Monday, November 03, 2014

Shits n'Giggles: Crude Oil (USO) and Natural Gas (UNG)

I have recommendations appear on my weekend commodities report but I'm not always able to get around to writing it, this past weekend being a perfect example. I had a 14 shift at the care home yesterday after 12 hours on saturday and wasn't in any kind of mood to write. Today I still feel exhausted and I have medical board exams that I still need to be studying for! I think I'm just going to take it easy and maybe do some practice problems later on as well as go for a jog, but I just can't review 'hardcore' today.

I have said in the past that "the world is becoming an increasingly interesting place to be." After a summer with the invasion of the Ukraine this past week the Central Bank of Japan in 5 to 4 decision decided to increase the size of it's quantitative easing program. This was a shock to many as the meeting took place in secret and happened at midnight. The timing couldn't have been more perfect. The first half of October hasn't been kind to equities with broad sharp declines occurring across the board. The S&P broke a very important long term support level, but with this announcement bullishness has returned to the market. The effects have been numerous, but none more so that precious metals and precious metals companies (which I urged all of you to "short).

While the market resolves this move by the Japanese I'm looking towards other opportunities such as a my new recommendation to short crude oil (USO), currently at a critical long term support, and placing a "buy" recommendation on natural gas (UNG).

Shits: United States Oil Fund (USO) 
USO on the daily chart is making a declining triangle pattern that seems poised to fall to the support of the lower channel line. The monthly chart looks hopeless - falling below my horizontal support line at about $29.00 means the next stop is about $22.00 to $23.00. The reasons for this are of course politics. Saudi Arabia is currently punishing both Russia (in league with the U.S. over the Ukraine debacle) and to punish American shale production.

USO: United States Oil Fund, daily time period.
USO: United States Oil Fund, weekly time period.
USO: United States Oil Fund, monthly time period.

Giggles: U.S. Natural Gas Fund (UNG)
Heating season has also begun. Weather has been favorable for harvests in the U.S. but the EIA did predict more heating days over the next two weeks which coincides perfectly with UNG's current support. My KST indicator is poised to crossover on the daily charts and the StochRSI indicator is finally emerging from it's oversold region and heading towards 50. Glancing at the monthly chart for UNG I noticed that last month's bar made contact with the lower support line meaning we are now well positioned to begin in heading in the other direction.

UNG: U.S. Natural Gas Fund, daily time frame.
UNG: U.S. Natural Gas Fund, weekly time frame.
UNG: U.S. Natural Gas Fund, daily time frame.

Jakob Richardson © 2014