August 2013 – Andrew Thrasher

Gasoline Prices Hit A Wall

Posted on August 30, 2013 by Andrew Thrasher, CMT

I’ve been keeping a close eye on crude oil ($CL_F) these last few weeks, I had expected $108/barrel to hold as resistance but with the threat of a U.S. air strike in Syria we got a print of $112/barrel – even though Syria’s oil production only represents 0.2% of the global supply. With the pick up in the oil market we’ve seen a somewhat similar rise in the price of spot unleaded gasoline ($RB_F).

The below chart shows the gasoline market going back the last nine months, as you can see it can be quite volatile. The recent price action has taken the spot price to the falling trend line resistance from the February and July highs. We also have the 61.8% retracement between the February high and June low.

Over the last couple of days we have seen an intraday break of the retracement resistance but bulls would need to get a close with the following day confirming the break to get gasoline prices rising higher. On the downside we have the rising trend line that could come into play around $2.95-$3.00 if we do see some weakness over the next couple of days.

As Obama continues to flesh out whether to pull the trigger on Syria we could see large moves as the market tries to digest the relevance and impact out of the violence and unrest in the Middle East.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Gold Advances On Middle East Fears

Posted on August 27, 2013 by Andrew Thrasher, CMT

It seems gold has been catching some bids lately with the stories out of Syria as well as the possible Fed taper take hold of the markets. With gold up nearly 20% from its 2013 low, this is the topic of my TraderPlanet article for this week.

Here’s a piece:

This morning we are seeing a surge in gold prices with the fears of the U.S. attacking Syrian forces. Yesterday I was quoted in MarketWatch as saying $1417 was the level of resistance gold need to break in order for us to have a chance at seeing $1500/oz. I didn’t think we would be testing that level today, but it looks like the fear from the Middle East did the trick.

Read the rest: Gold Advances On Middle East Fears (TraderPlanet)

Will Taper Talk Break This Long-Term Trend Line in Bonds?

Posted on August 26, 2013 by Andrew Thrasher, CMT

There has been a lot of ink spilled over the topic of whether or not the Fed will taper in September. It seems the consensus is for a $20 billion decrease in QE. I’m not completely sold that we will see a tapering in September. If we do I think it’ll be closer to $10 billion as we have already seen a spike in rates, both Treasury and mortgage, and the Fed will likely want to dip its toe in the water before completely jumping into the taper pool. Meanwhile, the bond market is preparing itself for a taper as the 10-year Treasury yield continues to rise.

In June I wrote that the 10-year yield ($TNX) was approaching its 200-week moving average. This MA acted as resistance in 2010 and 2011. Amid the massive outflows from bonds I was looking for a bounce in bond prices (and thus a drop in yield). But it didn’t happen. We saw the 10-year Treasury yield slightly consolidate around the 200MA but taper talk lit the match that took bonds lower and the 10-year yield higher.

With the continued march in yield we are now at a long-term trend line from the 2006 high. This trend line (along with the 200-week moving average) also seemed to stop the rise in yield in ’10 and ’11.

Turning to sentiment data, specifically the latest data from Consensus, the percentage of those bullish on bonds is at 21%, just shy of the low set in 2011 as bonds bottomed out, which was the lowest bullish percentage going back to 2005.

Next week we’ll get the unemployment data and that could be a deciding factor in whether the Fed pulls back a portion of the QE program or if Bernanke keeps his cash helicopter hovering over the financial markets. Going forward I’ll be watching the above trend line and see if the bond market gets any reprieve or if Fed rumors keep the Treasury yield elevated.

A Momentous Break in Momentum for Crude Oil

Posted on August 22, 2013 by Andrew Thrasher, CMT

With the unrest in Egypt, the price of a barrel of oil has stayed elevated. However even with the bullish Flash PMI data out of China this morning, we still aren’t seeing the strength in the oil market as one might expect.

For the last month the price of spot crude oil ($CL_F) has been consolidating around the $108 to $103 area. Looking at the previous declines in crude in 2011 and 2013 we saw similar periods of consolidation before oil corrected to $80/barrel. Taking a closer look at the daily chart below we can see signs of deterioration forming.

When crude first hit resistance at the $108/barrel level in June we saw momentum break above 70 as buyers trekked higher. This was a logical place for black gold to find resistance as it was the high in 2012. From there the consolidation began, with the Relative Strength Index finding support at its halfway point (50) before price knocked on the door of $108 a second time. We then saw the RSI indicator weaken each attempt buyers made to take crude higher. Yesterday we saw RSI break below 50 after two previous attempts, giving us a sign of potential further weakness in oil prices.

Going forward I’m looking to see if $103 is able to break which would also coincide with the 50-day moving average. I’ve also noticed the short-term trend line that J.C. Parets noted in his weekly video last week between the relative performance of crude oil and natural gas is also being tested as nat gas has strengthened and threatened crude’s relative uptrend.

It seems the unrest in Egypt is what is keeping the premium priced into crude oil. Although, the COT data favors a bearish slant towards crude with Commercial Traders heavily shorting the commodity with the largest net-short position going back to at least 2005. If $103 is unable to hold the next level of support would be the psychologically important $100/barrel and then $92/barrel. We’ll see where the market takes crude, but things aren’t looking good for the bulls.

Attempting to Break Resistance in the Copper Market

Posted on August 20, 2013 by Andrew Thrasher, CMT

I’ve discussed the copper ($HG_F) market a few times on the blog. Most notably, we looked at the consolidation late last year, and the bearish setup in February that took the commodity down nearly 25%. Now it appears copper is attempting to break resistance. This is the topic of my latest TraderPlanet article.

Here’s a piece:

With the downtrend from the February high we were able to draw a trend line through the lower high in May (dotted blue line). With the recent price action, copper has been able to break above this trend line and test the May high of $3.40. This also happens to be where the 50% retracement level sits from the prior correction off the February ’13 peak.

Read the rest here: Attempting to Break Resistance in the Copper Market (TraderPlanet)