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.” To emphasize this point, the market making the most sense, from 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, despite the market’s backwardated forward curve. This structure. sideways trend and bullish fundamentals, has been in place for months. The most recent indicator is a bullish crossover by monthly stochastics below the oversold level of 20% at the end of October indicating the major trend could soon turn up. Theoretical Positions: Most traders are likely on the sidelines, with sell stops below the previous 4-month low of $68.68 (September 2024) and buy stops above the previous 4-month high of $82.08 (October 2024).
WTI crude oil (CL) remains in a major sideways trend, despite the market’s backwardated forward curve. This structure. sideways trend and bullish fundamentals, has been in place for months. Theoretical Positions: Most traders are likely on the sidelines, with sell stops below the previous 4-month low of $65.27 (September 2024) and buy stops above the previous 4-month high of $78.46 (October 2024).
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.): The market looks to be in a major sideways trend, despite the market’s backwardated forward curve. The most recent indicator is a bullish crossover by monthly stochastics below the oversold level of 20% at the end of October indicating the major trend could soon turn up. 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). If so, buy stops would be above the previous 4-month high of $2.4183 (September 2024).
RBOB gasoline (RB) remains in a major sideways trend, with the market’s forward curve showing a contango indicating underlying fundamentals are not as bullish as what is seen in crude oil and distillates. The most recent indicator is a bullish crossover by monthly stochastics below the oversold level of 20% at the end of October indicating the major trend could soon turn up. Theoretical Positions: Traders have likely moved to the sidelines at this time with sell stops below the previous 4-month low of $1.8545 (September 2024) and buy stops above the previous 4-month high of $2.1753 (October 2024).
Natural gas (NG) remains in a major uptrend. The spot-month contract extended the trend to a high of $4.201 during December before closing at $3.514, up 15.1 cents for the month. The next upside target is the high of $4.771, the 38.2% retracement level of its precious major downtrend from $10.028 (August 2022) through the low of $1.522 (February 2024). 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. If so, then the average long position would be roughly $2.406 with sell stops below the previous 4-month low of $2.075 (September 2024).
