Brent crude (QA) still looks to be in a major (long-term) 3-wave downtrend. However, the spot-month contract spent the month of January consolidating within the December range meaning a test of the December low of $75.11 during February could be enough to pull monthly stochastics below the oversold level of 20%. Once that happens, a bullish crossover would be the signal the market could soon move into a new 5-wave major uptrend. Theoretical Positions: Short from the June close of $114.81 possibly. If not, shorts could’ve been established at the July close of $103.97 after the spot-month contract posted a new 4-month low below $96.95. These short positions may have been lifted with the the December move below the target price of $76.50. If not, they could be lifted on the next test of that mark.
WTI crude oil (CL) looks to be nearing the end of its major 3-wave downtrend. The December low of $70.08 continues to hold with the spot-month contract consolidating during January and monthly stochastics approaching the oversold level of 20%. Theoretical Positions: Short from the June close of 105.76 based on a bearish 2-month reversal. New or additional short positions could be near the July close of $98.62 based on the spot-month contract posting a new 4-month low below $92.93. These shorts were possibly lifted with a test of the 50% retracement target of $73.57 in both December and January. If not, that would be the target for buying shorts back during February.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) is still showing signs of a major 3-wave downtrend. Seasonally the market has turned bullish meaning a move to a short-term downtrend within the secondary uptrend could create a long-term buying opportunity. Theoretical Positions: If not already long based on secondary trend signals and seasonality, buy orders could be placed near the downside target of $2.7647.
RBOB gasoline (RB) posted a bullish spike reversal during December meaning the major trend looks to have turned up. Theoretical Positions: Short positions from the June close of $3.5363 should be covered near the December close of $2.4783 for a gain of $1.058. New longs could’ve been established at the same price, with stops below the December low of $2.0204.
Natural gas (NG) extended its major 3-wave downtrend to a low of $2.612 during January, its lowest mark since January 2021. Monthly stochaistcs are deep in oversold territory, though this has not generated buying interest yet. Theoretical Positions: None.
