Big Hotel Stocks – Starwood Is Not Hot

By Big Hotel ImageCynthia Kase

Read on TraderPlanet.com

The big hotel chains recovered from the financial crisis well and until recent months showed steady gains. Diversification, appealing to differing guests, as well as shifting property ownership to partners helped heat the sector. But now, it looks like supply is catching up with demand, and now the sector is cooling off. To evaluate specifics, I’ve chosen to look at Starwood Hotels & Resorts Worldwide Inc. (HOT) this week as a proxy for its peers.

HOT’s been down for four months running, having lost about 14 percent of its value. The first major downside target is $73.0. If that breaks, a freefall to $65 could ensue, but $70, or $67.5 form interim support. These prices are reflected in the retracement tables shown below

Big Hotel Small Chart
Retracements from Lows to $87.99

 

 

 

 

 

 

Since Friday, there’s been a small correction, but HOT declined today, August 11. $78 could be tested, and a close over next resistance at $81 would call for a recovery.

Starwood (HOT) Technical Indicators

Looking at the technicals, Starwood’s monthly chart generated a negative divergence back in April based on the KaseCD. Four down months have followed, but lows have not yet reached Kase’s first stop level at $72.83. The stop is near a key target, centered on $73.Big Hotel Chart

The first wave of a pattern is always the most important. Here that’s 87.99 – 79.53 – 86.96, the 1.62 extension for which is $73. If the pattern extends, look for $65, the trend terminus. This is just above Kase’s second stop at $65.8. The most recent wave is 87.99 – 79.53 – 86.96, and $73 is its equal extension as well as the Phi-squared corrective projection.

Backtracking, July 31 was an aberrant, outside, down day. Prices spiked to $86.96 only make a $77.72 low. $73 and $65 are targeted by this day’s waves.

The last four days through Tuesday for a Harami line with stars. The daily chart is oversold, but not divergent. Prices rose about $1.50 from $75.57, but fell today. The wave up targets $78, which is its equal extension, as well as its Phi corrective projection. The wave also targets $81, using three different calculations. This is the “drop dead” price above which the tone becomes positive, and the highest price to which the small wave projects. These two resistance values are the midpoints for the August (so far) and July monthly candlesticks.

Recommended Starwood (HOT) Trading

If I were short above $86, I’d just stay short, perhaps scaling out at $78 and then $81, and exercising caution at the downside targets. Bearish intraday traders might time in here, but watch $73, and use tighter stops. Technically there is little room for optimism, but if you’re long on fundamentals, then monitor the downside targets. Above $81 – you’re “hot”.

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By Dean Rogers

For the past eight weeks September WTI crude oil futures have closed lower, and the decline is quickly approaching major support at $42.5. Many pundits claim the sky is falling, but it is usually at times like this that the market will finally find support and at least attempt to make a bottom.

We have discussed $42.5 as major target and potential bottom in our weekly blog update and in our detailed crude oil forecast for several weeks. There is no definitive evidence that the move down is going to end, but on Monday a few positive signs formed that indicate an extended upward correction may take place.

Monday’s bullish engulfing line, exhausted daily KasePO and KaseCD momentum, weekly divergence setups, and the intraday wave up from $43.35 all show that the upward correction may test $45.9 and possibly $47.5 before the decline continues.

wti crude oil

For now, there is no evidence that this will be a major correction, not yet at least, but the fact that the market is starting to show some positive signs of life could mean the move down will end soon.

That said, important resistance was met at $45.01, so we expect to see a pullback to $44.3, Monday’s midpoint, in early trading Tuesday. A close below $44.3 would negate many of the aforementioned positive factors and open the way for $42.5 to finally be met.

This is a brief analysis and outlook for the near-term. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Patience is a virtue.

Natural gas has been trying the patience of traders as it continues to trade in a range between approximately $2.65 and $2.95. This week’s rise from $2.706 is very similar to last week’s move up from $2.735, and given today’s decline and close below $2.80, it looks like another failure to overcome key resistance at $2.89 is taking place…again!

September futures stalled at $2.863, the 62 percent retracement from $2.957 to $2.706. This is also just below $2.892, the 0.618 projection of the wave up from $2.656. The retracements and projections confirm that $2.89 is a key level. A close over this would call for an attempt to overcome $2.95 and break out of the trading range.

natural gas

However, the bearish KaseCD divergence and close below $2.80, the 38 percent retracement from $2.706 to $2.863, indicates prices are now positioned to challenge support at $2.77, the 62 percent retracement. A close below $2.77 would then open the way for another attempt of $2.65 and lower.

The take away this week – be patient.

This is a brief natural gas forecast ahead of tomorrow’s EIA report. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four week trial.

By Dean Rogers

RBOB Gasoline futures tested support at 167.43 on Monday and have taken out the crucial 169.25 swing low. The outlook is negative, but many technical factors, including Monday’s dip below the lower Bollinger Band, indicate a correction should take place once 160.0 is met. This is the confluence point between the 62 percent retracement of the move up from 122.65 and the 1.618 projection for the primary wave down from 218.58.

gasoline

Look for resistance at 172.3 and 181.3. The latter is expected to hold.

This is a brief analysis and outlook for the near-term. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Natural gas continues to oscillate in a range between $2.65 and $2.95 as weather forecasts change from week-to-week. “Sweltering” heat in the US Northeast is the latest reason reported for this week’s price rise.

However, it is important to keep in mind that the shifting weather forecasts and related events have kept the market range bound for the last few months, and even if prices do break higher the move is still corrective of the longer-term down trend.

If I sound skeptical of the move up, it is because I am, but as of Wednesday’s close most technical factors indicate $2.95 may be challenged again. These factors show that the key to testing $2.95 is a close over $2.87. This crucial resistance level was tested a few times on Wednesday. It is the 62 percent retracement of the decline from $2.957 to $2.735, near last Thursday’s midpoint, and a confluent projection for the small waves up from $2.735. A close over $2.87 would call for a test of $2.95, which is in line with the 0.618 projection of the wave $2.656 – 2.957 – 2.735.

natural gas

KaseX’s buy signal (green diamond) is promising and the pullback from $2.87 held the 38 percent retracement of the move up from $2.735. Look for prices to push above $2.87 in early trading tomorrow and to possibly overcome $2.95 in the event that the EIA storage report is bullish.

Near term support is $2.79, the 62 percent retracement from $2.735 to $2.87. This level should hold provided the move up is going to challenge $2.95. A close below $2.79 would shift the near-term outlook to negative and call for $2.73.

This is a brief natural gas forecast ahead of tomorrow’s EIA report. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four week trial. We also offer trials of our KaseX trading indicator.

us dollarRead on TraderPlanet.com

By Cynthia A. Kase

On Tuesday pundits were aflutter because the US Dollar had an up day, pointing to expectations that the Fed would soon clarify its intentions to raise rates. Technically, Tuesday was a “star” with a very small range, an inside bar which closed well below Monday’s open. It was indicative, at most, of a wait-and-see stance.

Technically, using the US Dollar index, DXY, the dollar, while not “in the doldrums”, isn’t yet robust. From a chart-driven standpoint, the market’s longer-term structure, viewed from March’s 100.39 high is negative. After five down days, prices are sitting on support. There must be a sustained close over 98.46 to give the dollar a boost.

The move up from 93.13 is a zig-zag abc pattern, where wave a equals wave c. Thus the upward correction could be complete having fulfilled a normal objective at 98.15. Also the second leg of the correction took 22 days, much shallower than the first at eight days. Put another way, it took almost three times as long for an equal increase in prices for wave c. The KaseCD momentum indicator exhibited a negative divergence at the July 21, 98.15 swing high.

us dollar 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.

For a positive outlook, 95 must hold and resistance at 98.46 overcome, in which case, 100.39 is the target.

Here’s the scoop on 95. The first small wave down from 98.15 projects no lower than 95 as the trend terminus (98.153/97.112), 2*1.38 extension, and the corrective Phi3 projection. 95 is confluent as the daily Kase DevStop6 and weekly warning line.

95 is the 62 percent retracement of the entire correction from 93.56, as shown in the table below. (As shown by the strike through, the decline has met the 38 percent retracement.) Finally the wave from April’s 98.46 swing high targets 95 as its minimum extension. So 95 is both a big target and major support. If broken, a decline to 91 becomes probable.

us dollar small

The downward pattern from 98.15, is also a zig-zag with equal waves. That’s supportive, as is the Harami star noted above, along with a bullish divergence on the KaseCD based on a 0.25 Kase Bar intraday chart. As noted, at minimum, 98.46 must be overcome for a recovery to come into view. This is not only the first swing high above 98.15, but also highly confluent for recent up waves. Very importantly it’s the next 1.38 extension for the wave 93.56 – 96.37 – 94.68 that’s already met and extended beyond its 1.0, equal to, objective.

Above 98.4, there’s some resistance at 99, but odds near certainty, then, for 100.39. This is the 1.38 extension (and Phi corrective projection) for wave a of the upward zig-zag pattern, and for the final up wave, 95.45 – 98.15 – 96.29. Above 100.39, the target’s 104.

It’s not yet time to “bet your bottom dollar” on DXY, but to watch the key levels and act accordingly!

“Ask Kase” and your question may be chosen as the subject of a future column (askkase@kaseco.com).

 

Prompt month WTI crude oil futures briefly fell below $50.0 on Monday and settled at the lowest level since April 2. The deal with Iran has led to fresh concerns about the global supply glut and most technical factors are negative. RBOB gasoline is lending some support, but on balance, the decline is poised to extend into the mid- and possibly low-$40s where the March 18th low of $42.03 would be challenged.

Prices broke lower out of the near perfect intraday bearish flag discussed last week. September WTI futures, which will become the prompt month on Wednesday, also settled below key support at $50.6 on Monday. This was the 1.618 projection of the wave $64.45 – 57.09 – 62.51. This is likely Wave I of a five wave trending pattern that should unfold to at least $47.0 and possibly $42.5. The five-wave pattern is not perfect, but the close below $50.6 and the bottom of Wave III leaves little room for any other interpretation.

WTI Crude Oil

When a five-wave pattern forms at least two of the three impulse waves (I, III, or V) should be equal. At $47.0 Waves I and V will be equal and at $42.5 Waves III and V will be equal. Structurally, both $47.0 and $42.5 fit the structure of the five-wave pattern because $47.0 is the 0.618 projection of Wave III, $62.51 – 50.95 – 54.35 and $42.5 is the 2.764 projection for Wave I.

It is important to note that $42.5 is the lowest that the five-wave pattern projects. Therefore, unless the structure of the wave formation drastically changes, it is not likely that prices will fall below $42.5 in coming weeks.

Odds favor the decline, but the market still seems a bit unsure of itself. As stated, there is some support being wrought by RBOB gasoline, but it ended Monday on a negative note by forming an evening star setup. The move down will likely be a grind and small tests of resistance will be commonplace. First resistance is $51.8 followed by $52.8, which is expected to hold. Key resistance is the $54.35 swing high. A close above this would negative the five-wave pattern and open the way for an extended correction and potential recovery to $59.3 and higher.

Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

Perfect geometric formations are a rare commodity. They are useful gems of information that can tell us a lot about a market’s outlook and general direction. It is important to pay attention to the implications of a successful break out of the pattern, and it is even more important to watch for patterns that fail.

WTI’s bearish flag on the $0.50 Kase Bar chart is as close to a textbook example as one will ever see. Flags are extremely reliable continuation patterns. Because this flag formed after a decline, and is sloping upwards, it is a bearish pattern that indicates the move up is corrective and that the decline should continue.

WTI Crude Oil

The waves within the flag have fulfilled the 1.00 projection for the wave $50.58 – 53.43 – 50.91. This is significant because it is evidence that the move up is unfolding as a three-wave ABC pattern, which is more evidence that the move is corrective.

Prices settled in the lower half of the formation on Monday, which does not bode well for another test of the upper trend line. A close below $51.8, which is near the bottom trend line, would indicate the move down is going to extend to at least $49.9. Our detailed weekly analysis discusses the connections to targets in the mid- to low-$40s upon a break lower.

There is an outside chance that the formation will fail, but prices will need to close over $54.8 to prove that an extended upward correction and potential recovery is underway. Technically, the flag will fail upon a close over the upper trend line, which is currently $54.2. However, for many technical reasons, $54.8 is the threshold for a positive near-term outlook. Most importantly, it is near the 38 percent retracement of the decline from $62.22 and the midpoint of July 6th.

For now, watch the flag formation closely. Odds favor a break lower and close below $51.8. The directional breakout of this pattern will be a strong clue as to the direction of WTI for the next several weeks.

This is a brief analysis and outlook for the near-term. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

After the 4th of July weekend the energy markets, unlike the weather across most of the U.S., heated up. The lack of warm summer weather in key areas of the county has given way to lower prices for natural gas. August natural gas futures finally closed below $2.73 on Tuesday and Wednesday. The move has been quiet relative to the noise being made by crude oil, but the break lower indicates prices should continue to decline. That said, the bullish KaseCD divergence and KasePO PeakOut (oversold signal) on the $0.035 Kase Bar chart indicate the decline will be a grind.

natural gas prices

The wave $2.977 – 2.733 – 2.885 took out its 0.618 projection at $2.73, therefore odds favor at least $2.64, its 1.00 projection. This is a highly confluent and important target that protects the $2.588 swing low. We expect to see a bounce from $2.64 given its importance. A close below $2.64 would call for $2.55 and $2.50.

The 38 percent retracement from $2.885 to $2.676 is $2.76. Key near-term resistance is $2.81, the 62 percent retracement. Both levels are in line with the two previous intraday swing highs of $2.756 and $2.80. A close over $2.81 is unlikely unless tomorrow’s Energy Information Agency (EIA) report is extremely bullish.

This is a brief natural gas forecast ahead of tomorrow’s EIA report. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four week trial.

As predicted WTI crude oil has broken lower out of the recent trading range and fell by nearly eight percent on Monday. The important 1.382 projection was met at the $52.41 swing low. Key support at $50.5 should be tested tomorrow. We consider this a decision point for a much more bearish outlook and decline into the mid-$40’s. Today’s action may even dust up talks about the $30s again, though we think that conversation is a bit premature. Look for resistance at Monday’s $54.4 midpoint. This may be tested in early trading Tuesday, but should hold.

wti crude oil

This is a brief analysis and outlook for the near-term. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.