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Wednesday Morning Pre-Market Comments

Nothing new to report since yesterday's pre-market commentary as the major stock indices went exactly nowhere since gapping up to those resistance levels (SPY 214.05 & QQQ 118.00), clinging to those levels like glue throughout the entire trading session yesterday, followed by a very minor dip in after-hours into early pre-market trading today & then recovering from that post regular session dip so far this morning to rally right back to just below those very same resistance levels.

$WTIC daily Oct 18th close

$WTIC daily Oct 18th close

Gold (GLD) & oil (USO) are trading up slightly higher in pre-market trading so far with GLD just slightly above a minor resistance level of 120.70 (best viewed on the 30-60 minute charts) & crude oil now challenging the neckline, which is resistance until/unless taken out, of the large Inverse Head & Shoulders Pattern that I've been highlighting recently.

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Oct 19, 2016 9:17am|Categories: Equity Market Analysis, Gold & Commodities|Tags: , , , , , , , |12 Comments

12 Comments

  1. riverbirch October 19, 2016 9:25 am at 9:25 am

    I think everyone on earth is watching that IHS pattern on oil!

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    • GetItRiight October 19, 2016 10:03 am at 10:03 am

      All the more reason that it should fail.

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      • joefriday October 19, 2016 10:08 am at 10:08 am

        Agree…. CL is likely going down imho.. IHS is just too obvious imho

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        • riverbirch October 19, 2016 10:13 am at 10:13 am

          Actually I see a weekly triangle pattern with a breakout above triangle and now at resistance of Sept 2015 high!

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  2. jegersmart October 19, 2016 10:42 am at 10:42 am

    We are drawing inventory in the US at least at a time when we should be building, this is why I have been and have added to USL long position as already mentioned over the past few weeks. If you want to trade flat price which I wouldn’t recommend unless you really know what you are doing, USL offers a less volatile option for longer term swing positions and protects somewhat against contango….arguably… In any case, I would not be surprised to see WTI at 60 early next year…..imho

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    • GetItRiight October 19, 2016 10:50 am at 10:50 am

      What surprises me is how well crude is trading on fundamentals now, when it ignored them not too long ago. Crude had a huge run up based only on jawboning from OPEC. The drawdowns would support higher prices but not at this level.
      Also, technicals in USO seem to take a backseat to sentiment.
      What is holding me back from a long position is the COTs report, which shows the highest percentage of traders on the long side.

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    • rsotc October 19, 2016 2:40 pm at 2:40 pm

      jegersmart- Thx for the suggestion & reasoning behind going with USL. I’m going to add that one to my watchlist & will consider it as an alternative to CL (futures) or USO going forward.

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  3. jegersmart October 19, 2016 11:03 am at 11:03 am

    Yes, at this point I would only add to my USL positions on reasonable sized dips – I am looking at a 2-5 month hold here. We are due a correction I agree – but I am not trading technicals here (for a change).

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  4. jegersmart October 19, 2016 11:16 am at 11:16 am

    p.s. as an afterthought and FYI, part of the draws seen are probably due to some Canadian pipelines being closed for a short period recently…..

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    • GetItRiight October 19, 2016 11:20 am at 11:20 am

      Interesting. Haven’t heard of that. Thanks for the info. It was baffling how on earth are they showing drawdown after drawdown in a season which should show builds. I have added to my DWTI position here, due to technicals (overbought RSI on the hourly) but also on expected profit taking at resistance.

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  5. alshaw October 19, 2016 11:31 am at 11:31 am

    wow funny chart reader say oil can go higher and sp lower and they say look at 2007 sp 500 blows apart and oil goes up well as always they do not tell you the whole story ya oil went up to 149.99 and then crashes and comes down to 32 one of the biggest drops ever and then what happen to sp500 ya goes to 666 one of the greatest drops ever so bottom line short sp 500 short oil and burn the charts

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  6. jegersmart October 19, 2016 4:53 pm at 4:53 pm

    @rsotc – with regards to USL, I am advocating its usage for longer term positions – i.e. multi-month due to the somewhat lower short term volatility (in general) but as I say it gives access to the whole curve (if wanted) – so there is usually also less movement to make short term money of course. Personally, if I want to build a longer term trade I use USL – even with size management I find it hard to ride it out on USO (especially over the last 8-10 months) and of course on USL you should get lower roll costs which is beneficial when holding for a longer period. How it behaves from a tech analysis point of view I do not know, I am acting on fundamentals in terms of physical oil, that does not mean the paper market will necessarily reflect that at times. As someone pointed out above, oil seems to have ignored fundamentals for a period of time. Well, the problem with fundamentals (and which is why I do not trade using that method in equities and fx) is that no one really has all the information in order to make a fundamental call. Someone above didn’t know that Canadian pipelines were down for a short period in the last week – what else does he or we not know? I have access to a lot of proprietary info as I operate in this space, however I do not often trade flat price. Neither do most of my peers. If you have solid information on refinery and pipeline outages, inventory levels and rack activity you at least have a good chance on the various spreads in terms of product, time, location and even the more basic WTI/Brent spread. Naked flat price trading is a beast imho – and you may as well try tech analysis to take the emotions (and lack of fundamentals) out of the equation. I just don’t find it works as often as on equities, but that is anecdotal. USL sometimes fits the bill for me is all I am saying! Good luck long or short though obviously. J

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