Energy Market Outlook – April 19, 2016

Energy News and Market Information for the week of 4/19/2016

Author: Jason Scarbrough

CES Technical Analysis – Bullish with a Grain of Salt


CES Technical Analysis - Bullish with a grain of salt

Natty bulls have been working extremely hard to get a rally to catch fire for the past few weeks after the April expiration “gap up” .  That gap was quickly filled allowing for a continued move higher.   Before the gap was filled however, trade broke through the 62% retracement level reaching $2.074 before retreating to close near the day’s lows.  Since then, the May contract has been trading in a consolidation range finding support right around at the 50% retracement level of the May contract’s move up from the lows from mid-march and finding resistance at the major psychological $2 level.

The bulls got natty up 14.8  cents to $2.088 heading in to close with almost 25% of today’s volume coming in in the last 30 minutes of trade.  A close here is about the best thing the bulls could hope for from a technical stand point.  In addition – this was a fairly broad move – taking most of cal 16 up double digits.

However, this came with less than 80% of the peak volume for the May 2016 contract, so the strength of this rally (like we haven’t seen in a very long time) is very hard to buy into.  In addition – there are little to no weather catalysts that I see at this point.  The MACD and the parabolic indicators were turning negative before today’s trade.  This would cause me to conclude that this was a short squeeze –     protective buys stops placed by bears, once they get triggered, buy orders flood the market.  But even still,  it would seem the bulls won the day and got exactly what they wanted – a breakout to the upside of the consolidation pattern giving way to  the next strong resistance towards the $2.30 level.

Just because it was a short squeeze doesn’t mean that a real rally can’t come from it.  Quite a move up and would prove par for the course giving us that now traditional shoulder month rally that eventually gives way to the summer month collapse.  Let us see how the follow through goes this week – will the bears try and stop this .. or will they get out of the way to create some new selling opportunities.

Continuous Chart – Prompt Month


Continuous Chart - Prompt Month

May Contract


May Contract