Damn Ides of March…

We’re posting a little different today because the website is secretly named Brutus…

That’s Hot

  • Daylight savings (makes the drive to Disney that much easier)
  • Brazil (funny how you need money to make money…or oil)
  • Radiohead (like $50 oil, I love the way good things always come back)

That’s Not

  • Spring Break (funny how more people work and more people get to take vacation)
  • OPEC/Russia oil freeze (when it’s too good to be true, it’s usually…)
  • Richard Simmons (why do I think we’re dealing with another Liberace)

Hold me, I’m scared.

I have yet to run into anyone named Brutus, but I’m always on the lookout this time of the year. On the other hand, there’s plenty to be scared about right now. Before we go anywhere though, I want to remind the teeming millions that I wasn’t too far off yesterday. I mentioned that volumes would be off because a lot of people are off. Between Sprig Break vacations and AFPM, we saw volumes in Futures as well as the stock market hit some low trading activity. We should expect as much today and look for hope after the Wednesday. At least by then we’ll have moved enough off the standard deviation that we’ll likely trigger stops or reversals and get a snap back to reality. There’s enough that can help flip any moves that are starting now and we’ll just sit back and enjoy the show for now.

We can obviously start with the FOMC meeting that gets an announcement on Wednesday afternoon. Nobody is willing to put on too much risk ahead of the meeting. It’s unlikely that they make another move this soon, but we do need to know where their heads are. We may be looking for a rate hike by June or we might just see them a bit more concerned about the state of the rest of the world. They waited patiently as China hit some bumps in 2015 and we may see then take some pause as the EU and the ECB continue to try to work things out. That should hold off any USD rallies and effectively give some room to rally the WTI once again. We also need to see what the plan is ahead for Unemployment. We’ve not given up no adding more jobs to the workforce, but the hourly earnings has lagged like Jessica Simpson on Jeopardy. Fact of the matter, that’s a damn good analogy I came up with. With our Unemployment situation it’s not bad looking and it’s doing great at one thing, but ask it to do something else and we see it’s not as well rounded as we might hope.

Then there’s always the struggle with oil, domestic and foreign. We’re watching the Domestic Production for crude oil here and looking for the EIA stats to answers. We’re dropping rigs like Oprah on Weight Watchers and like her, we have to see if we’re keeping it off. Last week we steadied after 5 weeks of declines. It’s more than likely that we do see a return to falling production. I’m all about efficiency, but at some point you need operating rigs more than you can rely on efficiency. And on the foreign front it’s an interesting situation unfolding in Syria. Russia is pulling out it’s military and that’s’ just weird in itself. Throw in Iran applauding the decision and it’s weird to see everyone in agreement. All of this kumbaya might just bring the “oil production freeze” to fruition. Russia has nothing to lose because they are probably at capacity and/or could use some relief to ease the costs of current production. Iran might be getting to that point of emptying floating storage and ready to lean on what’s operable in their production fields for now. This leaves the rest of OPEC to just shrug their shoulders and keep doing what they are doing. Of course I am going to come back to the idea that not everyone out there can afford to keep producing, even at $40. Careful today and watch your back.

Crude:

Hey hey. I thought I heard you say we’re moving to the CLJ(16). Well it’s about damn time and we’re glad to finally get out of that boring CLH6 contract. This is when some seasonality should kick in and get us back in the groove. We’re going to look for some hope to the upside and peg resistance at 3688, 3745 and 3852. To the other side of the chart, we’ll figure on support down to 3585, 3435 and 3370. The front CL spread moves up to CLJ6/CLK6 and we see resistance here at –160, -134 and –102. The support to the spread looks down at –184, -225 and –260. Give a little, take a little. We hold lower today and wait for the second half of the week rally.

Gasoline:

We’re moving along with the RBJ16 contract. We’re looking to resistance at 14048, 14255 and 14460. That will give us some room to look back down to support at 13846, 13655 and 13442. The front spread moves on with J16/K6. Resistance at –278, -225 and –178. Support to –335, -380 and –422. The RBCL moves to J16 and gets to resistance at 2266, 2312. Support down to 2185, 2138.

Distillate:

We’re playing in the here and now with the HOJ16 contract. We’re looking at support to 11640, 11432 and 11284. The resistance looks above to 11848, 12075 and 12266. The front spread is in J6/K6 with resistance at –88, -64. With the way it’s moving we may see support tested and looking to –145, -170. The HO crack in J16 sees resistance at 1302, 1370. Support back to 1225, 1170.

Trends are only for the affected:

Well I finally have a chance to change this up. Believe me, the HFT has taken most of the fun out of watching trends under 60min, but we still have some faith in that frame and definitely in the Daily. So let’s start there and see how the Daily is shaping up after last week. We’ve pegged a nice double bottom over the past few weeks and now 4000 is the target. If we can get up and above that, even in the slightest, we’re thinking we’re full blown reversal and the target moves up to the 5000 area.

Fundy you should mention:

Well I couldn’t have been more right than I was yesterday, calling out the lack of interest in the market this week. We do start the FOMC meeting today, but the answers won’t come until tomorrow. Actually, once we get past this meeting and this week, we might be distracted by the NCAA Tournament and March Madness. Oh yeah, there’s St. Patrick’s Day on Thirsty Thursday too. We get enough today with Retail Sales (-0.1), PPI-FD (-0.2) and Empire State Mfg Index (-11.25) at 8:30 am EST. Then we get Business Inventories (0.0) and Housing Market Index (59) at 10:00am.

Sorry, I am just physically attracted:

Is it wrong to go to the airport and start welcoming the oil traders back from AFPM? Recently I had a consulting client ask me to set him up with some colleagues who are going to AFPM. I said sure, where are you going to be? He said at the conference. Then I told him I don’t think that anyone I know realizes that there’s an actual conference that you can go to. It just so happens that at these things there’s plenty of business meetings that go on outside the conference and the actual conference is something that the marketers might attend. Trading oil always gets done behind the scenes and the screens. Everything else is just anyone’s best guess.

Carpe Diem (trade for today):

It’s a new week. It’s a new day.

Bring it on bichez. I go LONG RBJ6/CLJ6 above 2250. This is Spring Break and not to mention St. Patrick’s Day. The former is an easy time to pick out for a bump up in gasoline demand. The latter gets the attention because it’s an Uber generation. I’ll say we’re going to get some shock value come Weds stats and demand, but until then we’re getting ahead of the game and looking up to 2290-2300.

I’ll lay my bets and double down. I go LONG RBJ6/RBK6 above –330. Let your horses run free. Well in this case, we’re going with lots of horsepower. The fact remains that with demand up here, refineries can’t keep up and we’re not going to see imports pick up all that much just yet. I’ll let this one rise up to the –280 area and call it out.

Have some fries with that flat price. I go LONG CLJ6 above 3680. OK, this might just fail at resistance in the 3700 area, but if we have to wash out at flat, so be it. If we pop above 3700, it’s back on the Bull train to 4000. We’ll take it easy on the way up and look to the 3740 area, but try not to ask for too much right away.

Just enough time to catch my breath. I go SHORT CLJ6 under 3580. It’s the beginning of the week and we should expect as much. If you aren’t with the program, we slide early in the week and make it all back the second half. So playing along here, I’ll look for the dip to the 3530 area and wait for another shot tomorrow.