Energy Has Found its Resistance Level …

I wrote two pieces about energy stocks and crude oil prices back on August 29th (click here) and on September 14th (click here).  The call on crude oil and energy stocks were pretty good if I do say so myself.  Both crude and energy stocks are at areas where I think they have found obvious levels of resistance.

Crude Oil Futures Contract – Daily Chart

Crude has made a beautiful 3-wave price structure out of a downward broadening price pattern.  My software is painting dark blue extreme trend strength warning candles with pink divergence dots right as price has pushed into the 1.272x – 1.618x extension target zone for Wave 3.  As good a spot for crude to begin a corrective pull-back price structure as any.

S&P Energy Index ETF (XLE) – Daily Chart

As I suggested back in late August, energy stocks made it all the way up into the median line of the upward sloping weekly broadening price pattern.  Crude and energy stocks are going to crush a lot of dreams here over the next couple of weeks I would think.

Cheers … Leaf_West


Has the Next Leg for Bonds Begun? …

When you look at the weekly chart for bonds, you have to think that maybe, just maybe, the great Central Bank manipulation to global interest rates is coming close to the beginning of the Great Unwind.  Here are some weekly charts to ponder …

20-Plus Year US Bond ETF (TLT) – Weekly Chart

Price is still contained within the weekly downward broadening price pattern … we are in the middle of the 7th consecutive “contraction” warning signaled by my software painting the weekly candles yellow.  What follows contraction?  Typically it is a new expansion phase …

The Price Momentum indicator has shown that price has been in a squeeze for 16 consecutive weeks, which is pretty unreal, and almost all bond portfolio managers are likely fast asleep at the wheel and not prepared for what is going to happen next.

The Moving Average Spread Indicator is looking like it wants to make a second, lower cross-over, which typically is the sweet spot where the best shorts are made.

Where is support for price inside the weekly broadening pattern?  It is around $106.50ish … which is about 14% lower than yesterday’s close.

What would a 14% drop in bonds mean for all those equity holders who are maxed out with their margin accounts??  Probably a little bit of pain!!

Cheers … Leaf_West

Crude is Right Near the End of this 3-Wave Structure …

Lots of people waking up to the move that crude and energy stocks have made since I talked about a possible swing low in energy stocks back on August 29th (see post here and here).  Like happens often, the market pundits and talking heads starting recommending the sector as we push into resistance levels/zones (i.e., the SLOT).  Here is how I see the charts …

Crude Futures – Daily Chart

Crude is pushing right into the measured 1.272x target for the 3rd wave of the move coming off of the low made this past summer … I see 3 nice waves to the move and three minor waves in the bigger wave 2 and the terminating wave 3.

So for traders that don’t trade crude futures, how do they capitalize on this end to what could be only the first leg higher in crude in a bigger commodity rally that could play out over the next several years?

S&P Energy Sector – Daily Chart

The light blue warning candles that my software is painting, warns traders of an extended move in price away from the slower moving averages … the “return to the mean” effect is telling traders to take profits here in the short-term and/or sell some short-dated at-the-money or near-the-money calls for XLE or ERX the leveraged bullish ETFs for the energy sector.

3x Bullish Leveraged Energy Sector ETF – Daily Chart

The January monthly $40 calls for ERX can be sold for just under a dollar today …. I will look to sell some of these as well as looking for intra-day moves to the downside, as the intra-day moves lower are likely to be bigger than the shorter-term moves higher.

Cheers … Leaf_West

Today will Be a “Fade the Highs” Kind of Day …

I always try to get a sense of what type of day it is possibly going to be well before the start to the start of the regular cash trading session.  Today it looks like the NASDQ will be the kind of market where it will be ok to try and fade any push to new highs after the opening.

NASDQ Futures Contract (NQ) – 7 & 12 Vision Renko Charts

The bigger time frame charts are in a nice bullish trending position … we have now recorded a negative divergence signal on the 12 Renko chart, and we have pushed above the 1.0x Standard Deviation level on price momentum for the 7 Renko chart.  To me that 6617.50 level is likely going to be the high for today and probably for the rest of the week.  To me that means it will make more sense to try and look for short entries intra-day today and possibly tomorrow.  Longs will probably only work on larger oversold intra-day signals …

NASDQ Futures Contract (NQ) – 2 Vision Renko Chart

The 2 Renko chart painted some dark blue candles with pink divergence dots … this is another good sign that the pre-cash session highs are likely the high for today.

Cheers … Leaf_West


AMZN – Which Way for the Next Positional Trade??

I did well trading AMZN last year for what I thought were possible 3-5 day bullish moves.  I typically look for expansion phases that are beginning or about to begin when I have looked for these bullish moves.  Here is what I am seeing currently …

AMZN – Daily Chart 

The daily chart has set-up what looks like at first glance a nice bullish consolidation pattern (a pennant or wedge).  The Trend Strength histogram has pulled back from an extreme trend strength warning, and is now in a spot that gives better odds to an expansion phase beginning.  The Relative Strength indicator on the right shows that R/S is also making a bullish consolidation pattern similar to price … so all is fine for bulls to play for a 3-5 day move higher here in early 2018 right?  Well, don’t forget to check your odds of the daily chart pattern with the weekly chart …

AMZN – Weekly Chart 

The best daily chart setups occur when the weekly chart is pushing in the same direction.  Can we say that here with AMZN?  Actually, I think that odds of a relatively big daily chart move to the upside are not great odds wise here in early 2018.  The price momentum on the weekly chart is relatively stretched to the upside so the weekly chart could actually be losing steam here early in 2018.

That weekly chart could lead to chop on the daily chart, while the bigger time frame consolidates and builds up energy for the next push higher.  All-in-all, I think I will stick to intra-day trading AMZN here early in 2018, both to the upside and to the downside as well when the charts are lined up for a good intra-day move.

Always try and confirm the daily chart with the weekly when considering multi-day positions.  If you are trying to swing a trade positon for several weeks, then that monthly chart has to give you the go-ahead as well.

Cheers … Leaf_West

AAPL … Looks like a Year-End Ramp Job!

Today is the “triple witching” expiration date where index options and futures expire along with stock options.  Once we get this behind us, institutional managers are free to ramp their favorite stocks into year-end.

One of the stocks that I own call options on into Dec 29th expiry is AAPL …

AAPL – 195 Minute Chart #1

To me it looks like the third wave of a 3-wave price structure is about to officially break the ATR resistance level and “signal” the beginning of the final push into year-end.  $180 is my target … the market likes nice round numbers in part because of stock option strike prices.

AAPL – 195 Minute Chart #2

The Trend Strength histogram looks like it has completed the majority of its consolidation/pullback into the Chop Zone, and that should allow price to make its next push higher.

Price Momentum and the Moving Average Spread Indicators look like they are in a good position as well to get long AAPL into year-end.

Bottom Line – All that we need now is for Trump to not fuck up the last push into year-end!!

Cheers … Leaf_West