Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?
by ilene - July 23rd, 2010 7:50 pm
Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?
By Elliott Wave International
If "fundamentals" drive trend changes in financial markets, then shouldn’t the same factors have consistent effects on prices?
For example: Positive economic data should ignite a rally, while negative news should initiate decline. In the real world, though, this is hardly the case. On a regular basis, markets go up on bad news, down on good news, and both directions on the same news — almost as if saying "talk to the hand cuz the chart ain’t listening."
Unable to deny this fly in the fundamental ointment, the mainstream experts often attempt to reconcile the inconsistencies with phrases like "shrugged off," "defied" or "in spite of."
That begs the next question: How do you know when a market is going to cooperate with fundamental logic and when it won’t? ANSWER: You don’t.
Take, for instance, the first three news items below regarding the July 22 performance in crude oil, versus the fourth headline, which occurred on July 23:
- Crude prices surge nearly 4% in their sharpest one-day percentage gain since May. The rally was "aided by fears that Tropical Storm Bonnie will enter the Gulf of Mexico over the weekend and disrupt oil production." (Wall Street Journal)
- "Oil Prices Soar As Gulf Storm Threat Looms" (Associated Press)
- "The storm should keep oil prices bubbling if it continues to strengthen and remain on track." (Bloomberg)
vs.
- "Oil Slips From Surge Despite Storm Threats" (Commodity Online)
Unlike fundamental analysis, technical analysis methods don’t rely on the news to explain or predict market moves. They look at the markets’ internals instead.
*****
Get FREE access to Elliott Wave International’s most intensive forecasting service for the global Energy markets. Now through noon Eastern time July 28, you can get timely intraday charts, forecasts and analysis for Crude Oil and Natural Gas. You’ll also get daily, weekly and monthly analysis and forecasts for all major Energy markets and Energy ETFs. The timing couldn’t be better because Crude Oil and Natural Gas are both approaching important junctures. Learn more and get instant access to EWI’s free week in energy now.
This S&P 500 Chart Tells the Two-Part Truth
by ilene - November 5th, 2009 10:34 pm
This S&P 500 Chart Tells the Two-Part Truth
Until Nov. 11, EWI is allowing free downloads of their latest market analysis and forecasts, including Robert Prechter’s latest Elliott Wave Theorist and Steve Hochberg’s and Pete Kendall’s latest Elliott Wave Financial Forecast. Learn more about FreeWeek, and download your free reports here.
…
By Robert Folsom, Senior Writer for Elliott Wave International
As you read and look at this page, please know that the chart is the star of the show. My description will add only a few details.
The chart published less than two weeks ago in Bob Prechter’s Elliott Wave Theorist. The rectangular box is plain to see: It envelopes the huge S&P 500 rally that began last March — a gain of 61.5% and 430 points, as of Oct. 18.
But there’s a two-part truth to the rally — and that is what the box really shows.
Part one shows the "wall of worry" — basically March through August. That’s when the media and experts were overwhelmingly negative about stocks. They were surprised by the rally. Remember?
Part two shows the more recent time of "euphoria" — basically September and October. The media and experts turned positive. The market was all about "green shoots" and "recovery."
You see when most of the rally unfolded. Six months of serious worry produces a 373-point climb, whereas "two months of euphoria produces only 57 S&P points."
Now, the two-part truth about this rally is an easy story to tell. It’s literally a few lines and notations on a price chart. Has anyone else pointed out that over the past two months, the stock market "rally" has in fact slowed to a crawl? As you look at the chart, perhaps you notice that the decline, which began in 2007, and in turn the recent rally, are both on a similarly large scale.
Price action in the stock market this week has only strengthened the analysis in Bob Prechter’s October Theorist issue.
You can read the very latest forecasts in the just-published November issue of the Elliott Wave Financial Forecast — both publications (plus the tri-weekly Short Term Update) are yours for free — only during FreeWeek (now through Nov. 11).
Learn more about FreeWeek, and download the November Theorist for more about the above chart.
Robert Folsom is a financial writer and editor for Elliott Wave International. He has covered…