Author: Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

By Dean Rogers

February WTI turned lower again on Monday and gave up just over 50 percent of its pre-holiday weekend gains that it had made on the move up from $35.35. The supply glut is still a concern and reports of Iran stating that exports are ‘priority’ after sanctions are lifted has put a dose of reality back into the long-term outlook for oil.

Technical factors reflect the negative near-term outlook. Monday’s close below $37.0 completed December 24’s evening star and indicates the decline should continue. WTI oil prices should now test the evening star’s $36.5 confirmation point. This is also the 62 percent retracement of the move up from $35.35 to $38.28. The $36.5 target is crucial, and it will be important for WTI oil prices to close below $36.5 within the next day or so to confirm that the move down is going to continue. A close below $36.5 is expected and would open the way for $36.1 and $35.2, both of which are confluent wave projections.

The decline may be a grind lower and small corrections will likely take place, especially if gasoline prices start to rise again. Monday’s $37.4 midpoint should hold, but the key level for a renewed surge higher is $38.0. A close over $38.0 would call for at least $39.6.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four week trial.

By Dean Rogers

Natural gas is finally showing some signs of life as 2015 comes to a close. Reports that colder than normal temperatures along the East Coast and in the Great Lakes region for the first week of January have sparked a much needed relief rally from recent 16-year lows.

February natural gas, which will become the prompt futures contract on January 30, rallied to $2.061 on Wednesday and settled at $2.036. This was above the December 14 gap down from $2.022. Confluent technical resistance was met at $2.061, a crucial wave projection that connects to $2.13, $2.22, and $2.27. The wave $1.802 – 2.011 – 1.933 that met its 0.618 projection at $2.061, the close over the $2.022 gap, the break higher out of an intraday bullish descending triangle, and KaseX’s pierced dart signal (green arrow, bullish divergence, and yellow triangle, first buy signal) indicate the move up should extend to at least $2.08 and very likely $2.13 over the next few trading days.

There is little doubt that the move up is corrective of the longer-term decline, and it is too soon to definitively state that a long-term bottom has been made. Tomorrow’s EIA Weekly Natural Gas Storage Report could make or break the rally in the short-run. Lighter trade volume around the holidays is also a concern that could lead to the rally being short-lived. However, if temperatures do turn colder than normal in key areas of the U.S. as anticipated in coming weeks, bullish sentiment alone could support prices above $1.90 for the interim.

Wednesday’s $2.00 midpoint is first support, and will likely be tested on Thursday. If the move up is going to continue it should hold $1.96 and has to hold $1.90. The $1.96 threshold is near Wednesday’s open and the 38 percent retracement of the move up from $1.802 to $2.061. A move below $1.96 would not only call for the $1.933 swing lows to be taken out, but more importantly for a test of the 62 percent retracement at $1.90. A close below $1.90 would indicate the rally is over and that another test of recent lows is right around the corner.

This is a brief natural gas forecast for the next day or so. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four-week trial.

Apple Inc. (AAPL)

Apple’s stock has taken a bit of a beating this year, and the holiday season has not been the boon loyal shareholders had hoped for. Most technical factors are negative and odds favor a continued decline. However, there are a few positive technical factors that indicate the upward correction that began on November 21 could extend first.

Overall, the outlook is for AAPL is negative and our technical price forecasting model indicates that over the next ten days there is a 70 percent chance for $106.4 and a 60 percent chance for $103.8.

The decline from $123.82 is forming a five-wave trending pattern, and $102.5 is the key support target for the formation. Wave III is currently in progress and $102.5 is a potential stalling point and beginning of Wave IV. Should prices settle below $102.5 look for Wave IV to form from $98.8.

There is some technical evidence that indicates AAPL could rise to $108.9 and even $111.0 before the first target at $106.4 is met. The decline stalled at $105.57 on Monday, formed a pseudo hammer, and has been flirting with Friday’s $107.5 midpoint. In addition, KaseX, shown in the chart below, confirmed a weak bullish turn threat (gray arrow). The signal indicates stops on the daily chart could be tightened to approximately $112.3, which is in line with our $112.6 resistance threshold.

If the upward correction is going to extend in a significant manner it will need to close over at least $108.9 and very likely $111.0. The latter is strong near-term resistance that we expect to hold. A close over $111.0 would open the way for and extended upward correction to $112.6 and even $114.4.

Under Armour Inc (UA)

Since September UA’s stock performance has been dismal relative to that of their largest competitor, Nike (NKE), whose earnings hit the street Tuesday afternoon. NKE is pegged as one of the strongest performing stocks in the Dow Jones Industrial average, up 35 percent so far. The outlook for NKE, at least from a technical standpoint, is bullish. Conversely, we expect UA’s share price to continue to decline.

Most technical factors for UA are negative and odds are 75 percent for at least $78.1. This then connects to key support at $76.1. Longer-term odds favor $72.5 and $70.5, but we expect a correction to take place before the lower targets are met.

Kase StatWare, shown in the chart below, reflects the bearish sentiment with first class short KEES permissions (pink dots) on the daily bars for the past few days. That said, momentum on the KaseCD and KasePO are setup for divergence and the KasePO is nearing oversold territory. This means that a correction might take place soon.

The one solid positive technical factor was November 22’s hammer. This is a reversal pattern that also indicates a correction might take place before UA falls below $78.1 again. The correction should hold $81.9, but $84.6 is the key threshold. A close over this would open the way for an extended upward correction before the decline ultimately continues.

These are brief technical analyses based upon Kase’s technical forecasting models and trading indicators KaseX and Kase StatWare. If you are interested in taking a trial of KaseX or Kase StatWare please contact sales@kaseco.com. We would love to get your thoughts about the forecasted targets and probabilities. Leave a comment or send them along with your request for a trial to sales@kaseco.com.

By Dean Rogers

The U.S. rig count rose by 17 last week, and according to the EIA, U.S. crude oil supplies have reached 490.7 million barrels, the highest reported level for this time of year since 1930. In addition, the U.S.’s repeal of the 40-year oil export ban could ultimately encourage more pumping from domestic crude oil producers and narrow the WTI-Brent spread closer to parity in coming weeks. This is possibly good news for domestic producers, though it will take months and perhaps years before we will truly know. Overall, it is being reported that these factors could prolong the supply glut that is projected to last through the end of 2016 and possibly beyond.

The narrowing WTI-Brent spread is a being driven by WTI’s deeper contango versus Brent. In January 2015, the two grades were trading near parity, and it looks like this will be the case again in early 2016. This is encouraging for some U.S. producers as the spread could extend into positive territory where $2.60 is a confluent projection. However, longer-term, a narrow spread would likely lead to increased U.S. production, which would be negative for WTI. Conversely, a positive spread could encourage Brent producers to cutback, thus spurring both grades higher over the course of the longer-term. The key will be seeing whether or not the spread becomes positive and remains that way for the next few months. If so, it could lead to a longer-term shift in production strategies, and ultimately prices, world-wide.

Another factor to watch right now is the calendar spreads and the cost of carry. The six-month average cost of carry narrowed a bit for WTI and Brent last week, but remains volatile. Typically, a carry above approximately ($0.50) encourages those with storage to buy oil now, store it, and then sell it at a later date when prices are higher (due to deep contango). This is fundamentally negative because supply rises. The six-month average costs of carry for WTI was ($0.93) and for Brent ($0.79) as of Friday’s settlement.

The technical agree with the negative fundamental and spread factors right now. Most momentum indicators are oversold and setup for divergence on the weekly and daily charts. Therefore, a correction might take place soon. However, until a swing low in both price and momentum are made look for the decline to continue. Over the next day or so we expect WTI to fall to $35.0 and for Brent to challenge $35.6. Both are crucial targets to connect to much lower levels as discussed in our full weekly analysis.

By Dean Rogers

The outlook for natural gas is still bearish, and without support from weather or a strong increase in industrial demand, it will most likely remain that way. However, there are a few positive technical setups that indicate a small correction to $1.90 and even $1.959 might take place first.

Monday’s gap down from $1.959 still needs to be filled. This might be an exhaustion gap, but at this point it is looking more like a measuring gap that projects to $1.65. Wednesday’s morning star setup indicates prices could make a push for at least $1.90 to try and confirm the pattern. The Stochastic is deeply oversold (and has been for some time) and the KasePO is setup for bullish divergence as it nears oversold territory. If Wednesday’s $1.775 low holds, there is a good chance for the daily bullish KasePO divergence to be confirmed. Confirming the divergence, and confirming the morning star setup with a close over $1.90, would boost odds for filling the $1.959 gap.

That said, longer-term odds still favor the decline and any move up will be corrective and hard pressed to overcome $1.959 without support from aforementioned external factors. Once the correction is complete (if it takes place at all), we expect prices to fall to $1.73 and $1.65.

By Dean Rogers

The darkest hour is just before the dawn. It is a phrase that most are familiar with that provides hope, even in the worst of circumstances. The outlook for WTI crude oil prices has been “dark” in recent weeks, and the longer-term outlook is still dim. However, December 14’s close over $36.13 provides a small shimmer of hope that a correction might finally be underway.

January WTI met a confluent and structurally crucial support target near $35.0 on December 14 and closed above December 11’s $36.13 midpoint to form a bullish piercing pattern. The piercing pattern is an early indication that a sustainable correction might finally be underway. A close over the pattern’s $36.63 confirmation point (December 11’s open) would call for at least $37.9, the 38 percent retracement from $43.46 to $34.53.

The move up will most likely be corrective, but a substantial correction is long overdue. KaseX is not showing any signs of a turn yet, and the piercing pattern’s $36.63 confirmation point was tested and held. This dampens the likelihood of a reversal, but does not wipe out the potential completely. A close below $35.4 would negate the piercing pattern and call for the decline to continue towards the December 2008 perpetual swing low of $32.4.

Therefore, if the sun is going to rise $35.4 must hold and January WTI will need to close over $36.63 and then $37.9 within the next few days.

By Dean Rogers

Natural gas is still looking for support from weather, but until cold temperatures arrive in key areas of the U.S. prices should continue to grind lower. The negative bias is confirmed by KaseX’s filtered short signal (purple diamonds).

January futures met an important target at $2.15 on Wednesday. This was the 0.618 projection for the wave $2.347 – 2.175 – 2.259. A close below $2.15 would call for key support at $2.10, the 1.00 projection.

The importance of $2.15 indicates a correction might take place first, but look for resistance at $2.22 to hold. A close over $2.22 would call for $2.26 and possibly $2.30. A move higher than $2.30 is doubtful without support from weather.

By Dean Rogers

For the past few weeks gasoline futures rose in a dramatic fashion and lent some support to underlying WTI and Brent futures prices. However, a few bearish technical factors indicate the move up is probably complete and that a major test of support is now underway.

January gasoline futures stalled at the crucial 62 percent retracement of the decline from $1.4516 to $1.1962. In addition, Monday’s $1.3069 settle completed an evening star and hammer candlestick pattern and a moderately bearish overbought signal on KaseX (gray arrow). All three factors indicate the decline should continue.

The pullback has retraced 38 percent of the move up from $1.1962 to $1.3731 so far. A close below $1.2972 will confirm the evening star and hammer and call for at least $1.285 and very likely $1.264, the 50 and 62 percent retracements, respectively. These are also confluent intraday wave projections.

From a technical standpoint, the move down is corrective of the move up until there is a close below $1.264. Odds for a move of this magnitude over the next week or so are 65 percent.

Look for resistance at $1.33 to hold. A close over $1.354 would be positive and open the way for $1.412 and higher.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Natural gas’s upward correction has been held at bay as the market seeks frigid temperatures to support a move higher. January is settling into the familiar range between approximately $2.26 and $2.39 that December oscillated in before it finally broke lower. This is likely where prices will remain for the rest of the week due to the Thanksgiving holiday.

The move up is corrective, and that point was verified on Wednesday when prices initially broke higher out of an intraday coil and subsequently stalled at $2.347 before overcoming the $2.351 swing high.

Meeting the 0.618 projection for the wave $2.229 – 2.351 – 2.258 indicates January could still test $2.39, which is near the 1.00 projection and the 38 percent retracement of the decline from $2.60 to $2.229, as long as the $2.258 swing low holds. However, without support from external factors (cold temperatures) the market will be hard pressed to rise above $2.39 and extend to the next confluence point of $2.48.

Odds favor the decline and a test of $2.26 by the end of this week. This is a tough call right now because the market is sitting on major support, and external factors could turn this market higher in a heartbeat. Therefore, provided $2.26 can hold, there is still a reasonable chance the upward correction will extend to $2.39, but at this point we would not hold our breath.

Happy Thanksgiving to all!

By Dean Rogers

January WTI futures met crucial support at $40.41 early Monday. This was the 1.00 projection for the wave $52.02 – 43.52 – 49.23. The subsequent move up was initially promising for bulls, but stalled at $42.75 before it could overcome $43.2 resistance.

It is a tight call tomorrow, but we expect a test of $40.9 before the move up continues. This is confirmed on the intraday charts by the latest KaseX weak short signal (pink triangle). Support at $40.9 is near the 0.618 projection of the wave $42.75 – 41.09 – 42.62 and the $41.09 swing low. A close below $40.9 would call for $40.0 and possibly lower.

Conversely, not all hope is lost for the upward correction to extend. The daily chart’s Kase Easy Entry System (KEES) permissions shifted from first class short (pink dots) to second class long (light blue dot). Therefore, there is still a reasonable chance for a close over $43.2 and an upward correction to $43.8, the 38 percent retracement from $49.23 to $40.41. A close over $43.8 would significantly increase the probability for an extended move to test major resistance levels.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil forecast is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

Crude Oil Forecast: WTI Oil Prices Turn Lower

Apple Inc. (AAPL)

Under Armour Inc (UA)