ChartWatch Markets: Uranium, coal, crude oil – energy commodities review, plus Nasdaq rally hints Santa is near

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

• Nasdaq Composite

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

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

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

• Uranium Futures (Front month, back-adjusted) COMEX

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Nasdaq Composite Index

Analysis

That’s 7 white bodied candles in a row now – kind of the polar opposite to the 24020-21898 move that preceded it!

It’s certainly not outside the realm of possibility – hey this is the Comp we’re talking about, and even despite the pullback – the fact it remained in a bull market was never in doubt… But I must admit, I’m a little frustrated at being sold a big fat dummy! 😅

I know I always have the excuse of: “Well, that’s trend following… by default, one’s guaranteed to be at least a day behind the market”, and I concede that V-shaped rallies are one of the hardest moves for a trend follower to navigate (with A-shaped reversals being the other! 😉).

Looking at that seventh-straight white-bodied candle with close near the sessions high, it confirms again that the motivation among investors to buy stocks remains intact. I propose that given the substantially below average volume (again), there’s not exactly a wall of demand chasing stocks – nor a wall of supply opposing it.

In the thinness of a December market, the path of least resistance for now is up.

As I’ve mentioned in previous updates, the big test will come when there is an influx of motivated demand or supply and how the other side responds respectively.

So, perhaps the next proper signal we’ll get regarding whether the rally from 21898 is sustainable or not will coincide with a meaningfully above-average volume session.

Until then, as the December doldrums drag on – I remain comfortable with a bet each way. I acknowledge, however, that the technical picture here is rapidly improving:

(Consistent with demand-side control = ✅ vs Consistent with supply-side control = ❌)

1. Short and long term trend ribbons: ⬆️ / ⬆️, widening (getting stronger), the price is above both ribbons and both ribbons are acting as a zone of dynamic excess demand = ✅✅

2. Price action: Rising peaks and rising troughs (i.e., supply removal and demand reinforcement) = ✅

3. Candles: Demand-side candles (i.e., white-bodied candles and or downward pointing shadows) = ✅

I note the V-shaped recovery is also evident in the small-cap Russell 2000. It's starting to look a lot like Christmas! 🎄🎁

View

I remain comfortable at 1/2RP as my Risk Bucket 🪣 limit for now – and am happy to utilise the entire risk allocation if suitable opportunities can be found (i.e., my personal allowable capital allocation limit (i.e., Risk Position) for my investments in US stocks is 50%).

Key levels

The next critical zone of demand is the short term uptrend ribbon (presently 23000-23075), the Comp price should not close below this zone if the demand-side is in strong control of the price. Below it, 21898 is the next critical point of demand, if the Comp price closes below it, t hen the short term trend is unequivocally down and the long term uptrend is likely under significant pressure = ⚠️ 23570-24020 is the nearest critical zone of supply – the Comp must at least close within this zone with a strong demand-side candle to confirm the demand-side has moved back into control of the Comp's price.

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

Analysis

We haven't done an energy edition in ChartWatch Markets for a while, and to be fair, when you consider the chart above of Brent crude, and the charts below, there really hasn't been any reason to! 🥱

But, for completeness, and to keep in touch after recent contract rolls, let's do a quick catch up.

View

No trends. Nil. Nada. Nothing. Zero. Well, ahem, sideways is a trend too! 🤦 ZRP for me on Brent (Zero Risk Position = my model sees no reason to have any risk exposure to this market).

Key levels

You know that Leonardo DiCaprio movie about dreams within dreams within dreams... Well, this is ranges inside ranges, inside... you get the drift. Is it 70.30 to the upside and 57.78 to the downside? Or 77.09 and 52.58? Zoom out... and there are ranges further out still!!!

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

Analysis

A decent spike here last few sessions as the financial wires report on looming supply shortages. We've seen rallies like this before – and we've seen them fail – so, for me, I prefer to stick with my model and not the news!

This chart remains a picture of supply-side control, albeit with that control being tested over the last week.

To start a new long term uptrend, the coking coal price must:

• Close above the long term trend ribbon (presently down / dark pink)

• The long term trend ribbon should at lease nuetralise (i.e. amber or up / dark green)

• The short term trend (presently neutral) should be up (light green)

• The price action should be rising peaks and rising troughs

• The trend ribbons should begin to act as zones of dynamic demand (i.e. troughs should form at or above the ribbons)

Until then, this is an interesting chart – but not one that requires any movement on the risk allocation front as far as my model is concerned.

View

ZRP for me on coking coal. If I squint, that last rally moves the dial to "=R" (i.e., maintain risk if I had it – but I don't!)

Key levels

220 – a close above that point of supply and this chart is starting to look interesting. Back below the short term trend ribbon (presently 204-05) and the long term downtrend has reasserted itself. Below 200 and it's lights out for coking coal.

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

Analysis

Short term downtrend + Long term downtrend + Falling peaks and falling troughs = Convincing supply-side control. Which means little interest here for me.

View

ZRP for me on thermal coal, although if this was a stock, going one step further to "-R" (i.e., shorting) would also be an option.

Key levels

117.10 to the upside and 106.75 to the downside. Happy to trust the prevailing short and long term downtrends in between.

Uranium Futures (Front month, back-adjusted) COMEX

Analysis

Uranium is bouncing along the bottom of the 75.60-83.65 trading range. The short term trend is down and the price action is falling peaks and falling troughs. The long term uptrend is flattening out substantially... Sounds like growing supply-side control to me...

One positive is that the long term uptrend ribbon is so far doing its job of acting as a zone of dynamic demand – if that changes, and if uranium closes below 75.60 – it could be a very slippery slope down to the next zone of demand at 70.30-71.00.

View

ZRP for me on uranium.

Key levels

75.60 is the critical point of demand. If the uranium price closes below it, the short term trend is unequivocally down.