It has been two weeks since analysts here at The Schork Report switched our technical daily bias in the Nymex liquids from bullish to bearish. In the aggregate we have been correct, but we are not yet convinced the bears have what it takes for a significant sell-off… especially in light of the strong negative correlation with oil prices and the value of the dollar (see QE2).
Before we go into the liquids, let’s first update the natural gas market. This one is easy; the market is as bearish as ever, i.e. down 26%. Since moving to a bearish bent on August 06th the contract for November delivery has dropped in 30 of 50 sessions (60%) with average losses coming to 2½ cents per dekatherm, per session. Thus, for the time being, we see little reason to alter our bearish view.
The liquids markets have not been nearly as convincing, however. Since switching to a bearish bias on October 04th the spot crude oil contract for November delivery has closed lower in 6 of 10 sessions with an average loss of 3.3 cents per barrel per session.
Be that as it may, before correcting lower we had to endure a couple of sleepless nights as the market rallied 3.3% above the high from whence we switched our bias.