RBOB Blast Nullifies Mo Failure, Reinstates 2016 Bull

November 1, 2016 3:34AM CDT

The market's Alabama pipeline explosion-related recovery above our short-term risk parameter at 1.4880 rendered the sell-off attempt from 21-Oct's 1.5173 high a 3-wave and thus corrective affair that re-exposed this year's major uptrend.  Especially given the magnitude of today's rally, we are now considering yesterday's 1.4105 low as the latest larger-degree corrective low and key long-term risk parameter the market is now required to break to threaten the entire year's uptrend.  In lieu of such sub-1.4105 weakness setback attempts to 1.51-handle-area resistance-turned-support are advised to first be approached as corrective buying opportunities.

NY Gasoline 240 min

NY Gasoline Daily

Despite yesterday's BEARISH divergence in momentum, we discussed in yesterday's Technical Webcast the fact that this market, UNlike crude and heating oil, had yet to fail below former 1.46-to-1.41-handle-area resistance-turned-support shown in the daily log chart above and weekly log chart below.  Obviously, as a result of today's explosive rally, this area played its new role as support terrifically, defining yesterday's 1.4105 low as one of obvious importance as support and a key long-term risk parameter to a bullish policy.

The weekly chart below shows that, understandably, market sentiment levels remain historically frothy that some might misinterpret as a reason to be leery of a broader PEAK/reversal factor.  However, traders are reminded that sentiment is not an applicable technical tool in the absence of a confirmed bearish divergence in momentum needed to, in fact, break the clear and present uptrend.  Herein lies the importance of yesterday's 1.4105 low and key risk parameter.

NY Gasoline Weekly

May's 1.6707 high in the then-prompt Jul contract shown in the monthly log active-continuation chart below cannot be ignored as a resistance candidate, but here again, only a confirmed bearish divergence in momentum will suffice in deferring or threatening a broader bullish count.  This requires a failure below a recent corrective low.  And currently, yesterday's 1.4105 low is the only corrective low that suffices in this risk parameter regard.

We do anticipate an interim setback to former 1.51-handle-area resistance-turned-support as the dust of the past day's events settles, but such a setback is advised to first be approached as a corrective buying opportunity rather than the start of a broader reversal lower.  Weakness below at least former 1.51-handle-area resistance-turned-support and preferably below yesterday's 1.4105 corrective low is required to threaten or negate this resumed bullish policy.  From a very long-term perspective, traders are reminded of our long-term count introduced in Feb that the SECULAR bear market ENDED with Feb's 0.8975 low and that the market was reversing the entire 74% decline from Apr'12's 3.4278 high in a move that could span YEARS.  Yesterday's rally does noting to distract from this call.

NY Gasoline Monthly

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