02/18/2017 Weekend Update

[Cobra]

Smart money covered a little bit this week. The short is not extreme yet so should still be some up rooms.


How I use the chart:

I don't care what's the logic behind the chart. I found it works in the following two cases:

1.) When market up huge, if I see smart money huge short, best if new record short, then I know a short-term pullback is due soon.
2.) When market down, if I see smart money suddenly rises sharply from very negative value, then I know the pullback was over.

So I only use this chart for the above 2 cases. Besides those 2 cases, it means nothing to me. i.e. the absolute value of this chart means nothing to me, I only care if it rises sharply or drops sharply.

[Cobra]

don't forget our weekly sentiment poll here: viewtopic.php?f=9&t=2365

[Cobra]

The next week's stock picks are here:
viewtopic.php?f=10&t=2367

[Trades with cats]

Oil- The narrative is getting complicated.
What is Known. US has an all time record amount of crude in storage. I know I am a broken record but we have 30 million more barrels in the tank then we did a year ago and the price is double what it was, what a fantastic job by OPEC. Last week we imported less than normal by around a half million barrels a day. We exported a million barrels a day. All I know is Venezuela likes our distillates just like Canada does for cutting their heavy crude. So imports down exports up and we still have a monster build. Refinery run rates dropped hard and the crack spread is looking pretty bad so the reports imply demand is softening fast for now. I remember crack spreads going essentially negative and watching Valero like a hawk.

Shale well the Wall Street Journal has a big piece out today on how this is getting difficult because costs are going up. I read elsewhere that estimated shale production is based on models derived from prior year production. So there is a reasonable chance shale production is actually noticeably higher than what the government is estimating. Where ever the truth is the rig count just keeps on going up and wall street just keeps throwing more billions into the shale patch.

Hedge Funds increased their WTI long position to a new record but I am waiting for John Kemp at Reuters to put out his consolidated chart that includes Brent and combines all three major exchanges.

Gasoline Demand. Again the Wall Street Journal saying what everybody else has been saying for weeks that demand is dropping. Goldman reminded us a week or so ago that big drop in demand is a sure sign of recession so I am positive we will be reading more about this in the future.

Finally the Grand Prize. Early this week we read that outside engineers were confirming ARAMCO reserves. Wall Street Journal says the major underwriting has been awarded to House of Morgan. But they also said untangling ARAMCO from the Kingdom is more complicated than they thought possibly delaying the IPO. Never forget we are watching the largest IPO in history and anyone who thinks Saudi won't slice even more production to make this thing go in 2018 is being foolish. On the other hand there will be plenty of plot twists (and price spikes) between hear and there. A record long position by hedge funds at the most negative part of the price cycle is a very tempting target and think of the money Da Boyz will make as they ride it back up to the Saudi price.

[Trades with cats]

Nat Gas Our exports are starting to show up in the draw numbers. What should have been a disaster was not. See John Kemps outstanding and easy to read charts http://fingfx.thomsonreuters.com/gfx/ce ... CATORS.pdf.
But it looks like you need to follow more than weather. World wide LNG train construction status as well as tanker capacity is going to have a noticeable effect on US pricing. At least one new train is under construction and there are a half dozen permits in process. Without picking political sides I think it is safe to say that the permits will start moving faster.

The minimum demand season this spring will be very telling. If exports and depletion really have got us back into the middle of the 5 year inventory curve then a hot summer with some hurricanes shutting down the gulf platforms could bring this market back from the dead. My wife has royalty interests that have been in the family for 50 years or more. So that gives me a longer term perspective. Or put another way What Fracking and Chesapeake Energy took away LNG export trains will restore, I hope.

[BullBear52x]

It is what it is department:

The question is.....bull flag breakout or 2x Top? Trend is up buy will continue on trend following trading. counter trend still on a defensive here.

[BullBear52x]

Dollar, $WTIC, and USO are all over the places. make it hard to trade based on common wisdom.

$USD/$WTIC not opposite force any more.

$WTIC/USO were not in the same TA alignment for a long time now.

Intraday trading on /CL, I see a trade lower than 53.3 will change to more bearish view but last Friday ramp up at the closed I don't see it will give in any time soon. 53 to 53.3 will be a big fight for bulls and ears alike. short term on USO, this is un-tradable, why waste energy on it?

[BullBear52x]

GLD hit a historical resistance, short term is in a consolidation phase, next week should tell, a breakout either side should take place.

[tsf]

Thank you, BB52X
Given your short-term indecision, roughly how many of your signals suggest continued up, how many suggest reversal down, and how many are for cash?

It is what it is department:

The question is.....bull flag breakout or 2x Top? Trend is up buy will continue on trend following trading. counter trend still on a defensive here.

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[BullBear52x]

Thank you, BB52X
Given your short-term indecision, roughly how many of your signals suggest continued up, how many suggest reversal down, and how many are for cash?

It is what it is department:

The question is.....bull flag breakout or 2x Top? Trend is up buy will continue on trend following trading. counter trend still on a defensive here.

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Mid term buy with stop(swing over night holding for days)
Long term buy with stop ( buy/sell and pretend dead for months)
short term 5min. stay in cash. this time frame could change daily I use it as a guidance to day trading planing.

[daytradingES]

Oil-
Gasoline Demand. Again the Wall Street Journal saying what everybody else has been saying for weeks that demand is dropping. Goldman reminded us a week or so ago that big drop in demand is a sure sign of recession so I am positive we will be reading more about this in the future.

twC

did you read the article at ZH that NYC is actually EXPORTING gasoline because they are so over-loaded they have nowhere to put it?

First time in 26(?) yrs.

So why do I highlight this? Well last Wed a week ago there was a massive inventory Cl build - and they explained it away with "well gasoline" stocks are down slightly (ergo strong economy ergo more horseradish...) . The reality has nothing to do with the Saudi spin via US MSM Very fake news services.

[TraderJoe]

Where is mr. miyagi ???????????
I miss him

[Al_Dente]

"Who ya gonna believe, me or your own eyes?" [Groucho Marx]

60m, short term, not intraday
IWM bulls did everything right and passed all the tests: breakout above the horizontal channel, successful backtest, higher lows and higher highs.
It’s now on track to push up to the target 142 zone.
First downside support is at the breakout zone of 137. Bulls don’t want it to drop back into the evil horizontal range. If it does, plenty of bulls will reverse.

$OEX (not on this chart) made another ATH Friday, indicating that this rally leg is still driven by large caps.
So it’s touch-and-go for IWM small caps, but the short-term bulls have the TA advantage at the moment.

$SKEW at 141.13 says that the pros are actively hedging again. With so many indicators at extremes, just ask yourself this question:
If you managed $billions, wouldn't you hedge right about here?

[BullBear52x]

$USD/UUP Long term = Buy.

Mid term = Buy

Short term is hitting a 5 DMA resistance. a penny higher from Friday's HOD, screaming buy it is.....

[BullBear52x]

"Who ya gonna believe, me or your own eyes?" [Groucho Marx]

60m, short term, not intraday
IWM bulls did everything right and passed all the tests: breakout above the horizontal channel, successful backtest, higher lows and higher highs.
It’s now on track to push up to the target 142 zone.
First downside support is at the breakout zone of 137. Bulls don’t want it to drop back into the evil horizontal range. If it does, plenty of bulls will reverse.

$OEX (not on this chart) made another ATH Friday, indicating that this rally leg is still driven by large caps.
So it’s touch-and-go for IWM small caps, but the short-term bulls have the TA advantage at the moment.

$SKEW at 141.13 says that the pros are actively hedging again. With so many indicators at extremes, just ask yourself this question:
If you managed $billions, wouldn't you hedge right about here?

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Down volume is strong on over bought area, be careful it is...