Today’s Leading Women – Episode 634: Learn Trading and Forecasting Techniques with Cynthia Kase

Kase’s president Cynthia A. Kase is featured in a podcast interview with Marie Grace Berg of Today’s Leading Women.

Listen to Ms. Kase’s interview on iTunes and give it a rating, or click the link below to listen on the Today’s Leading Women website.

Episode 634: Learn Trading and Forecasting Techniques with Cynthia Kase

Cynthia-Kase-of-Kase-Company-e1447283745788

 

sugarBy Cynthia Kase

The market’s been watching the impact of El Niño since June. Then the National Oceanic and Atmospheric Administration said there was a 90 percent chance the baby would stick around all summer, and maybe even into 2016. Sugar has been rising since mid-August, as El Niño persisted, but turned choppy in October only to break to 15.53¢ as of the 3rd.

Apparently Niño’s wet weather is delaying the sugar harvest and fears have grown about undersupply. The technicals have been positive but slammed up against resistance at 15.53¢. So while it’s too soon to say if 15.53¢ is “it”, there is likely more downside.

15.53¢ is important for a few reasons. It failed by 5 points to reach the 21 percent retracement of the entire move down from 36.08¢ to 10.13¢ on the continuation chart. Second, the Stochastic and RSI momentum indicators were set up for bearish divergences at that price. Most important, 15.53¢ was a confluent target, as shown in the chart. That price is just 0.01 points shy of March’s “trend terminus” target (12.55^3/11.28^2) for the first wave up from 11.28¢.

SBH6_Fig1Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

First support was met on Wednesday at 14.64¢. Next is 14.40¢, just 7 points below Thursday’s low. This is the 21 percent retracement for continuation’s entire move up, and a confluent retracement for the intermediate swings on both charts. It is also the 0.62 projection for the wave 15.53 – 14.47 – 15.05.

The key question is whether the decline, which only reached 15.47¢ versus 15.40¢ support, is over. The fact that the bounce up from 15.47¢ formed an ABC pattern where C is the 1.62 extension of A, exactly, and that prices then declined to 14.59¢, that is, below the prior 14.64¢ swing, means probably not.

14.40¢ remains to be broken, so a continued decline is not a sure thing, but 14¢, the major threshold, is likely.

The open and midpoints of candlesticks constitute support and resistance. Last week’s midpoint was 14.37¢ and the open for the week ending October 9, the last large up week prior, was 13.92¢. There’s also an important swing at 13.94¢. So as long as this holds (the lower end of a 14¢ +/- 0.1¢ range), odds are open for the bull market to resume.

Initial resistance is 15.40¢. The decline isn’t dead unless this is overcome. Above this, a highly confluent 15.95¢, the last remaining target (the Phi^3 corrective projection) for the first wave up, and occurs as a target 10 times for the 10 waves up from mid-October’s 13.69¢ swing low. The highest price to which the March chart projects which has a moderate probability is 18¢, the 0.62 projection of the entire move up.

Send questions to [email protected], and click the link learn more about Cynthia Kase’s latest video series, Kase on Technical Analysis.

5c1050e7d305921d3b87cdb35a1e42ffby

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With VW cheating on diesel fuel emissions and standards being scrutinized worldwide, interest in electric vehicles may increase longer-term, and medium-term, gasoline fueled vehicles might pick up. But will gasoline prices get a boost any time soon? Probably not.

December gasoline, which becomes prompt in two days, traded up to $1.4604 at the end of August. Since then it’s been caught in a downward oscillating pattern, but remains above its earlier $1.1756 low.

Odds favor the downside. This was a large down month which prevented a bullish reversal pattern from completing. On the daily chart, the decline to and bounce up from $1.1756 was a bullish V-bottom but failed. The decline from $1.4604 was interrupted by a bullish flag which has since broken lower. The perpetual has been steadily dropping since mid-June, only going into a sideways stall during the past two weeks.

RB-Fig1

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

Odds of a recovery are higher than for a normal trending market. The decline from $1.4604 only met the minimum 0.62 extension. The decline has also been shallow.

Two very strong layers of support are $1.235 and $1.205, respectively the 78 percent and 89 percent retracements of the $1.1756 to $1.4604 rise. $1.235, less than one cent above the perpetual’s January low, is important because it’s only generated by the waves down from $1.4604. For the six waves down from this price, $1.235 is a wave extension for five, and as a corrective projection for three. Thus, should $1.235 hold, there is no connection to larger, earlier waves which project to lower levels. The next layer at $120.5 connects back to the mid July $1.5828 high. This support level could engender a trading range between the $1.20s and $1.50s, so watch out for that.

Even though the previous low of $1.1756 is natural support, a close below $1.205 could trigger a steep decline down to $1.06. This is because the wave extensions tie the two prices together. The wave 158.28 – 117.56 – 146.04 targets $1.205 as the 0.62 extension and $1.06 as the equal, 1.0, extension. 140.46 – 130.04 – 133.73 targets $1.205 as the 1.38 extension and $1.06 as the 2*1.38 extension. The point is that should there be a close below $1.205, the pull from $1.06 grows.

Adding to that pull is that $1.06 is the 89 percent retracement of the move up from the 2008 low of $0.785 to 3.48. Hitting $1.06 could cause a slide below the $1.00 level.

So watch to see if the two targets in the $1.20s hold – or not.

A close over $1.375 would argue for concern that the move up from $1.1756 will extend. That’s the price above which I wouldn’t hold short-term short position. Above $1.4604 the contract is in for a further recovery. Either way, moderate prices, well below prices should prevail. So fill up the tank, and get on the road before December snows slow you down!

Send questions for next week to [email protected], and click the link to learn more about Cynthia Kase’s latest video series, Kase on Technical Analysis.

coffee1

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by Cynthia A. Kase

Iced Coffee Anyone?

Just keeping up with the news, coffee should enter a lower priced environment, longer-term. In the short-run, technicals indicate an expectation of prices testing a threshold at 110 would not be unreasonable.

Coffee Production Forecast

Economists see much room for increased production out of Africa, which used to be the planet’s biggest crop exporter, producing 25 percent of the world’s coffee. After many years of state interference in, and regulation of agriculture, coffee production per acre is so low that it could fairly easily be increased by a factor of five. Simple changes have already increased output per tree by 50 percent in some areas. Incubator commodity firms are proving increases are practical. So, more supply means eventual lower prices.

Near-term Coffee Technical Indicators

We’ve been bearish technically on coffee since our previous article that focused on the September contract, June 23 Will the Sun Shine on KC. We expected coffee to break down out of its correction, first to 123.2 and then to at least 117.50. 141 was resistance. KCU15 dropped to 123.65, rose to 139, coming within 2 cents of our level, then hit 117.5 exactly before meandering down to 113.05.

Given coffee’s back in the news, let’s look at the December contract. The chart patterns are unrelievedly negative on the daily chart and above. The intraday chart been bouncing along a downwardly sloping trend line. The market is attempting to skid to a halt, or at least a stall. The pattern intersects the y-axis at about 114.6. This is highly confluent, major support, as 114.6 is the smallest (0.62) extension for the wave down from 207.8, as well as, both extension targets and corrective projections for more recent waves. It’s also the endpoint of a rare ending diagonal triangle.

Coffee Outlook

I think 114.6 will break, even if there’s a bounce. The 122 – 125 area must be solidly overcome for a recovery to begin. On a slip below 114.6, I’d look for 110.6. One reason 114.6 will probably break is that the first of the two equal waves shown in red targets 112.7 as its 1.62 extension, showing no support at 114.6.

There might be a test of and small bounce after 112.7, which is “sandwiched” between 114.6 and 110.6 within the wave structure. So the three prices are connected making it more probable for the lower number to be met on a break through 114.6. Given that KCZ15 is making new contract lows, there’s not many numeric methods, aside from the waves to confirm the values discussed, though the daily warning line on Kase’s stops is 114.6.

Unlike September, this contract has no support around 100.0. There’s big gap in the targets from 110.6 to 98.6. That means coffee wants to stay at least in the teens, and may move into a corrective phase into the 130s. So, I’d stay short, or day-trade short, but there might not be enough downside here for a longer lived position. Watch 110.6, and don’t crunch your ice.

Coffee2

 

 

 

 

 

 

 

 

 

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

 

Send questions for next week to [email protected], and click the link learn more about the KasePO, KaseCD, KEES, and the Kase DevStops.

SPXby Dean Rogers

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You can feel it in the air, the mounting anticipation of an interest rate hike is coming to a head as investors, traders, and even my own feisty grandmother are jockeying for position ahead of this week’s Fed meeting.

Some pundits believe a rate hike at this time would be disastrous and that Tuesday’s S&P 500 gain of 1.3 percent was a sign the markets are telling the Fed to wait. Others believe the rate hike is long overdue and that the sooner the Fed raises rates the better.

There is a lot of indecision about what the Fed will do this week. However, one thing is for certain, whether Feds hike rates or not, the market’s direction for at least the next few weeks, and possibly months, will be determined within the next 48 hours.

What Do The Technical Factors Say?

The formation of a pennant reflects the market’s indecision. The pattern is bearish because it formed after the decline to 1867.01 on August 24. That said, there are enough bullish factors to indicate this formation has a higher than normal probability to fail.

SPX-Fig1Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

Bearish Technical Factors

  • Pennant
  • Move up from 1867.01 stalled near the 50 percent retracement of the decline from 2103.47
  • Held Kase’s daily DevStop3 (large blue dot)
  • Decline to 1867.01 was non-divergent

The bottom of the pennant is near 1950 and a close below this would open the way for 1903. This then connects to confluent wave projections at 1838, 1732, 1665, and 1567. Upon a break lower out of the pennant we expect to see at least 1838 and very possibly 1732.

The lowest target at 1567 is interesting because it is near the 38 percent retracement from the March 2009 swing low of 666.79 to the recent 2134.72 swing high. In addition, 1567 is near the October 2007 high of 1576.09, just before the financial crisis, and the March 2000 high of 1552.87, just before the dotcom crash.

I am not calling for 1567 yet, but from a longer-term perspective, a decline to 1567 would be a normal technical correction (38 percent), and a 25 percent correction from high to low (less than half of the financial crisis’s decline).

Bullish Technical Factors

  • KCDpeak and PeakOut (oversold signals)
  • KEES buy signals (blue L’s) and long permissions (blue dots)

A close over 1985 would confirm the bearish pennant has failed and open the way for at least 2022, the 1.00 projection for the wave 1867.01 – 1993.48 – 1903.07. Then connects to confluent projections at 2070 and 2109 as the 1.382 and 1.618 projections, respectively. The latter is the last level protecting the 2134.72 high.

Conclusions

It is a very tough call and the market could break either way. On balance though, I see enough bearish evidence to state that I think the Fed will hike rates and the markets will break lower.

Now if you’ll excuse me, I need to call to my grandmother and tell her not to bet the farm on the downside. Maybe some puts are in order.

“Ask Kase” and your question may be chosen as the subject of a future column ([email protected]).

Send questions for next week to [email protected], and click the link learn more about the KasePO, KaseCD, KEES, and the Kase DevStops.

CME1By Cynthia A. Kase

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As a fledgling oil trader over 32 years ago, the one exchange with which I was familiar was NYMEX, now part of CME Group. So I’m always interested in how the exchange is doing. With erratic swings in equity, fixed income, and FOREX markets, some think investors will increasingly use the CME to manage risk and take advantage of bear markets.

CME Outlook

Let’s see what the charts have to say about this transaction volume, as opposed to price driven, market.

As August closed, CME had hit $95, retracing 62 percent of the decline from $100.87 to $84.33. Tuesday, CME made a $94.92 high, closing just 10 cents below that – the highest close since $84.33.

 

CME2Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

Will the current modest recovery hold below its 62 percent retracement, or continue higher? The call is not clear, but my bias is higher with the proviso that CME must close and remain over $95.2 soon.

CME Technical Analysis

Here are the technical reasons:

  1. The trend terminus (Y3/X2) for the first wave down, 100.87 – 95.01 – 98.661, calculated to $84.30. $84.33 was hit, fulfilling the target almost exactly.
  2. The market gapped down on the August 24 open, before meeting $84.33. This could be an exhaustion gap.
  3. The daily candlestick for August 24 was a bullish “hammer”.
  4. Together with the prior day, August 21, the hammer comprised a “morning star” setup, completed by a close over the August 21 midpoint.
  5. The low on August 24 generated an oversold signal.
  6. Every downside test generated by small down gaps has failed.
  7. Tuesday importantly closed over the midpoint of the very bearish week ending August 21.

The reason $95.2 is critical, in addition to being just over the 62 percent retracement, and the midpoint for the bearish week, is that it is structural resistance and previously support as shown on the chart. $95 is also the critical daily Kase DevStop3. So, a close over will mean, per statistical testing, odds for a close over $100 are 70 percent.

The next threshold is $97.5, confluent for the wave 84.33 – 95.00 – 90.68, as the 0.62 extension and Phi corrective projection. It is a key target for the smaller waves following, and the open of the big down week noted above. Once $97.5 is hit, a trading range could ensue, but it would not be surprising to see $100.87 tested, and even new post-recession highs made. If I were short, I’d certainly scale out on closes in the $95.2 to $97.5 range.

Recommended CME Trading

The big bearish factor is that $95 has not yet been overcome. If I were long, I’d begin to lighten up at $90, and become more aggressive below $86 and out by. Playing from the short side, I’d be emboldened below $90, and looking for confirmation at $86.5 and $82.6. The “settlement” on CME isn’t in yet, but odds are leaning towards some moderation to the upside. For the CME no “exchange” just yet.

Mon1By Cynthia A. Kase

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Six big firms dominate the agricultural supply business today, having bought up over 200 smaller companies and their intellectual property over the past 25 years or so. Monsanto, the world’s largest seed supplier, and BASF both reportedly tried to buy rival Syngenta. Though no deals went through, it looks like the industry is in for another round of consolidation. One of Monsanto’s problems is that weeds are becoming resistant to its star product, Roundup, and commodity prices are down, reducing farmers’ ability to pay for its goods. A merger would help by giving it economies of scale which could improve its both prices and its pace of innovation.

The Monsanto stock price itself is now about 30 percent off its post-recession $128.79 high. Is Monsanto stock in the weeds or will it round UP?

Analysis

I’m biased to the downside primarily for these bearish reasons. The last four days, following last Wednesday’s big up day, have been stars, or small open-close range days. There was a possible breakaway gap down this morning. Kase’s daily upper stop has held. Momentum is non-divergent. The two most recent signals on KaseX, purple diamonds, were sell signals. All these are shown in the chart below.

mon2

 

 

 

 

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

If the $10 recovery lengthens, it’s no big deal if $98 is tested. The price to watch is $101. There’d have to be a three sigma move of the daily double TrueRange for $101 to be hit. This is also the minimum, 0.62 extension for the bounce from $89.34 to $99.48, and the midpoint of the candlestick for the week ending August 7. Above this, there’s heavy resistance in the $105 to $107 area, but odds then swing in favor of a recovery right back to May’s highs of $123 plus.

The decline to $89.34 was about $0.75 shy of $88.6 support, which must be clearly broken for a continuation lower. $88.6 is the 1.62 extension for the major recent wave is 128.79 – 105.76 – 126.0, and the 1.38 extension for the first wave down from $123.82. The trend terminus for both these waves is $71.25. Importantly, the correction from $89.34 to $99.48 targets $88.6 as the Phi-cubed projection. $88.6 is Kase daily DevStop2 and weekly DevStop1, so it is confluent statistically.

It’s not unusual for trending patterns elongate in such a way as to stretch key targets to more extreme levels. This is what’s happened for Monsanto. After falling from $128.79 to $105.76 in 2014, prices recovered to $126 earlier this year. Waves down from $126 have pushed the major downside target to$86.7. This is the “trend terminus” for the wave from $126.0 to $111.16, and the 1.0 extension from $126.0 to $103.14. Very importantly, $86.7 is the 50 percent retracement of the entire move up from the recession low of $44.61.

Outlook

Structurally, there’s a reasonable chance for $86.7 holding support, otherwise, I’d look for a free fall to $71.25. Below that don’t get lost after landing in the weeds!

Send questions for next week to [email protected], and click the link learn more about KaseX and the Kase DevStops.

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By Cynthia A. Kase

 

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Clearly US Stocks have been declining as the drop in demand in China has finally hit hard. It’s easy to sustain robust growth from a low base, but as an economy grows, that becomes more difficult, as China’s machinations show. The spillover to the Dow Jones Index has been evident since mid-May as its been oscillating in a downward pattern since then, bouncing down the cliff, as anyone paying attention will have seen. US Stocks have now rolled off the cliff edge. Now what? Continue reading US Stocks Rolled Off Edge Of Cliff: Now What?

Cows in a high mountain pastureBy Dean Rogers

Who could ever forget the iconic 1984 Wendy’s commercials featuring three little old ladies yelling “where’s the beef?”(If you are too young to remember treat yourself to taking a minute to watch.)

The commercials and the phrase “where’s the beef?” spawned a cultural catchphrase that has since become a statement questioning the value and substance of a product. The value of beef, priced in live cattle futures, has tripled since 1984, but a downturn in prices over the past 10 months begs the question, “where’s the beef going?”

On October 31, 2014 the perpetual (first nearby) live cattle futures contract rose to an all-time high of 171.975 cents per pound. Since then, prices have fallen in a corrective manner and recently came very close to meeting major support at 141.35. This is a highly confluent target that serves as a series of Fibonacci projections for the waves down from 171.975 (blue), 164.25 (green), and 156.475 (red) as shown in the chart below.

live cattle support

A close below 141.35 would open the way for the decline to continue to at least 135.6 and very likely 131.4. The latter is another highly confluent wave projection and potential stalling point, but the key target for live cattle futures is 127.0. This is the 1.618 projection of the largest and most important wave down from 171.975 (blue) and the more recent wave from 156.475 (red).

The decline from 171.975 is no doubt a correction of the long-term move up, and corrections normally hold the 1.618 target. Therefore, we expect to see a significant pullback and potential bottom form at 127.0. However, a sustained close below this would open the way for an extended decline to 122.05 and possibly 112.0.

The decline has stalled at 142.25 for now, and so far the subsequent rise to 150.85 is most likely a small correction of the move down (yes we are talking about corrections of corrections). The recent move up is most likely being driven by a typical seasonal boost for beef ahead of Labor Day.

The upward correction may extend, but 153.4, the 1.00 projection of the wave up from 142.25 (pink) and the 38 percent retracement of the decline from 171.975 should hold. The connection to 153.4 is made through the 0.618 projection of 149.8.

live cattle resistance

Based upon most technical factors as of this analysis, we don’t expect to see prices rise much higher than 153.4. This is a very important level not only because it is a confluent retracement and wave projection, but it also protects the 156.475 swing high. A move above 156.475 would take out of the waves down from this swing high and from 164.25. As a result the likelihood of a decline to or below 141.35 would be significantly dampened.

Therefore, upon a close over 153.4 odds would shift in favor of an extended upward correction to 156.8 and likely 159.5, a crucial target because it is split between the 1.618 projection of the wave up from 142.25 and the 62 percent retracement of the decline from 171.975. A sustained close over 159.5 would indicate the decline from 171.975 is over and would call for 168.5 and higher.

So to answer the question “where’s the beef going?”; technical factors show that prices will most likely fall once the Labor Day demand boost passes. Look for resistance at 153.4 to hold and for 141.35 to be challenged again. A close below 141.35 will call for 135.6, 131.4, and 127.0.

Check out Kase on Technical Analysis to learn more about trading and forecasting price using technical analysis.

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

disney
By Cynthia Kase

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“Ask Kase” and your question may be chosen as the subject of a future column ([email protected]).

The media sector has been hit by fears about streaming video and unbundling. Disney reported decent revenues, but is trading at a relatively high multiple. With high hopes that Star Wars will boost Disney’s stock price, is the decline now a time to buy in?

Disney climbed from a $15.14 low back in 2009 to a $122.08 high on August 4, only to suffer an $11 plus down gap on the following day’s open. This precipitous drop, continuing to $104.24, disconnected the following price action from the previous uptrend. Though the dropped seemed large, it only retraced 38 percent of the rise from $78.54.

Aside from waves, the only key pattern is an intraday coil, shown in the chart below (dark red). Though coils are signs of uncertainty, this one appears to be a failed attempt to recover. The last wave up in green would be expected to exceed the earlier one, which did not happen

$0.75 Kase Bar with Coil

DIS Kase Bar Chart

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

If there’s a break higher, though, I’d buy above $111 and increase my position above $117.9. Otherwise, I’d watch $100. If it doesn’t break, then I would time in on signals as prices rise from a short-lived downside test. I would buy on a bounce up from $93.4. But if this lower “drop dead” support breaks, I’d watch Fantasia instead of DIS for now.

Here are the details. As the coil’s apex is approached, a breakout is expected, with upside and downside targets $117.9 and $97.8 respectively.

The decline stalled before hitting its 21 percent retracement, $100. This is a hugely important price because it is the first retracement of the entire move up.

Retracements to $122.08

DIS Retracements

$100 is also a key extension for the waves marked in magenta in the chart. The wave from $122.08 extends to $100 as its 0.62 projection, and the Phi corrective projection. The 1.62 extension for this wave is $93.4.

The magenta wave down from $111 extends to $100 as its 1.38 projection. The last small wave from $109.28 targets $100 as its 2*1.38 extension. (For more on wave targets, check out Kase on Technical Analysis).

The waves shown in blue calculate to immediate support at $101.5. This is also Kase DevStop3 on the weekly chart. If this level isn’t broken on a move lower, then the tone will improve. It’s likely though, if this is tested, $100 will be met. $100 is also a psychological barrier.

Below $100, there’s a wave projection to $97.6, the coil’s lower target, but a break of $100 will likely lead to the $93.4 confluence point.

On the upside, the recent $111 swing poses initial resistance both structurally and as a wave target. Above this there’s a confluence point at $114.9, but the big number is $117.9, coincident with the coil’s upper target. Above this, a resumption of the uptrend would be expected, with reasonably confluent targets up to about $133.

Send questions for next week to [email protected], and learn more about Kase’s services please visit here.