On Friday, this tumbled into my Twitter feed, attributed to Gartman:
And, so, as federal law requires, equities are UP and crude oil is DOWN right now.
I love the crude oil chart as a short, and I’m short USO as we speak (well, neither of us is speaking – – or at least I’m not – – and if you’re talking to your screen right now, you’ve got worse problems than either of us). Anyway, here’s what I see:
By Mike Paulenoff, MPTrader.com
The lower-than-expected build in natural gas inventories (28 bcf vs. expected 37 bcf) in the Weekly Natural Gas Storage Report released yesterday (Thursday, August 10) goosed the price of the nat gas futures.
Our technical work anticipated the move, and we still see continued upside for the futures as well as for the VelocityShares 3x Long Natural Gas ETN (UGAZ).
The positive juxtaposition of our nearer-term momentum gauges with the sideways price action on the nat gas futures chart (July contract) was one of the indicators we used, which you can see on the chart from August 8.
We actually added a long trade in UGAZ back on August 2, when the nat gas futures clawed their way above important resistance at 2.835, which corresponded to a price of 11.07 in the UGAZ.
As we now know, natural gas rocketed yesterday above the July 31 unfilled downgap area at 2.89-2.92, towards a challenge of the next significant resistance zone at 2.97-3.00.
If hurdled and sustained, this will trigger potential for a run at multi-month resistance at 3.10-3.11.
The UGAZ has already exceeded our initial initial target of 12.40, and is up over 15% since we added it, with our next target at 13.25.
I’ve maintained a steady interest in energy issues, and I’ve been noticing with increasing delight that energy stocks are acting weaker than oil. On days that oil is strong, energy stocks are either “meh” or, in some cases, down. On days that oil is weak, energy stocks are really weak. You can see the increasing spread here:
Even though crude oil has its (annoying) surge from June 21 through July 31, the topping pattern for oil and gas explorers and producers was never violated. The head and shoulders pattern is firmly in place, and the neckline was tested twice successfully. This downturn could start to kick in very soon.
Greetings from my undisclosed tropical paradise location. As I gaze out upon the palm trees, nearby islands, and churning waves, and I am reminded again how I’m not really wired for relaxation. The presence of WiFi and SlopeCharts gives me sustenance in a place where saner people lay on the beach and drink rum-based refreshments. (On that note, I have been sober as a judge during this outing, as they drive on the left side of the road here, and I want 100% of my senses available to me at all times).
So on that note, I will say that crude oil seems (hopefully…..) to be obeying its descending trendline. It had a very modest overshoot during the past session, but we’ll see if that really matters or not. Sometimes it does. In the case of gold, I chose to ignore its own small violation on the trendline, and that was a grievous error. Thus, I am more respectful of such things, understanding that, well, a violation is a violation, and it may mean something. (more…)