Wednesday, June 15, 2011

Crude Oil (CL) Repeat of May crash? 6/15

On the left is a long term view of an hourly chart for Crude Oil, starting with the sell off in early may from its highs at 114.83 to today's activity. The purple channel is a regression channel drawn from its low after May's sell off to today, with 1st and 2nd deviations shown. We can see its stayed in this channel really well over the last month plus, and the only three times it has broken below (circled in white), it snapped right back and did so well before the markets settled for the day. We notice that today's trading has broken this channel and has sat outside of it now for a good amount of time and settled. I also present the previous two lulls in price preceding the massive sell off on May 5th, highlighted in yellow. While todays preceding price action was quite a bit more than the others, you can see how there is almost no retracement in these moves and just a straight sideways channel until the next sell off, similar to what we are currently forming. With all that said, The green extension is the price extension from the highs @114.83 to the lows of the meltdown, projected off the highs in the channel. We are currently sitting on the 50% projection, and while its a bold projection, I could see oil selling off hard to the 85 level very soon. We've discussed playing straddles or strangles in the option markets on oil, and it looks like that might pay off, and if you are still looking to play this, I would look to cheap option puts on bullish etfs.

Silver at a Crossroads, But Evidence Still Says it is Going Lower 5:25 PM CST 6/15

(Chart 1 - Silver 60 min zoom)
(Chart 2 - Silver 60 min)
(Chart 3 - Silver daily zoom)
(Chart 4 - Silver daily)

After breaking out of the burgundy pennant on Jun 13th, we were weighted heavily towards going lower from there and testing the 34.375 support.
Well, 34.40 is close enough in my book.

Now we have retraced back to the weak MML resistance at 35.94, and the rally stalled again.

Looking at the 60 min chart, we are in a short term up trend (light blue) since we put in lows at 34.40. The highs today stalled at the top of this channel, the 35.94 resistance, and the midpoint of the daily bearish channel (magenta dotted). We had a nice upper wick on that candle and we headed lower.

Short term this channel will govern silver.... However I suspect silver will not be able to get above 36 with any real conviction, and will form a head and shoulders on the 60 min. A subsequent neckline break will then give us the power to get under this bullish channel, back to 34.40, and set up for an eventual test of 32.81, my ultimate support for this phase.

VIX breakout 6/15

After posting a couple days ago that the VIX was showing some consolidation right near the top of its recent channel, it seems that today it finally broke out to the upside and has closed well above the 20 level which it hasnt seen since mid march. Depending on where this opens tomorrow, it might be a good play to try to get in this.

EUR/USD Price Targets 6/15

After the divergence shown in purple on the hourly EUR/USD charts has finally come in, and in a strong way, we start to look for a profit target for this trade. We can see the price extension in yellow for the last major move down, shown projected from the top of the most recent retracement upwards. The 50% level will provide good resistance to the upside as it lines up with the recent low peak (@1.4307ish) and will probably be the indicator to get out. I have pulled a small part of my position off at the open today as butt agaisnt the 61.8% level of the extension, but ultimately we look to target the 100% (@1.4117) in this move. I will be holding the rest until we get there or break the aforementioned 50% level firmly.

S&P (ES) Bouncing off trendline 6/15

The hourly chart formed a trendling (shown in green) from two previous peaks on this march downwards over the last week. After yesterdays break above this and then break below it this morning, we are now testing it on the downside. I think this will be an important area to hold to determine that we continue down today and the next couple days. If you are looking to get short its as good of place as any.