Category Archives: Other Topics

Near-term downtrend for copper

Yes, Dr. Copper has a tepid prognosis for the world economy
Near-term downtrend for copper with support at  $3.40

Copper Weekly Candlestick Chart – courtesy of StockCharts.com

The near-term trend for copper is down and trading below the 200-day simple moving average.

Copper and the TSX Composite Index are positively correlated. Don’t expect any major upward movement in the TSX unless copper makes a move above resistance.

Reference the last chart analysis for copper showing the positive correlation with the TSX Composite Index.

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

West Texas Intermediate (WTI) area chart

Intermediate uptrend for WTI with resistance at $97.50 – $98.00 zone
Two year chart for West Texas Intermediate (WTI) crude showing the intermediate uptrend and resistance levels.

WTI 2-Year Weekly Area Chart courtesy of StockCharts.com

The above two-year weekly area chart (shaded area) for West Texas Intermediate crude shows the near-term and intermediate uptrend. The major trend is down. WTI is trading above the 50-day (blue line) and the 200-day (red line) simple moving averages and the 50-day has crossed above (golden cross) the 200-day moving average. The current resistance level is the $97.50 to $98.00 price zone.  This is the near-term price at which traders take profits. If WTI can breakout above $98.00, the major resistance zone will be the September, 2012 close of $99.01. And the even number of $100 around the intraday high of $100.42 would also be a major resistance level.

Brent crude is the  the world standard (Europe and Asia) for crude oil pricing and West Texas Intermediate is trading at a discount relative to Brent pricing. I have charted the differential in a previous post.  One could argue that WTI is trading in a sweet spot providing a reasonable profit for U.S. based oil companies while not a threat to increased inflation.  It is a different situation for Canada where Western Canadian Select is trading at a $30.00 (rounded) discount to WTI which in turn is trading at a discount of $20.00 to Brent.  There is no need to shed any tears for big Canadian oil companies like Suncor which are still generating positive cash flow at current pricing levels.  But, from an investment perspective; world class oil companies in the U.S. and other countries will attract the investment dollars.  An investment in Canadian oil companies is “dead” money for the intermediate term.  Pipelines cannot be constructed overnight to transport crude. And, then there is the depressed price for North American natural gas.  LNG terminals are expensive and controversial.

There are a number of factors that affect the price of West Texas Intermediate:

  1. Supply and demand balance
  2. U.S. Dollar — WTI normally has an inverse correlation to the value of the U.S. dollar
  3. Supply  — there is currently a glut of oil at the  Cushing, Okla caused in part by pipeline constraints
  4. Supply — surging production out of the Bakken fields in North Dakota and Saskatchewan
  5. Supply — hydraulic fracturing is increasing production
  6. Supply — geopolitical risk associated mostly with the Middle East — one known-known is Iran
  7. Demand — tepid U.S. GDP growth in the the 2% range
  8. Demand — single digit GDP growth of  7% to 8% for China

Reference the last chart analysis for WTI highlighting the price differential versus Brent.

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

West Texas Intermediate (WTI) crude chart analysis

Chart highlights the differential between Brent and WTI
Three year chart for West Texas Intermediate and Brent crude highlighting the differential. Both products are in an intermediate uptrend.

WTI and Brent Crude 3-Year chart courtesy of StockCharts.com

Key points from the above chart:

  • WTI and Brent wide differential is a relatively recent development
  • Differential widened starting in 2011
  • Differential for February 5, 2013 was $116.52 – $96.65 = $19.87
  • Price for Western Canadian Select (not shown) on February 5, 2012 was $66.74
  • Brent versus WCS differential was $116.52 – $66.74 = $49.78
  • WTI versus WCS differential was $96.65 – $66.74 = $29.91

Reference a recent chart analysis for the U.S. and Canadian energy sectors.

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Copper chart analysis showing resistance at $3.80

Positive correlation between copper and TSX Index
Copper chart analysis using a weekly line chart and a TSX Index overlay. Correlation coefficient is identified on the chart.

Copper 3-Year Weekly Chart with TSX Index Overlay – courtesy of StockCharts.com

The major trend is sideways for copper. The intermediate and near-term trends are up with resistance at $3.80.

Reference the last chart analysis for copper.

Reference the last chart analysis for the TSX Index.

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

U.S. dollar versus yen chart analysis

U.S. dollar is surging versus the yen
Intermediate and near-term uptrend for the U.S. dollar versus the yen as the Bank of Japan adds to the asset buying program.  This is the Japanese version of Operation Twist.

U.S. Dollar versus Yen 3-Year Chart

Bank of Japan has eased the inflation target from 1% to 2% after government demands and most likely will add to the asset buying program. This is the Japanese version of Operation Twist to reinflate the stagnant economy. The net result is a lower yen versus the U.S. dollar and other major currencies. This should help the major exporters like Sony and the Japanese automobile industry.

Are we entering a new period of currency “wars”? Both the ECB and the Federal Reserve have implemented variations of quantitative easing to reinflate stagnant economies. Exporting nations cannot tolerate a rising currency as they try to revive stagnant economies. For example, the euro is already in an intermediate uptrend versus other major currencies and this will not be welcomed by a major exporter like Germany. Relative to other euro zone countries, the German export oriented economy prospered in part due to the weak euro.

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Stock Screener: The first place to start your analysis

A good stock screener is the first place to start both your fundamental and technical analysis. There are two that I highly recommend.

1. Screens based on fundamental data:

TMX Money

2. Screens based on technical data:

StockCharts.com — Charting Tools

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Technical analysis of copper

Intermediate trend is down for copper
The intermediate trend is down for copper with major support at $3.00/lb

One Year Copper Chart

Copper is seen as a leading indicator for the global economy. The intermediate trend for copper is down which does not bode well for equities overall and commodity based equities in particular.

Reference the last chart analysis for copper posted on May 18, 2012.

View Kitco for updated charts and other time periods.

Relevant articles picked from the Web:

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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2012 TradeOnline.ca

Technical Analysis: iShares Brazil Index ETF – EWZ

Double bottom for the Brazil Index ETF
Technical analysis of the Brazil iShares ETF showing a double bottom

iShares Brazil ETF (EWZ) 2 Year Chart

Down 27% from the the March, 2012 high with a possible double bottom at $50.00.

Relevant articles picked from the Web:

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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2012 TradeOnline.ca