- New Science in old markets -

Energy rallies into resistance

There has been a rally in energy markets in the last two weeks (except in the price of Natural Gas). This has taken crude, heating oil and Rbob prices (the first two are show below) up into resistance from some old weekly-scale compressions that formed last month:

Bren=nt & HO ret to wkly comps

As experienced readers will know, compressions act as 'attractors' in the mathematical sense - the price will move away from a compressed area only to re-visit it before resuming the original move, in this case downwards.

The present rally will probably stall at or just above current levels and so you should liquidate any 'mainstream' energy market longs that you took on our advice in the May 2nd edition. This does not apply to Nat Gas long positions that were recommended more recently as the market dynamics of that commodity are completely different in the short-term.

This also means that it is worth exploring the short side in the 'mainstream' energy markets of crude, heating oil and Rbob. We have no preference which to choose, so suggest staying with liquidity and picking crude oil futures.

Weekly scale signals may take a while to have effect, so please be patient with this forecast that energy prices will stall hereabouts - there may be repeated attempts at rallies and a range may form. Still, we suggest selling short here.

All signals generated by software supplied by our friends at Parallax Financial Research www.pfr.com