APR HEATING OIL
Today’s break below last Mon’s 1.0799 low reaffirms the major downtrend and leaves smaller- and larger-degree corrective highs in its wake at 1.2081 and 1.3023, respectively, that now serve as our new short- and longer-term risk parameters from which a still-advised bearish policy can be objectively rebased and managed. The trend is down on all scales with NO levels of any technical merit below it. In effect, there is no support. The ONLY levels of any technical merit currently exists only ABOVE the market in the form of former support-turned-resistance and especially recent corrective highs, the recovery above which is the ONLY thing that will break the major but simple downtrend pattern of lower lows and lower highs.
The weekly (above) and monthly (below) log scale charts show the magnitude of the past few weeks’ historic move that very likely requires a slowdown process before it can ultimately bottom. This process will likely require an interim corrective rebound, another round of new lows thereafter and then a recovery above the high of that corrective rebound before we have the evidence of a prospective end to the carnage. Until and unless such price action is presented or until the market recovers above the risk parameters specified above, further losses remain expected.
In sum, a bearish policy and exposure remain advised with a recovery above at least 1.2081 required to threaten this call and warrant paring or neutralizing exposure. In lieu of such strength, further losses to indeterminable depths remains expected with former 1.1200-area support considered new near-term resistance.
The technical construct of the RBOB market is identical to that detailed above in diesel with today’s resumed meltdown leaving smaller- and larger-degree corrective highs at 1.0195 and 1.2348, respectively, as our new short- and longer-term risk parameters from which a bearish policy and exposure can be objectively rebased and managed.
From a longer-term perspective, we believe there is little doubt that the past three days’ collapse is the market’s forced capitulation of the still-grossly bullishly-skewed and long-&-wrong exposure of the Managed Money community. Fri’s update in our RJO Bullish Sentiment Index reflects Managed Money positions as of the close last Tues, 11-Mar. At a still-whopping 84% reflecting 85K longs to just 16K shorts DESPITE a clear downtrend at that point, this indicator warned of exactly the type of VULNERABILITY to steep, relentless losses that have unfolded.
This sentiment/contrary opinion indicator will move down to historically bearish levels like the Bullish Consensus (marketvane.net) has and will be a critical contributor to the inevitable major bottom and major buying opportunity. But the key technical issue at this time remains MOMENTUM. And until or unless this market recoups a prior corrective high on even a smaller scale, the trend is down and expected to continue.
In sum, a bearish policy and exposure remain advised with a recovery above at least 1.0195 required to flip the script and warrant paring or neutralizing exposure. The market’s remaining downside potential remains indeterminable and potentially severe.