S-T Mo Failures Defer Energy Complex Bulls, BUT...

December 8, 2016 2:42AM CST

JAN CRUDE OIL

Before delving into yesterday's short-term technical issues, we'd like to start by reiterating our long-term bullish count introduced in 16-Feb's Technical Blog that contends that Feb's 26.05 low ENDED THE SECULAR BEAR MARKET from May'11's 114.83 high shown in the monthly log scale chart below.  We believe the market to still be in the relatively early stages of a major correction or reversal higher that could still span quarters or even years and could sight the 75-to-95-range.  Furthermore and on the heels of Feb-Jun's impressive, impulsive initial count-trend rally, we believe the lateral, consolidative price action from 09-Jun's 51.67 high could be the "coiling-up" preparation before an ACCELERATED RESUMPTION of this year's earlier rally that will decide the issue by removing all doubt of the market's longer-term bullish intentions.

Crude Light Monthly

The weekly log scale chart below shows the incessantly lateral trading range environment that has gripped the market since 09-Jun's 51.67 high and caused immeasurable angst and frustration with trend-following analysts and traders.  But such environments are not only a fact of trading and market life, they occur about 2/3rds of the time and, we believe, are why even the best traders in the world are right on only about 1/3rd of their trading bets (confirming the identification and manage of risk as THE most important tool in a successful trader's toolbox).

The critical take-away from the past six months' lateral chop is that it is very likely a corrective/consolidative structure that warns of the eventual resumption of Feb-Jun's trendy, impulsive uptrend that preceded it.

Crude Light Weekly

Crude Light Daily

As a result of yesterday's bearish divergence in short-term momentum below our short-term risk parameter defined by 02-Dec's 50.18 corrective low, the 240-min chart below shows that the market has once again stemmed an uptrend.  But this short-term mo failure ONLY allows us to conclude the end of the rally from 29-Nov's 44.82 low.  Against the broader bullish backdrop discussed above and with the market thus failing to retrace even a Fibonacci minimum 38.2% of even the past week-and-a-half's 44.82 - 52.42 intra-range rally, traders are advised to first approach this setback as another corrective buying opportunity ahead of the eventual bust-out above the 52-handle that has thus far contained the bull.

Nonetheless, yesterday's short-term mo failure defines Mon's 52.42 high as one of developing importance and our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed by shorter-term traders with tighter risk profiles.  If our longer-term bullish count is correct however, we would anticipate the market stemming the current relapse attempt with a countering bullish divergence in short-term mo somewhere around the area defined by that 49.38 Fib retrace and former 49.20-area resistance from 22-Nov that now serves as a new support candidate.  We will be watchful for a bullish divergence in short-term mo in the days/week ahead that will provide a favorable risk/reward opportunity for shorter-term traders to objectively re-establish a bullish policy.  Long-term players remain advised to maintain a bullish policy and exposure with a failure below 29-Nov's 44.82 larger-degree corrective low and key risk parameter required to negate this call.

Crude Light 240

JAN HEATING OIL

The technical construct and expectations for diesel are virtually identical to those detailed above in crude oil with Mon's 1.6774 high and 29-Nov's 1.4684 low considered the key directional triggers and risk parameters from which short- and longer-term traders can base and manage their risk of non-bullish and still-bullish policies, respectively.  We suspect that this week's setback following yesterday's bearish divergence in short-term momentum below 1.6239 is another interim corrective buying opportunity within the new secular bull market that will eventually make its presence known with a bust-out above the 1.63-to-1.67-range that has capped this market as resistance since early-Jun.  A commensurately larger-degree momentum failure below 29-Nov's larger-degree corrective low and key risk parameter at 1.4684 remains minimally required to threaten this long-term bullish call.

NY Gasoline 240 min

NY Gasoline Daily

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JAN RBOB

The same holds for Jan RBOB following yesterday's bearish divergence in short-term mo below 1.5152 that defines Mon's 1.5789 high as one of developing importance and our new short-term risk parameter from which non-bullish decisions like long-covers can be objectively based and managed by shorter-term traders.  As this mo failure is of too small a scale to nullify our longer-term bullish count however, longer-term traders remain advised to maintain a bullish policy with a failure below 29-Nov's 1.3638 larger-degree corrective low and key risk parameter required to negate this long-term bullish count.  We will be watchful for a countering bullish divergence in short-term mo from the 1.4967 - 1.4430-range in the days/week ahead to stem the correction and re-expose this year's major uptrend to new and potentially significant highs above 1.58 as part of the major correction or reversal of the 4-year bear market from Apr'12's 3.4278 high to Feb'16's 0.8975 low.

NY Gasoline 240 min

NY Gasoline Daily

NY Gasoline Weekly

NY Gasoline Monthly

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