As the 10 Year Yield ($TNX) broke out of its trading range, it injected volatility into the market between Friday and Wednesday. Until this starts to settle down, it is likely that we see wide price swings each day affecting a lot of the asset classes. In the near term, this range at 17.5 may hold but the highs for the year are around 20.0. The 200 DMA at 18.0 could also provide some upside resistance.
- Oil Continues To Test High $40's
- Natural Gas Consolidating
- Oil And Gas Stocks Lead The SCTR Rankings
- XLE Breaks Out Of A Major Base
Crude Oil ($WTIC) continues to flirt with breakout levels. This $47.50 seems to be a meaningful area of attention. We'll continue to watch this level in the coming months. Here is a link to the webinar.
The Energy Sector SPDR (XLE) has been trying to breakout for the last few weeks. Even as Crude Oil and Natural Gas pulled back, the XLE held firm. Today it is breaking out!
I have my regularly scheduled webinar today at 5 PM EDT for those interested in finding opportunities in the energy space. Commodities Countdown 2016-09-08.
Don't forget about ChartCon 2016! It's only 2 weeks away!
This month, Chartcon 2016 is coming to you via live stream broadcast! Rather than have customers spend all the money to travel to the event, we have arranged for all the technicians to gather in one location and broadcast from there, saving you thousands of dollars. It should be a fantastic couple of days with a tight synopsis of the markets from an award winning Technical Analyst crew. You can register for this event for under $200 and have access to the recordings. Chartcon 2016.
Next, I will be presenting in person at Golden Gate University in September if you are in the area.
September 20th, 2016 @ 4 PM
Golden Gate University. Rm 3214
536 Mission Street
San Francisco, 94104
Cost: Registration is $10 for MTA members and $20 for non-members
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Greg Schnell, CMT, MFTA
The charts have been bullishly aligning for the majority of the commodities since the January/February lows. With the US Dollar trading between 93 and 100 for 19 months, the stability of the dollar has been helping some of the commodities regain some chart strength. With the $USD in the middle of the range, 8 commodities either lost the support of the 40 WMA or broke a support trendline in the last 2 weeks. That is not the action we would expect to see.
Gasoline ($GASO) lost 40 WMA support in the energy sector. Crude Oil ($WTIC and $HOIL) are still holding up above the 40 WMA...barely. Heating Oil ($HOIL) gave us a trend line backtest that looked successful but now looks unable to get back above trend. So these two start the parade.
Two of Canada's largest companies in the Agriculture related space confirmed they were in merger discussions on Tuesday. While Agrium (AGU, AGU.TO) is widely considered an acquisitive company, this has not been the history for Potash Corp. (POT, POT.TO).
A few things need to be reviewed here. First of all, Potash prices have been struggling since the collapse of the potash marketing consortium, Canpotex. As this Potash pricing problem doesn't appear to be resolving itself anytime soon, Potash is struggling. It appears that Agrium wants to continue to expand its vertical integration model for supplying the farmer. With a retail arm firmly in place, Agrium does a nice business supplying the farmer with crop inputs and then helps them with the sale of the grain during and after the harvest through their network of grain terminals.
Let's look at the charts to see what might be happening technically. Starting with Potash Corp, the stock is roughly half of its preceding market value before the breakup of Canpotex. Again, Canpotex was the marketing consortium controlling price on Potash. Before Tuesday's announcement, Potash's US listing was trading at $16 USD which is about 25% of the 2008 high of $65. That can motivate a management team to look for strategic alternatives.
The commodity pops and drops this week have been very sudden both ways.
Oil struggled as it approached $50 and has drifted back this week. This is not really a surprise, as probably every floor trader was selling at resistance. It has now built a nice channel between $39 and $50. If crude breaks through over the next few weeks, expect it to accelerate quickly.
I started off with a review of the webinar I shared with Martin Pring on Tuesday, August 23rd. Members can find that previous webinar at the StockCharts webinar archives. There were a few questions from the survey results that I tried to answer in the review portion of my Commodities Countdown webinar.
Martin Pring and Greg Schnell are getting together in Pring Studios in Florida to do a live debate webinar. The setup is compelling as many of the major charts in the world are lining up for a major shift. I've nicknamed the webinar 'Back From The Precipice' as the charts appear to be setting up for a major trend change.
Well, that was fast! Oil makes strides towards $50 so the bear market in oil from 12 days ago is officially over. A business news channel announced a new bull market in oil because it is up 20% off the lows. Best to ignore hype reporting that leads us into and out of trades. This same news network had everyone bearish 2 days before oil bottomed by talking about the new bear market in oil starting August 1. Maybe we'll just use the $WTIC charts and look for support and resistance levels!
We have had a wild ride with crude oil so far this year. From the depths of $26 to over $51. Recently, the pullback totalled 20% from the June highs. It took roughly 2 months to pull back and now oil has been rising almost every day, heading back to $50. We can also see that the pullback was about 50% of the move up. I also made a note on the chart about a TV panelist yelling about the new bear market in crude oil. While they were almost screaming to remind people to get out, it could not have been a more contrarian call.