Crude Oil, Nat Gas Bear Trends Firmly Entrenched
JAN CRUDE OIL
Yesterday's break below 24-Aug's 37.75 low reinstates the secular bear trend from May'11's 1114.83 high and exposes an area devoid of any technical levels of merit shy of Jan'09's 33.20 low. As a result of this latest spate of weakness the daily chart below shows that the market has identified Fri's 42.00 high and 24-Nov's 43.46 high as the latest smaller- and larger-degree corrective highs and new short- and longer-term risk parameters it is required to recoup to threaten and then negate a continued bearish policy. In lieu of such strength further and possibly accelerated losses remain expected.
On a smaller scale the 240-min chart below details yesterday's break below recent 40.41-to-39.84-range support that now serves as new near-term resistance. Our new short- and longer-term risk parameters to a bearish policy are clearly marked at 42.00 and 43.46, respectively.
The weekly (above) and monthly (below) log scale charts show the magnitude and resumption of the secular bear trend that has broken all support levels. The trend is down on every scale with ALL pertinent technical levels ONLY existing ABOVE the market in the form of prior corrective highs like 42.00 and 43.46. In effect there is no support. Merely derived technical levels like channel lines, Bollinger Bands, the ever-useless moving averages and even the vaunted Fibonacci progression relationships we cite often in our analysis never have been reliable technical reasons to buck a trend, and they never will.
The monthly chart below shows NO levels of any technical merit between spot and Jan'09's 33.20 low. This does not mean we are forecasting a move to 33.20. But it certainly does mean that until and unless this market proves strength above at least 42.00, the market's downside potential remains indeterminable and potentially steep, including a run below 33.20.
Market sentiment is, understandably, at historically low, pessimistic levels typical of major BASE/reversal environments. But traders are reminded that sentiment is not an applicable technical tool in the absence of a confirmed bullish divergence in momentum. Herein lies the importance of corrective highs and risk parameters like 42.00 and 43.46. In sum, a bearish policy remains advised with strength above 42.00 and/or 43.46 (depending on one's risk profile) required to threaten or negate this call and warrant defensive steps.
JAN NAT GAS
Similarly, this week's resumed losses reaffirm the secular bear trend and expose an area totally devoid of any technical levels of merit shy of Apr'12's 1.902 low shown in the weekly log chart below. Market sentiment is at historically bearish levels typical of major BASE/reversal environments, but here too, this technical tool is not applicable until and unless the market stems the clear and present downtrend with a confirmed bullish divergence in momentum. This requires strength above a recent corrective high of a scale sufficient to break the major bear trend.
The 240-min chart above details this week's continuation of the major bear trend that leaves Fri's 2.211 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter the market is now minimally required to recoup to even defer, let alone threaten the downtrend. Given the magnitude of the secular bear trend however, 16-Nov's next larger-degree corrective high at 2.600 remains as our key risk parameter this market is MINIMALLY required to recoup to threaten the secular bear trend that will celebrate its 10-yr anniversary this Sunday.
The monthly log scale chart below shows the 10-yr bear trend from 13-Dec-05's 15.78 high and encroachment on Apr'12's 1.902 low. Noting that any references to a market being "oversold" are outside the bounds of even a modicum of technical discipline, an eventual break of that 1.902 headline low should hardly come as a surprise given the bear's ACCELERATING nature over the past month or so.
In sum, a full bearish policy remains advised with strength above 2.211 required to even defer this call and warrant a move to the sidelines by shorter-term traders with tighter risk profiles. Longer-term players remain advised to maintain a bearish policy until the market can recover above 2.600.
RJO Market Insights |
