Seeking Alpha

Robert Edwards'  Instablog

Robert Edwards
Send Message
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
View Robert Edwards' Instablogs on:
  • Natural Gas Is Cheap While Crude Oil Is Booming

    Natural Gas Is Cheap

    If you check out the forecasted price of natural gas at www.forecasts.org, you will see that they are now predicting an increase in prices going forward over the next six months, click here. That should not come as a surprise since natural gas is trading at historical low prices. Here is a weekly chart of June Natural Gas futures:

    Over the last 10 weeks, June Natural Gas has alternated closing up/down/up/down/up/down/up/down/up/down. That would make next week an up week, right? Maybe. In any case we are not making any real progress to the downside, even though many have been predicting a major washout. So far, so good. If you look at where we traded in natural gas, in May 2014 and in May 2013, prices remained bouncy and going long in April paid off. However, during both of the last two years, after showing some strength into the middle of June, there was still a selloff going into July. I would expect that scalping long in natural gas futures should work well until the middle of June 2015, similar to what happened the last couple years. I am long June Natural Gas futures from 3.570.

    For those trading in the triple leveraged natural gas ETN (NYSEARCA:UGAZ), here is the daily chart:

    (click to enlarge)

    Even though UGAZ is continuing to work sideways to lower, scale buying down to $1.80 should work out, as it should be followed by a bounce back of 20 to 40 cents. If we then fall back to $1.80, one can buy with confidence and buy even more on a dip to $1.60, and then play for a move back to $2.00. Buying dips under $2.00 should work well if one scale in buys and takes profits on rallies back towards $2.00+, between now and the middle of June.

    (click to enlarge)

    This is the natural gas producers ETF (NYSEARCA:FCG) that I recommended from $10 to $11. When we rallied recently above $12, I recommended a week ago to take profits and buy again on dips. So far we have fallen back towards the $11.50s. I would pick some up in here and add more on a dip close to $11 again. Scale in buying in FCG should also work out well as we should work sideways to higher in the next couple months. The recent low was $9.70 and high was $12.43. A 38% Fibonacci retracement would be $11.39, while a 50% Fib retracement would be $11.06. Buying on dips towards $11 should work out well.

    Crude Oil Is Booming

    Over the past five weeks June Crude Oil has been in an uptrend. However, the high for the move was scored 7 trading days back, at $58.82. It appears we are hitting into resistance just under $60. For now, it is unlikely that June Crude Oil can move higher than the $60 to $65 level without correcting first. But even though we may see a pullback next week. I still prefer playing the long side of the triple leveraged crude oil ETN (NYSEARCA:UWTI) rather than dabbling with DWTI. There is a very good chance that the bottom is in already in crude oil, and the lowest we will probably trade for the remainder of 2015, is the $40 to $45 level. Don't be surprised if we never trade below $50 for the remainder of the year. Low prices are bringing in demand that over time should more than sap up the excess supply.

    The recent low in June Crude Oil was $45.93 and the high that followed was $58.82. That was a $12.89 rally and 28% move off the low. Now that we are hitting resistance, we could easily slip back to a 38% Fibonacci retracement level of $53.92. A 50% retracement in crude oil would be $52.37.

    (click to enlarge)

    The recent low of UWTI (chart shown above) is $1.79 and high is $3.59, so UWTI doubled in value off the low. A 38% Fib correction would be $2.91 and a 50% Fib correction would be $2.69. I like buying all dips in UWTI, especially if I can buy in the $2.91 to $3.05 support area.

    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.

    Apr 26 3:28 PM | Link | 4 Comments
  • Gold Is Down But Not Out!

    With today's plunge in June Gold futures, below stops at $1178, it is looking pretty bleak for gold and most of the miners today. I say most miners but not all, because Newmont (NYSE:NEM), just reported some great earnings and the stock is rallying strongly today, click here. Well, I was sad to see support again broken in gold, but happy to be able to again buy at bargain basement prices.

    Gold Is At Levels Where It Has Previously Bottomed!

    Ned Schmidt is recommending the buying of gold now, click here. The article concludes that the price of gold vs. the price of stocks, is at an extreme. Either gold is too cheap and will need to begin a strong rally soon, or stocks are extremely overvalued and need to crash lower shortly, or both! They have stretched the rubber band so far, it is likely to soon snap! When it does, do not be surprised to see stocks top out, and see gold bottom. Gold metal topped out in September 2011 and then started a major bear market. Gold stocks topped out a few months prior to the metal, so the bear market in stocks will hit the four year mark this summer. Out of like 8 bear markets in gold stocks in the past 50 years, there is only one other time we went this long before bottoming. It is highly likely that even if we do not rally much for a few months longer, we have probably already seen the lowest price level in the gold mining stock ETFs of GDX (Majors) and GDXJ (Juniors). Newmont is now trading above $25, a long way from the bottom hit in December 2014 of $17.58. Surely Newmont has already bottomed. Another of my favorites IamGold (NYSE:IAG), it has also seen the worst already when it hit bottom at $1.42 in early November 2014. IAG should continue to be a steal under $2, and eventually should retake $5, $10, and much higher price levels.

    The same could even be true for gold, that it too probably saw the low when it hit $1133 back in early November 2014. If I am wrong, then we could get a final capitulation low into the $1090s and maybe as low as $1068 to $1075. However, don't count on it. If you should see any trading occur below $1133 or under $1100, count yourself extremely lucky and be buying as you should be very happy for doing so. I can't say we have hit bottom as no real sign of a bottom has been yet established on the charts. However, I know when a market is ripe for a bottom and gold is extremely ripe for a bottom. If gold was a banana the color would be a very dark black! I base that on how ripe gold is to see a bottom.

    (Note: Speaking of black gold, it is looking more and more like Crude Oil has bottomed. I was right about calling the bottom when it occurred in real time, and I feel fairly certain that within the next weeks or months, I will get a similar buy signal in gold).

    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: GLD, GDX, GDXJ
    Apr 24 2:04 PM | Link | 5 Comments
  • What Does Friday's Action In The Emini Dow Futures Foretell For The Coming Week?

    On Friday, April 17, 2015, the Dow Jones fell 374 points before bouncing over 100 points off the low to close down 271 points (see the above daily chart of the June Emini Dow Jones Futures). I am a technician who likes looking for similar price action and patterns in the recent past. I call them "doppelgangers" as it is like finding your twin. What happened the last time such a pattern was struck, could give a hint for the future. More on that in a minute.

    For over 2 weeks, the stock market and thus the June Emini Dow Jones futures, had been in a nice uptrend. But then came Friday when in a single day, we fell to price levels not seen in 2 weeks. This action formed a triple top. The first top was at 18188 on March 2nd. The next top was at 18126 on March 23rd. On Thursday we made the third top at 18093. The last couple times we failed to make a new high. In March we dipped to a low of around 17550, but then in early April dipped to just under 17500. I expect to see a marginal new low soon a bit further below 17500 as a downward channel is being formed.

    Now, the last time we topped out (just 3 1/2 weeks ago), it was followed by a hard smackdown day, (March 25th). That is the doppelganger to the candlestick formed on Friday, April 17th. The next trading day the Dow made the low below 17500. I expect that Monday of this coming week, we could see a similar carry through to the downside. However, if we should fall closer to the 17500 area, it should find some temporary support and should bounce.

    There is an alternate scenario, a Monday rally. Back on March 6th, a few days after the first top was formed, we got a hard smackdown day making a new low going back a couple weeks again. However, that time there was a rally of over 50% off the lows the following day. But then the next day we saw another hard smackdown day.

    Thus, if Monday should be a nice snapback rally day, don't be surprised if Tuesday, April 21st we see another hard selloff with a bottom coming on Wednesday. The fact that we ended up closing over 100 points off the low on Friday, increases the chances that Monday is an up day. But even if Monday is higher, we should continue lower for Tuesday and into Wednesday where a short-term low can be expected.

    In Summary, I am recommending selling into any strength seen early in the week, as we should either go lower by the end of trading on Monday, or go lower on Tuesday and Wednesday if Monday is an up day. Will be fun to see if I am right in my price action guess.

    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.

    Apr 20 12:07 AM | Link | 2 Comments
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.