A daring leap sideways: In these times of economic uncertainty, the global oil market continues to boldly go where long time bulls, bears and trend followers fear to go, sideways. Where is the action, people? Wake up! Bulls are frustrated, bears are frustrated and those pesky day traders are having the time of their life.
Right now the oil market continues to show signs of stability. Yikes stability! What fun is that? Last Friday oil prices closed at 7038 and as I write this after a week with a big time major league Fed announcement, global GDP figures and enough macro-economic and global oil supply and demand data that would make even a number crunching junkie's mouth water, oil is just a measly 30 cents lower than where it closed last Friday. Let's face it oil cannot make a commitment as it is trying to decide whether or not the economy is recovering and whether or not that possible recovery is going to mean that the next big move in oil will be up or down.
Now we all know that recession in the first person such as our recession or my recession is so much more painful versus a recession in the second person such as their recession which is much more palatable. On the other hand, recovery in the first person sounds so much better than recovery in the second. Yet whether you believe the world economies can decouple or are we all in this together, a day after the Fed said the US economy is leveling out so too it seems France and Germany are coming out of recession. Germany posted a better than expected 0.3% quarter on quarter increase in the in the period, following a -3.5% quarterly decline in 1 quarter. The French GDP was up by 0.3% quarter on quarter after falling by 1.3%. This gave the oil bulls hope that perhaps we would see demand for oil come soaring back globally soon.
Yet that optimism became a bit subdued after a clunker of a retail sales report. I guess you can't junk your way out of a recession. Even after giving cash for junk, auto sales only rose by 2.4 per cent in July. What? The Commerce Department said that overall U.S. retail sales fell 0.1 percent in July after gaining a revised 0.8 percent the prior month. I guess you can't clunk yourself out of a recession. Or is it that you cannot clunker your way to prosperity.
Bottom line is oil is undecided with mixed expectations for global demand and rising supply oil is torn I still feel that the next big move is down.
One well known trader is very bearish. Old school Elliot Wave surfer dude Robert Prechter, famous for predicting the 1987 stock-market crash, says that crude oil may go to less than $10 a barrel in the next decade. According to Bloomberg News Prechter says, It took many years for it to achieve $147.50, and it will take a long while for the full retreat to occur. Oil should fall to between $4 and $10 a barrel based on a technical analysis called Elliott Wave principle. The forecast rests on a supercycle theory, which through a series of five waves from last century suggests a decline from last year's peak. Bloomberg says that crude oil in New York reached a record in July before tumbling to $33.20 on Jan. 15 on expectations the global recession will sap demand for fuels. Oil has since more than doubled to $70.70 a barrel in New York. Brent oil rose to an all-time high of $147.50 on July 11, 2008. The Elliott-Wave picture pretty much assures us that there will be no additional waves of advance to extend the peak oil mania. On the contrary, if five waves are complete from the early 1990s, oil should fall to between $4 and $10 a barrel, which, needless to say, supports our deflationary outlook.
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We're short Sept crude from apprx 7150 - stop 7390.
Sell September heating oil 19700 - stop 20000.
Sell September RBOB 20750 - lower stop 21000.
Sell September natural gas at 470 - stop 480
The Dan Flynn Corn & Ethanol Report
The December Corn settled at 392 1/4 which was down 2 3/4 cents after yesterdays fireworks.
Stocks are coming in Steadyto higher and the U.S. Dollar trading lower as I write.
I expect a major move to the upside in commodity futures is blossoming.
We should see this in Corn Market after harvest time.
On the Energy Front September Crude continues the rangebound trade between $72 and $70.
I still expect a break to the downside.