Side Note: For the record, I’m in agreement with Warren Buffett’s thoughts on technical analysis, at least in the Energies sector. Buffett has said on the subject, “I realized that technical analysis didn’t work when I turned the chart upside down and didn’t get a different answer.”.
Brent crude (QA): I don’t see a clear pattern on the market’s long-term monthly chart. Theoretical Positions: Long-term investors are likely on the sidelines for now given the WTI forward curve remains in backwardation.
WTI crude oil (CL): I don’t see a clear pattern on the market’s long-term monthly chart. Theoretical Positions: Long-term investors are likely on the sidelines for now given the WTI forward curve remains in backwardation.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.): The market continued to consolidate during June. Theoretical Positions: Investors would be on the sidelines.
RBOB gasoline (RB): The market remains in a major sideways trend. Theoretical Positions: Investors would be on the sidelines.
Natural gas (NG) remains in a major uptrend. The selloff during April looks to be Wave 4 of a 5-wave pattern. However, the market has continued to consolidate before closing June at $3.456, up fractionally for the month. Theoretical Positions: Traders might’ve gone long on the bullish breakout above $2.168 during May 2024. Additional long positions may have been established above the May high of $2.924 during June. Additional longs may have been added near the August close of $2.127 based on the spot-month contract completing a bullish spike reversal, indicating a Wave 2 low. Another set of long positions might’ve been added during February as the spot-month contract took auto the January high of $4.369. If so, then the average long position would be roughly $2.897. Sell stops would be below the April low of $2.858.
The Bottom Line: I do not like the Energies sector at this time.
