TF and JP WTIC Fearless TOP forecast--- HI Terry The Falcon and I fearlessly called the top in $WTIC about 3 weeks ago...this was when we were at 120 ish my number was 132.65 and I did allow a $2 wiggle window.
The Natural Gas market has been even more obvious on the daily charts having created a triple price momentum divergence on a number of different Day ROC osc. going all the way out to 34 and 55 days.
The Falcon and I were joking at the time that it almost requires drinking the Koolaid to even think about calling tops in runaway parabolic markets. What I have really been following the past few weeks is the forward heavy duty spread trading that has been occurring along the forward crude strip.
You can get a feel for what kind of trades are being put on by matching up the big daily volumes in the long dated months coupled with the price concessions that have to be made.
ie...if you want to buy 3500 contracts in Dec of 20011 you are going to have to bid up the price to get it done. ditto if you want to sell a big swag of contracts in April of 2010, you've got to expect to get slightly lower prices relative to the other nearby months on the strip.
Message 24613255
To: TheFalcon who wrote (9449) 5/22/2008 3:45:45 PM
From: John Pitera Read Replies (2) of 9514
Hi F, I still believe we put the top in crude yesterday as we got to the 132.65 + an extra two bucks for a leeway window.
These were the numbers that you and I had come up with about 3 weeks ago here on the thread.... We actually had to tamp down our bullish/inflationary exuburence a fair bit at that point in time.
I have an excellent story that was told to me live by the Head of the NYMEX in Houston in 1997, Her name was denise palmer huggins and she had some tremendous insights as to how the long dated strip of the Nymex crude contract had great predictive value of future price trends. Let me see about posting that latter today.
John
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To: TheFalcon who wrote (9437) 5/21/2008 12:47:47 AM
From: John Pitera Read Replies (4) of 9514
I believe that WTIC is putting in it's top for 2008. The Falcon and I have been discussing price pivot turning points of 130 (TF) and 132 (JP's crystal ball gazing number). There are several different Elliott Wave time and price clusters that are in this area in price and we are starting to enter the turning point "window"; as well as some WD Gann and various additional technical evidence that is lining up for this presumed price high @ 130-132.63 (I've got to give a $2 leeway for a move to 134 and change in a spike move reversal.)
The single most compelling data point that I can point to is that the entire Crude futures curve (or strip) has achieved something very very rarely witnessed at elevated market tops.
the entire forward strip is priced above the nearby spot price of the high open interest nearby month. the Strip (or curve) is showing a price of 131.04 for Dec of 2011 and the long dated contract is way up at 138.38. As Patrick Slevin would comment this is an entire forward strip (curve) that is in contango) and is simply illogical and extreme with spot crude at 129 and change. This is one of the type market extreme sentiment shifts that occur at significant intermediate and longer term tops. This is a death knell for significant price appreciation from this point.
The commercials can come in and sell their product in the forward markets at grand slam prices. the only way you can get on board this continuing to occur would be to see a currency collapse and a hyper inflationary environment. That is not going to happen now. ( i'd give it a 2.4% outlier possibility).
So the energy complex is totally juiced up in price we have the commercials who can come in and lean on this market from here to doomsday at this price level and they will have their way. They are the commercials. This is an aberation.
The commercials can sell endlessly into this market and they can deliver the actual product so they are not going to get caught short. (that's my analysis; and I realize it's an opinion and analysis that is going against the popular grain..... if it was not who the heck else could be long all these bloody crude contracts with a 130 dollar handle. If I am wrong and we zoom to 150- 160 you can feed me humble pie.
But otherwise a few of you hedge funds and wealth management offices; ....commercial entities etc. should retain the services of someone who has been involved with the markets for more than the past single cycle.
So let's see how this plays out. Hell I traded my first crude contract in 1986 and it almost had a single digit handle!
John
Message 24578122
the Falcon
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To: ajtj99 who wrote (9365) 5/8/2008 6:10:47 PM
From: John Pitera Read Replies (2) of 9514
Yes $132 dollar is my "magic" number for the near term top in crude. So I'll settle for $130. I ran a 5,8,13, 21,and 34 day rate of change oscillator on WTIC and it's a pretty mixed bag in term of momentum divergences especially on the 8 Day but on others one can still make the case that momentum is not all that bad.
Putting on my Elliot wave hat for a moment I can actually make a case that we are in the over all 3 of the 3rd of the 5th wave or 3rd of the 5th wave all the way up off of the 10.35 intraday low we made on 12-21-1998.......Dec 21st of course being one of WD GANN famed time turning points, the winter solstice.
I'll see if I can post a chart with a count. For magnitude if that count were to be correct the top of the 3rd wave of the same magnitude would have to be the Jul 2006 high of 79.86 and the bottom of wave 4 the 51.03 low of Jan 2007.
within the 4th wave and it would be a simple a-b-c with the a wave decline from 79.86 in Jul of 2006 to the 57.05 on it looks like 10-31-2007, the b wave up to the high of 64.15 on wouldn't you know it Dec 20th 2006 and then wave c of larger wave 4 straight down into the low of 51.03 on 01-17-2007.
If you to the charts the elliottician in the group and on SI can ponder that one if they like... May I also post this on the appropriate Elliot wave thread..... would that be the clown-free Elliot wave thread?.............
anyway, I feel a bit like Elmer Fudd in one of the old Bugsy Bunny cartoons....... "be werrry werrry quite, we're doing Elliott wave Analysis here -vbg-
So to make sense of that elliot wave argument, fundamentally we have to be talking about a bigger globalized slowdown, China's got to stop growing at 15-20% or what the heck ever they are really growing at ..... etc.
I do have a oil time cycle charts that I do keep, but that's going to have to be shown with charts to make any sense, as does most or all Techical Analysis for that matter.
And not to pick on Cramer that much but it would make sense as to why he is so incredibly bullish on the energy sector. (I suspect Dr. Mad Money would be burning me in effigy on his show if he heard me mention that... sorry Jimbo ;-) )
Message 24573198
John
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To: John Pitera who wrote (9368) 5/8/2008 6:45:16 PM
From: ajtj99 Read Replies (1) | Respond to of 9514
John, when you consider waves can sub-divide (see Nasdaq 1999), it really is a better bet to just follow the parabolic arc and wait for it to flatten out when you have an issue like the WTIC.
One thing you may find helpful is the ADX-14 on the daily WTIC chart.
Peaks in price have occured when the -d line drops between the 5 and 10 range on that indicator. Typically we've seen re-tests of the highs shortly afterwards with the same indicator testing the 10 area, making a negative divergence on that indicator.
I think this could be a useful method for watching for pivot high in the daily chart.
Oh, there is also a "mirror" pattern on the weekly RSI-14 that suggests it will reach the 82 area, which is another thing to watch on the WTIC.
The WTIC and Natural Gas appear to be running hand in hand. The Natural Gas continuous contract peak at around $15.52 in Dec. 2005 may be a good place to use as a proxy for a high in the WTIC as well. If Natgas gets above that, it could run to $20 pretty easily. The monthly tells the story on that chart real well.
To: John Pitera who wrote (9368) 5/9/2008 12:07:24 PM
From: TheFalcon 2 Recommendations Read Replies (1) | Respond to of 9514
John, I would prefer that crude is in a vth and final move here (for this run), as is the CRB/CCI. One could argue a bit where I suppose, but I prefer much closer to the end than the beginning. In a case such as we are in I would also suspect early truncation at the top, and an incomplete finish.
I do not follow crude that much, follow the $DJUSEN.
$DJUSEN:
Started 5th wave in early Oct of '06.
Started 3rd of 5th about March of '07.
Started 5th of 5th about Feb of '08, topping now??
One wave of any 5 wave series must extend (my rule). The 5th wave in the DJUSEN extended. The 3rd wave within the 5th extended and maybe the 5th within the 5th as well.
If this analysis is correct I think the DJUSEN should retreat back to the 400 area, in the next correction.
Prechter did an interesting paper on peak oil many months ago. As I recall he has crude in a 5th and final wave, in the real LT sense, this whole move probably being a 3rd. He also showed that in terms of real money (gold) crude is falling behind, really. I dunno. I would rather think it more likely that in a LT sense crude has made a major major
BO here. A retrenchment is inevitable, but following that the next move could really take it up to the moon. The pain to consumers is pretty hefty here. Wait till the next run peaks, some years down the road. The pain will be unbearable.
TF
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