We had a very big storm blow through the San Francisco Bay Area over the weekend. What would I do during what was called the biggest storm of the decade? Head to the beach with my youngest child, of course!
Ahead of tomorrow’s Inventory Report, Natural Gas has pivoted to the upside after retracing right to a test of the upside breakout level (3.15/3.20) of its 2-year resistance line.
This is very constructive price behavior within a larger-developing bull phase, and argues for a positive reaction to the Inventory Report. The reaction could perpetuate continued price strength for a revisit of the December high, en route to 4.00-4.10, thereafter.
I’d say that crude oil shot its wad during the Sunday-Monday session. All the good news that crude could have enjoyed came out:
- OPEC agreement, the first in 8 years;
- Non-OPEC nations agreement, the first in well over a decade;
- Saudi Arabia announcing it would cut even farther than already pledged
Thus, crude oil spiked huge………..and then faded all day. The tremendous green “shadow” on that candlestick is like a spike through the hearts of crude oil traders dreaming of the stuff going to the 60s. This is a failed bullish breakout par excellence.
After the “crude shock” from Sunday, which sent oil prices ripping over 5% higher, equities immediately followed. Both ES and NQ were up healthy double-digit amounts. And then……..
Yesterday was a an unexpected trend day. Usually trend days arrive on Stan’s cycle trend days but not always and yesterday was one of those exceptions. The double bottom targets that I gave on Monday morning for ES, NQ & TF have now all been made, and obviously this move is developing faster than I was expecting. This increases the odds of making the next significant high in mid to late December rather than January.
The trend day yesterday clarified the pattern setup here nicely on NQ & TF. Less so on ES, but that too is likely setting up for some retracement here. The obvious target would be rising support, currently in the 2218 area. ES Dec 60min chart: