Side Note: For the record, I’m starting to agree 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.” To emphasize this point, the market making the most sense, form a technical point of view, is Natural Gas (aka the Widow Maker). That tells us all we need to know.
Brent crude (QA) remains in a major (long-term) sideways trend. Technically, though, the spot-month contract took out the lower trend line of the consolidation pattern during August, also posting a new 4-month low below the previous mark of $76.75. Theoretical Positions: While most traders are likely on the sidelines, some short positions might’ve been established on the move to a new 4-month low during August. If so, this puts the position at roughly $76.74.
WTI crude oil (CL) is in a major sideways trend, consolidating between converging trend lines. The long-term range is between the May 2023 low of $63.57 and September 2023 high of $95.03. Theoretical Positions: Long positions were established on the move above the previous 4-month high of $83.53 (April 2023). Additional longs could’ve been established near the January 2024 close of $75.85 on the idea Wave 2 has bottomed. The average position would be near $79.70. However, sell stops might’ve been triggered below the June 2024 low of $72.48.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.): I’m not sure what to call distillates trend, though a lower monthly close 9 out of the past 10 months certainly fits the definition of a downtrend. Additionally, the spot-month contract posted a new low of $2.0431 during September. Theoretical Positions: Traders have likely moved to the sidelines at this point. If not, they could be short from the initial new 4-month low near $2.6959 (December 2023).
RBOB gasoline (RB) remains in a major sideways-to-down trend, posting a new low of $1.8545 during September. Theoretical Positions: Traders have likely moved to the sidelines at this time.
Natural gas (NG) looks to be in a major uptrend after posting a new 4-month high during June. The August low of $1.875 could be viewed as a Wave 2 low, with Wave 3 confirmed by a move above the Wave 1 peak of $3.159 (June 2024). Theoretical Positions: Traders might’ve gone long on the bullish breakout above $2.168 during May, the high from February 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. If so, then the average long position would be roughly $2.406.
