ChartWatch Markets: Crude Oil and Coal markets' response to Trump's – Climate change is the "greatest con job ever"

In today's edition of ChartWatch Markets, we do our usual check-in on on the Nasdaq Composite, then we see if there's been any response in key carbon-based energy markets like Crude Oil and Coal to US President Trump's recent comments that climate change "the greatest con job ever perpetrated on the world".

In today's edition, we'll be covering the technicals for:

1. Nasdaq Composite

2. Brent Crude Oil Futures (Front month, back-adjusted) ICE

3. Australian Premium Coking Coal Futures (Front month, back-adjusted) SGX

4. Newcastle Coal Futures (Front month, back-adjusted) ICE

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Nasdaq Composite Index

As expected! (click here for full size image)

All pretty much as expected on Thursday… Which is silly, because I’m not allowed to expect / predict, remember! Let’s just say that Thursday’s candle is hardly a surprise for students of MOTN like us!

More Often Than Not

Think about what candle you’d expect in a rampaging bull market like the Comp’s, i.e., one with:

1. Rising short and long term trend ribbons, widening (getting stronger), each acting as a zone of dynamic excess demand.

2. Price action consistent with demand-side control, i.e., supply removal and demand reinforcement (equates to rising peaks and rising troughs).

3. Candles consistent with demand-side control (i.e., white-bodied candles and or downward pointing shadows).

But! Also after you’ve had a couple of decent supply-side showings to demonstrate a few jitters in the short term.

I’d expect some sort of follow through of that excess supply, at least on the open / early in the trading session… Then to see the demand-side come in as per the usual bull market playbook, soak up that supply and then remain motivated enough once they’d dealt with that to keep bidding up price. Similarly on this point, that the supply-side either realised their time in control was up – or simply ran out of ammunition. D > S = P⬆️.

This is a narrative of course, in terms of price action, this narrative looks like a white-bodied candle with a downward pointing shadow. The bottom of that shadow just about tickled the dynamic excess demand we’d ordinarily expect to kick in that the short term uptrend ribbon.

So, as I said, Thursday was “pretty much as expected”! ✅

The only detail that isn't ideal from Thursday’s price action is that small upward pointing shadow. It’s not huge – but we would have much rather preferred a close smack-bang on the high to indicate unequivocally that the demand-side is back in control of the Comp’s price.

We might get that tonight. Hey – we might not, too! It's a MOTN thing, remember!? 😉

We just gotta keep reading those candles, one by one, just like the words you’re reading in this sentence right now. That’s our job as risk managers, and between you and me, I relish the task! 💪

But until we get the next candle, given 1, 2, and 3 above, and of course that decent demand-side showing last night – there’s nothing left to do but restate the obvious: Stay the course = FRP (Full Risk Position = My personal allowable capital allocation limit for my investments in US stocks is 100%)

• Key levels: 22058 is the closest point of demand, the price should not close below here if the demand-side is in control of the Comp's price; a close below the short term uptrend ribbon (presently 21860-22130) will nullify the short term uptrend = ⚠️

Brent Crude Oil Futures (Front month, back-adjusted) ICE

Stuck in the middle with crude 🎶🎵 (click here for full size image)

Super quick update here, but I thought it's worth covering this one because:

1. It's been so long since our last update (ChartWatch in the Evening Wrap of 25-June – that's before my holiday!)

2. ASX Energy stocks have taken a nasty turn for the worse over the last few weeks.

As for Point 1, um, well look at what's happened since the end of June – or rather what's not happened! Major snooze-fest for Brent 😴!

As for Point 2, unfortunately the answer to why ASX energy stocks have tanked recently doesn't lie here. That would probably be more to do with fund flows and the dissolution of a takeover premium for the sector after the XRG Consortium walked away from its bid for STO.

I suggest that until Brent makes a meaningful break, either above 72.31 – but really above 81.94 – the dial will continue to be fixed at neutral in terms of sector impact. Well, positive sector impact... because it could also break below 63.84 and likely do some damage... ⚠️

But, trends (ST up if you squint and LT neutral), price action (again plenty of squinting required so I'm not even going to bother!), and candles (pass...!) are all stuck in the middle of mundaneness... 🥱

Australian Premium Coking Coal Futures (Front month, back-adjusted) SGX

Stuck in the middle with coking coal? Doesn't have the same ring! (click here for full size image)

Largely sideways here, too. We covered coking coal and thermal coal (below) in ChartWatch in the Evening Wrap a month ago – just as those June-July anti-involution tailwinds were begging to wane.

In that update, I noted: "both major coal contracts appear to be rolling over again, from neutral-neutral short and long term trends (i.e., equilibrium) on the coking coal chart, to now-clearly re-established down-down short and long term trends (i.e., supply-side control) on the thermal coal chart".

Pretty accurate. Both contracts are weaker today, and in the case of Newcastle thermal, substantially so.

Clearly, coking coal looks better than thermal, but it's hardly inspiring. The short term trend is neutral and the long term trend is down. The price action is compressing below the dynamic excess supply of the long term downtrend ribbon.

In short, I can't take this one seriously until it closes above that long term uptrend ribbon – which even after those anti-involution heroics, it failed to do... 👎

Newcastle Coal Futures (Front month, back-adjusted) ICE

Never ending (downtrend) story (click here for full size image)

Thermal coal's trends show a greater consensus among market participants and that adds up to dominant supply-side control. There has been a decent rally from 104.45, however, but again – there's little to get excited about until we at least see a close above the short term downtrend ribbon...

A close above the long term downtrend ribbon? 🤔

I could only imagine what would have to take place in the world for that to happen!!! (Can I say, far more than President Trump pulling out of various climate accords and declaring climate change is the "greatest con job ever perpetrated in the world"! 🤦).