16th)

(Added Thurs. May 17th)

Market Overview: Market fundamentals seem to be prevailing of late. Historically high inventories coupled with poor economic data from all three global economic zones have seriously called into question $100+ per barrel prices. Having said that, the movement away from nuclear (and back to fossil fuels) by Japan and continued middle east tensions have kept a bid in the market. The previously strong weekly bull flag pattern has been broken suggesting prices are heading generally lower over the coming days/weeks rather than higher. Next significant weekly support zone seems to indicate a move back into the high 80s/low 90's area. Having said that, the current daily bearish price pattern (short from just above 101) has hit and exceeded its downside target has still has an associated stop above 106. A short squeeze in the near future up into that resistance zone would not surprise me at all. 

Trading Strategy (1 week): While we are pointing lower I will still look for lower prices to come. I expect the 95.17 level to be tested in earnest as the current bear flag pole pattern has a target just below that number. This seems like a dangerous market to be shorting breaks to new lows. Instead, I will be looking for counter trend rallies back into resistance for areas to consider establishing short positions. Keep tight stops as I do believe they could run this thing up to just north of 106 in a heart-beat if given the opportunity....

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca

Sunday, May 6, 2012

CLM12 - Update for May 4th, 2012


Price analysis for the week of May 4th, 2012:

Market Overview: As suggested above, it appears the low volume bull run into the May Day holiday weekend was a trap. We completed a very well defined 50% retracement of the late winter sell off (back to 106.26) and then promptly collapsed. The sheer violence of the move lower caught even myself off guard. But given the rather noticeable divergence between fundamental data (inventories at historic highs, poor economic data, relative Geo-political stability) and price, it seems logical that price would catch up at some point. Given too the seasonal nature of commodity demand, it should not surprise us to see a top form once comfortably in the month of May.

Trading Strategy (1 week): My inclination is to be looking for a bottom to form over the coming days. $100/barrel should act as a bit of a magnet for price over the coming sessions. Should we indeed bottom, I would be expecting al bounce back to the 50% level of this sell off (101.97). Having said that, prices have yet to bottom so the trend continues to be down over the short term. Should 97.51 be breached, shorts would once again be warranted but downside expectations ought to be limited given how far we have come in such a short time.
Trading Strategy (1 month) The seasonal top I was expecting to form through the spring has maybe come a week or two early this year. Regardless, downside pressure shall persist for a while and given CRI's 1st two weeks of Q2'12 Study, one shouldn't be expecting outperformance from commodities in general and energy specifically through the rest of the quarter. The final piece of the bearish puzzle will be this week's CoT report which I will be watching for a change in both the Commercial's & Institution's positions to confirm my seasonal top hypothesis.
Sell in May and walk away...


That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca