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Tuesday, February 17, 2015

USO / Oil Update

This is a recent post from our member's site,

USO Update

Our last update for USO was Friday, Feb 13th, USO Gap Fill Likely which was dead on accurate today. Here's the first paragraph of that post, 

"Looking at USO as it approaches resistance that marks the start of the next leg up and the previous leg's consolidation highs, it looks like it wants to fill today's gap or at least some portion of it."

Here's the USO daily chart and intraday charts...
 USO daily with the gap at the yellow arrow and today's intraday lows filling the gap.

This is the same on a 60 min chart, but this isn't the first gap in USO so it wasn't so much the gap that led to Friday's analysis of USO, it was the 3C charts, especially the short term 1 min intraday, here's the chart from Friday's post, USO Gap Fill Likely

Note the deep leading negative divegrence Friday, but still mostly contained to a 1 min chart.

The /CL - Brent Futures look pretty good otherwise. As for USO which is WTI crude...
 This is the same 1 min intraday chart with Friday's divergence and another today after the gap fill and bounce higher.

Since our initial pullback/consolidation target below an ascending triangle was hit, it's time to re-draw the trendlines which gives us...
a lateral consolidation or rectangle. The technical implications, considering the preceding trend would be to look for a breakout to the upside and a new leg higher, but we also have a defined level of support, which makes a stop run before any upside breakout an increasingly likely prospect. Remember this chart or come back to it for the trade set up.

Looking at a 3 min chart, we can see a larger positive divergence or gas in the tank and two smaller negatives from Friday and today, this suggests that any head fake move below the rectangle would be a head fake move as the distribution signals are not very strong, this is only a 3 min chart and they are barely showing up here/

 a stronger 5 min chart shows what looks like a perfect 3C/confirmed consolidation through time (laterally). Note there are no negatives of concern, again suggesting a consolidation, but the short term charts and the rectangle make an increasingly compelling case for a stop run below the rectangle which would be an excellent entry so long as the move was confirmed as a head fake with short term 1-3 min charts showing positive divergences in to any break of the rectangle's support in the area of $17.95-$18 and below.

The 30 min chart shows plenty of gas in the tank, the counter trend rally we were looking for and I think that is still very much on the table, a head fake move below the rectangle would make for a nice call entry or just a long entry.

 Our X-Over Screen has recently given all 3 confirmation signals for a long and as is usually the case, the first pullback has held up at the 10-day yellow moving average, everything else looks good.

Part of me is wondering whether we get a head fake move at all based on that and the trend channel below, part of me is wondering if a head fake move/stop run is on an intraday basis only and therefore does not violate either the X-Over Screen or the Trend Channel . The intraday 1-3 min charts over the next day should continue to tell us what the highest probability is in relation to a possible head fake/stop run before the next leg up, it would be helpful, but being all of the above and especially the X-Over and Trend Channel screens are where they are, if you are interested in the trade, I'd set USO price alerts for a move below $18 as a head fake move might be intraday only and we'd need to confirm it pretty fast, which would make an excellent call position as well.

The daily trend channel held the entire trend down until the stop at the white arrow and is now holding the new uptrend with a stop on a closing basis just above $18, this is why I suspect any head fake move may be intraday only and pretty fast.

I'll be setting alerts as this would be a fantastic entry since we called the pullback/consolidation.

Friday, February 06, 2015

Our Oil Call (USO)

These are the original, full posts from our member's site,

First our USO set-up for a long entry... Next, you'll find our call for a pullback just as everyone else is calling a bottom in oil.

Wednesday, January 28, 2015

USO Heads Up

This may be the set-up described in recent USO posts, take yesterday's for example...USO Update

One of the things I was looking for was a move below the support area on higher volume...

 This morning we have a move below the most recent lows/support and on volume.

Here's a closer look on a 10 min chart.

And the 2 min 3C chart is not leading in a huge way, but still in a relatively positive area.

The 5 min chart however looks good and...

A close up of the area on a 5 min chart looks good.

This looks like the potential head fake move we were talking about in a USO long trade set up for a bounce.

I suspect we'll know for sure by the time the EIA inventories is out at 10:30, you might keep an eye on it

And the second post looking for a USO/Oil Pullback...

Tuesday, February 3, 2015

USO Update

Oil is now on track for its 4th consecutive daily gain and it appears, as usual, the bottom callers are in, just in time for what should be a little consolidation which will likely kick them out of the trade and turn them bearish again just as USO makes another leg higher.

Other than the Mass Psychology of calling the obvious long after it has occurred and taking it to an extreme of a "Bottom", which this clearly is not, the market is finally noticing what we have been forecasting for weeks, but it does look like we are at an area of natural consolidation, one I'm sure will be interpreted as "Oil is not at a bottom, it was a false start".

Lets just check the charts...
 On the daily chart, USO is currently at a gain of +2.36% as I write. I wouldn't judge the day's outcome by this early Doji Star candle, but there are some short term charts that look like a small consolidation is becoming more and more likely.

 This is the USO 2 min intraday chart with a negative divegrence, along the lines of a consolidation.
Remember, a consolidation can occur through price (pullback) or through time (lateral consolidation pattern or sideways).

The Brent/CL Futures are also showing intraday 1 min 3C weakness on this chart and that extends further out...

To the 5 min chart that looks more serious and the 7 min chart, by the 10 min chart price and 3C are in line, thus I don't see this as much more than a consolidation setting up, unless things were to materially deteriorate from here, but as we have talked about probabilities in place before a move even starts, USO has strong probabilities of more gains, in fact as a counter trend bounce/rally, I'd hardly consider this move as started.

 I think the 5 min USO chart best puts the consolidation probability in to proper scale and focus, vs. the positive divegrence that kicked off the move.

While the 2 min USO chart looks worse, this is just because it's a weaker timeframe so the divergence looks worse than a stronger timeframe like 5 min above, but this is a better indication of timing.

As for the probabilities...
This isn't even the strongest chart, but this 15 min USO leading positive divergence has plenty of gas in the tank, a plenty strong base to take it higher.

Consolidation is natural, it keeps an asset from overheating and seeing volatile corrections, I'm not concerned with it at all.

As for whether it's through time or price, we'll just have to wait and see, if it is through price it may offer a second chance buying opportunity for those who are interested.

Tuesday, January 27, 2015

Odd Signals in Last Night's Futures Session Warned About This Morning's Market Decline

Last night at 1:15 a.m., I time I don't usually post on our member's site, Wolf on Wall Street, something so strange was going on in Index Futures on our 3C charts, I had to at least document it.

This is the post below that led to the overnight blood bath we are seeing right now, looking something like this...

This is a 5 min 3C chart of NQ / NASDAQ 100 Futures. Below is the post from 1:15 a.m. EDT this morning from Wolf on Wall Street...

Here's the full post with charts and all from 1:15 a.m. Tuesday January 27th.

I'm not quite sure what to make of this as of yet. I really only see this strange behavior on the 3C charts of ES/SPX E-mini futures, but in 3 timeframes. I suspect the signal may be stronger in ES than NQ and TF because of the obvious higher liquidity even though liquidity is very shallow at this time of night.

I'm not going to assume anything or make too big of a deal of it, but I do want to document it in case something else happens from here. At this very moment, just a few minutes after these charts were captured, we're seeing a little ramp of about 1 ES point in the Index futures on slightly more volume.

 On the 1 min Es/3C chart, the green arrow is the US cash open, the red arrow is the US cash close and the yellow arrow is midnight EDT. Note the very tight range in ES as well as 3C in a leading negative position.

Usually I wouldn't pay any attention to a 1 min chart in overnight futures trade, but it's on several other timeframes and just strikes me as a little odd.

This 5 min chart shows the weakness Friday which was part of our forecast for The Week Ahead post near the close which was looking for...

"As for early action next week, it looks like early weakness on Monday, although I think it will regain some strength in the later part of the day or some time afternoon-ish....

I think the IWM/Russell 2000 outperforms the other averages early in the week "

Both events occurred, even though we saw the opening Futures trade Sunday night (yellow arrow) gap down a bit and then recover right up until the cash open at 9:30 at which time we saw the cash market "Early weakness" that recovered not too long after and of course the dramatic relative outperformance of the Russell 2000 today over the other major averages.

Beyond the chart from Friday that led to The Week Ahead forecast for early intraday trade and relative performance among the major averages, the other interesting feature is the same leading negative divergence seen on the 1 min chart here on a 5 min chart of ES.

The 7 min ES chart also shows a negative divergence at Friday last week right in to the highs and the small gap down on the open of trade Sunday night at the yellow arrow. Again, that odd leading negative signal is in the same place on this 7 min chart.

I don't see anything after a quick look around that would explain it and as of right now, in this thin overnight market I don't want to make to big of a deal of it, but it did strike me as strange enough to be worth a post as this time of night.

We'll see what we have in the morning.

Friday, January 23, 2015

Precious Metals: Gold and Silver Update

From Wolf on Wall Street, Wednesday January 21st...

Wednesday, January 21, 2015

Precious Metals: Silver

For a while I've held the belief that gold and Gold miners would be moving toward a longer term, primary and maybe even secular bull market move. That analysis, while not having changed, was put on the back burner for a while until the longer term signals started to clear up.

Shorter term, you're probably aware I'm expecting some downside in GLD, from the looks of the charts, SLV too. However, it may be time to revisit the longer term GLD perspective, especially with a pullback in prices and a few things on the charts that look like perhaps precious metals may very well take the place of stocks in the very near future as risk asset of choice.

 This is one of several near term signals suggesting a fairly decent pullback in gold. Of course tomorrow's ECB policy announcement can have some wild fluctuations and I've heard everything from the ECB will come out with a bazooka and the market will sell the news to nearly the exact opposite, all from Investment bank analysis, the point, no one really knows, but for now, we've been expecting a near term GLD pullback, yesterday's post dealt with this, GLD Update, including a reversal down right in this very area which so far looks to be on track today from the loss of the early gap up.

GLD has never really recovered since our 2011 top call and Intermediate to primary downtrend to follow, if you look at a 5-day chart of GLD like this, you don't see much of interest...

However, add some trendlines and some macro versions of our head fake concepts, nearly exactly the same as what we are looking at with the short term market bounce we are expecting or at least that has been setting up, and you get a different view.

A closer look on a 1 day chart shows what we have suspected for some time was a large base being put together, albeit within the confines of what looks like a bearish descending triangle, although the price pattern is much too big to be anything of the sort, traders still view it in this manner.

As per usual with a head fake move, we see it just before a reversal 9to the upside), it builds momentum. In this case that head fake move would be in the yellow area, creating a bear trap and thus as it moves back in to the triangle, a short squeeze. So in fact, the short term action in GLD, may put us back on track to start considering the longer term position.

Silver is in a very similar situation...

 This long term 2 hour chart of SLV shows an impressive positive divergence, even though I'm not a big fan of silver for all of the manipulation through the years.

 The shorter term 5 min chart shows a base (white), mark -up and the same sort of near term negative divergence (pullback) that we are expecting in GLD.

The 3 min SLV chart shows this sharply, much like GLD's charts in similar timeframes.

As do the shorter intraday charts.

While we do have some GLD pullback positions, like GLD puts, I am starting to think more and more that we'll be looking at longer term positions in either PM shortly.

Wednesday, January 14, 2015

Crude Oil Bounce $USO Forecasting by: Wolf on Wall Street

The decline in USO has been a sharp one, but not one we didn't see coming. This is one of the stronger bouts of distribution I've seen in an asset class, so someone knew well in advance of USO's decline that it was going to be a doozy...

USO 2 hour 3C chart showing mostly in line trend confirmation to the left and heavy distribution in to the June highs, the rest is history.

This isn't the first time we caught an oil plummet, ironically at the same time Cramer on CNBC was telling viewers to BUY oil on the next bad EIA report as a "Contrarian Trade", which I never understood, all of those viewers doing the same thing at the same time hardly seems contrarian. In any case, that was 2008 and this is how that worked out as we called a top in USO about 7 days before the final highs and an approximate -80% decline.
USO 2008 top call...

Here are some excerpts from our members' site,

with respect to a USO bounce we've been looking for as recently as this morning....

WOWS USO post excerpts, charts and commentary from those posts...

From our "Daily Wrap", Tuesday January 13th, 2015 7:10 p.m.

"As per today's post,  I think we do get that bounce in Crude/USO, just remember the caveats.
USO ended with a nice leading positive divegrence for the day."

As to the post from earlier in the day, it was posted at 11 a.m. the same day...

 "This is the January range mentioned above, which looks like it had a decent positive divegrence; the break below and what looks like confirmation of a stop-run/head fake move with a positive divegrence on the break below support (stop run).

The 5 min chart, which also shows the volume spike under the small range (stops hit).

 The fact there's a divergence out on the 10 min chart makes me think this bounce has a chance.

As for Crude (Brent) futures, there's similar recent confirmation as well.

5 min leading positive looks like confirmation of a head fake move/stop run that was accumulated."

Then this morning after the EIA build in Crude Inventories, quite a bit above consensus caused a knee jerk reaction lower, we checked oil again this morning to make sure our anticipated bounce was still on track...

"This morning's 10:30 EIA Petroleum inventories came in higher than expected at +5.39 mm barrels vs consensus of 1.75mm barrel build with the last a draw of 3.062 mm barrels.

This initially sent crude lower at 10:30 on the report's release, but from everything I can see, we should still be expecting a USO/oil bounce.
 USO 1 min with the EIA release and a positive intraday divergence holding USO together from further decline.

The 2 min chart has no damage and the 5 min...

Still looks great.

This is one of those common scenarios in which once Wall St. sets up positions for a move, they rarely call them off, which is what makes the current market's 5 min chart so interesting."

Since our last update for Crude as we have also been forecasting a market bounce to start today, here's USO...

As you can see, the crummy EIA inventories failed to push USO down despite the initial knee jerk lower and just as our 3C charts have been forecasting recently, USO has started a bounce. At the appropriate time we'll be looking to establish a new short when the charts confirm (don't forget about the first 3C chart at the top of this post), but for now, it looks like the anticipated move is off to a decent start.

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