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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
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  • Despite Current Crude Oil Weakness, Still Prefer UWTI Over DWTI

    The above daily crude oil chart was posted by David Becker in a technical analysis article posted on FXEMPIRE, click here. In the article they mention the next support is $48.50. Is this a valid price target? Well, if you look to the early February 2015 rally, you will see that August Crude Oil stopped rallying then when it hit $59.17 on February 3rd. Then it dropped to as low as $48.71 on March 18th, a drop of $10.47 (17.7%). Next we topped out at $64.12 on May 6th, and if we fall a similar 17.7%, we would bottom $11.35 lower, or $52.77. To me, $52.77 is a more reasonable target than $48.50.

    On Thursday, July 2nd, August Crude Oil hit a low of $56.50 which happens to be just one penny below the $56.51 low that July Crude Oil hit on May 28th. However, on Friday, July 3rd, although most markets were closed, crude oil traded until 1:00 p.m. EST on the Globex, and closed just off the daily low of $55.42. Many factors contributed to the weakness, the Greek vote on Sunday, the small increase in the rig count, and a bearish inventory report on Wednesday. Counting Friday, August Crude Oil has traded 8 days in the current downtrend, and a typical count is 9 to 12 days. I do expect for a bounce soon, but we could slip early next week first. Due to the Greece vote, I took profits in the triple leveraged Crude Oil ETF (NYSEARCA:UWTI) on Thursday's early strength and have stayed out of the market since.

    I am looking for no more than a 7% drop in crude oil, lower than we saw on Thursday when UWTI was still trading. Being triple leveraged that would translate to a 21% drop in UWTI from $2.80 down to as low as $2.21. Here is a daily chart of UWTI:

    (click to enlarge)

    We could bounce from $2.60 and $2.40, even if we ultimately see $2.20 and again, I still want to play UWTI over DWTI, as once we bottom, we should eventually work our way back to the $65 to $70 area in crude oil, which is 15% to 24% higher than Thursday's lows. Adding 45% to 72% to the $2.80 price, UWTI could rally to $4 to $4.80. Factoring in some slippage, you would still get $3.75 to $4.50 as a reasonable price target once crude oil bottoms.

    For those who are long UWTI at $3, it might seem alarming to think UWTI could fall to $2.20, but if you realize that we have rallied in UWTI after every 20 cent move lower, one should be comforted. From the top, we first stopped at $3.40, and rallied back to $4. Next stop down was $3.20, which caused a rally back to over $3.70. Then we stopped twice at $3.00, rallying first to 3.80 and next to $3.75. Last Wednesday we fell to just above $2.80, and got a quick Thursday pop back to $3.02. With the weakness seen on Friday, I expect to see UWTI hit $2.60 on Monday but we could bounce from there. We are 8 days into the current downtrend in crude oil and most of the time we don't work lower than 10 days (2 weeks) at a time without showing some significant strength for at least a few days.

    To follow along as we trade crude oil , gold, natural gas (NYSEARCA:UGAZ) and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. Again, it is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: UWTI, DWTI
    Jul 04 2:11 PM | Link | Comment!
  • Natural Gas Is About To Trigger A Major Long Term Buy Signal

    Natural Gas Is About To Take Out A Down-sloping Trendline

    In doing my research I came across this article by David Becker at FXEMPIRE, click here. What is amazing to see was the weekly chart going back 4 years. I will repeat the chart here:

    On the above weekly natural gas chart is drawn a downward sloping trendline starting from the February 2014 high of $6.483, retouched 9 months later at just above $4.50 in November 2014 and now about to be broken sometime in July. Counting out another 9 months from late November 2014, one could project another high in late August 2015.

    If we can rally in natural gas back above $3, we could easily pop back towards $4 or higher, based on the Fibonacci retracement levels mentioned in the article. However, we will break the downward sloping trendline if we can just maintain the mid $2.80s in the next couple weeks.

    Being Bullish On Natural Gas Is The Contrarian View

    Check out this video by Christopher Lewis at FXEMPIRE, click here. He is very bearish and telling traders to sell all rallies. I would agree with him somewhat as long as we do not trade above the $3.00 to $3.17 resistance levels. However, if we start moving above $3.25, a major low could be in and much, much higher prices are in store. I have been buying natural gas dips through futures as well as buying UGAZ, but turning to shorting futures or buying DGAZ as we approach resistance in the $2.85 level and higher prices. That has worked out well so far. However, that could soon change and one needs to be cautious shorting into a hole.

    Higher Natural Gas Prices Are Now In The Forecast

    At www.forecasts.org, click here, they are looking for just marginally higher natural gas prices through the summer but a larger rally in October and November of this year as we approach winter. In any case, one needs to favor owning the triple leveraged bullish natural gas ETN (NYSEARCA:UGAZ) over the bearish triple leveraged natural gas TN (NYSEARCA:DGAZ), in my opinion. Especially one needs to be careful about being short if we again move back above $3.00.

    Summary

    Sometimes it is nice to step back and get a look at the big picture. I cannot emphasize enough the importance for natural gas bulls, of breaking that downward sloping trendline. The bullish ramifications could be immense. This could be the last time natural gas trades at current prices for several years, perhaps in our lifetimes. We could be looking at a generational buy in natural gas right now. With the advent of exporting liquid natural gas (NYSEMKT:LNG) later this year, domestic natural gas prices should gradually increase closer to the much higher international natural gas prices. Here is a chart showing world natural gas prices posted by Mark J. Perry, a year ago, click here. Other countries are lucky to pay double the prices we pay for natural gas. A majority of countries pay 3 1/2 to 4 times our prices. As we go forward $4 will be considered a bargain low natural gas price, with $3 a back up the truck and buy, bottom!

    To follow along as we trade gold and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. Again, it is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Jul 04 6:13 AM | Link | Comment!
  • Stay Away From The Beaten Down Coal Names, But Look To Coal Terminal Owners Instead

    I did some research on coal companies and decided that even though many were just going for small fractions of their book values, the sector is showing no signs of bottoming and are too risky to own. Making money with coal stocks right now, even the big names, is not as bad of odds as one would face trying to get rich from buying lottery tickets. But it might be pretty close.

    However, in my search I did run across one article that pointed out a couple companies that showed some promise. Aaron Levitt suggested owning coal terminal owners instead of the coal names themselves, click here. He recommended Kinder Morgan (NYSE:KMI) and CONSOL Energy (NYSE:CNX).

    Kinder Morgan, Inc.

    (click to enlarge)

    The above weekly chart shows Kinder Morgan is trading near an excellent support level of $38. It could briefly spike down to the low $36s like it did last December, but all dips look to be a buy. The stock offers a nice dividend and also has appreciation potential.

    CONSOL Energy, Inc.

    (click to enlarge)

    By owning its own export terminal at Baltimore Marine, CNX does not need to pay terminal fees to another company. Other coal companies are paying them. Also David Einhorn is getting involved, click here. I love to trade stocks where David Einhorn is involved as they tend to be quite volatile. Looking at the above chart, it is apparent that CNX is washed out at $22. Previously the stock bounced $10 from $32 to $42 last fall. Early this year CNX saw a 3 week bounce from $28 to $34, followed by a 3 week selloff to $26. Then it took 8 weeks to get to $34. The past 7 weeks have been straight down. It could keep falling so don't jump in immediately on Monday morning but watch this stock for stability. It should find some soon. Getting David Einhorn's endorsement won't hurt. This stock interests me because it is a real mover, both to the upside and especially to the downside recently. Again, this is definitely one to watch!

    To follow along as we trade gold and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    Today I sent out my fourth issue of my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. It is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: KMI, CNX
    Jun 27 3:30 PM | Link | Comment!
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