Daily Archives: March 7, 2018

March, 7, 2018 Crude Oil Intraday Crash Update

I have made a few changes with the oil wave positions. I added the 4th wave in Intermediate degree at the January top.  This is not chiseled in stone, but I have to use it to eliminate it.  This next set of 5 waves must crash below $58 as that alone will help to confirm that this wave 2 rally in Minute degree was just a bearish trend counter rally.  Usually with any zigzag crash the “A” wave can be very steep, with the “C5” wave meandering more obviously.

This is not what is happening so the wave two rally has a good chance of holding.   Just by adding one higher degree of the 4th wave in Intermediate degree makes the 2008 peak a Cycle degree top.  The major rally from the 2008 $34 bottom to about the 2011 top ($115)  was confirmed as a bear market rally, when oil crash to about $28 in late 2015.  If oil keeps progressing south, then by the end of 2018 we would be finishing a 10 year bear market. A 13 year bear market would get us very close to the 2021 time period, just in time for solar cycle #25 to take off.

I have mentioned it several times that oil could fall to $12 if the rally that started in early 2016 was a fake. It sure was frustrating enough to count out. Some fundamentals are very positive, but they are still years away from kicking in. Oil fields get pumped out which slows worldwide oil production.   I look up or down with the wave counts, but 2-3 years is still a long time where anything can happen.

Many presidents in the past have added duties on countries and it all sound like a trade war as well.  Most of it is just jawboning rhetoric and it will never happen, so don’t get too wrapped up in the “Tariff Wars” that the mainstream media loves.

The commercial traders are net short WTI oil by a ratio of 2:1 while the speculators are still net long by a ratio of 6.9:1. This is a huge bull trap that the speculators are in. These numbers should eventually reverse and when that happens, then another set up for an oil bull market should happen.  The Gold/Oil ratio has not really changed that much and is still sitting at a bit over 21:1, which seems to be a double and even triple top. This ratio should expand when oil gets cheaper,  and then compress when it becomes more expensive.

DJIA Intraday Gyrations Update

The indices I cover make 3 month jumps, so when the March contracts finish,  I have to jump to June 2018 contracts. This chart is the first I will post in the new June contracts. (YMM18). Trading is a bit thin with this June month, but it should pick up in another two weeks.

I’m keeping my wave counts that would work for a Cycle degree zigzag correction. If this is not true, then eventually this wave count will get trashed, but it would also eliminate 2 out of three possible Cycle degree corrections. Any 1-2-3 declining wave count can be identical to any A-B-C zigzag, so until we get to the “C”or “3” wave count I can use my “B”wave top. The February 9th down spike you see is an erroneous spike, because it disappears with line type settings.

What gets me is that the DJIA secondary bottom of February looks truncated, which I have a problem with. It looks worse when I switch into line type settings.  These erroneous spikes, seemed to be computer generated due to the fact they happen so fast.

The rally is still going as I post and I would like to see that open gap closed before these markets resume any downside. All of my March contracts all registered Gaps, so it’s not an isolated event. (The Gary Cohon Dip) It would be fantastic if the gap ended up being closed, but still short of breaking out to another higher high. Trade war fears are not going to go away as they are part of the changing  fundamentals. Trump has made it pretty clear as he was always talking about tariffs and duties, so we should not be surprised at what is happening now.

The EU has threatened retalator attacks on US exports that are targeted at president Trumps heartland voter support. That is a very direct attack on Trump supporters as their jobs woud be on the line.  Fundamentals keep the masses entertained, but in the end if a big Cycle degree bear market is coming, it matters little what fundamental reasoning they use. Fundamentals will change like the wind and it will drive you nuts trying to make decisions based on fundamentals. In January 2018 the herd was extremely bullish as they bought into this “New Era” hype, and now two months later we hear lots of bearish news. When forecasting a price crash, before it happens, we would also be forecasting that fundamentals will change.

The idea that we always have to remind readers that markets never go down in a straight line is ridiculous, as that would only apply to investors that have never seen a financial chart before.

US Dollar Bear Market Returns?

The general direction of the US dollar is still down. It’s declining in a choppy fashion so we could be looking at a 5th wave diagonal decline.  The Euro jumped as the USD declined, but the Euro is a better looking rally. It’s not a beauty contest, but a war between bulls and bears.  Right now the bears seemed to be winning as the USD slowly keeps  grinding down.

The commercials switched to a net short position, so this helps in knowing that a super bull will not suddenly possess the US dollar holders.  I think the US dollar still has to fall well below that 88.200 price level, but it must also be finishing the big Minute degree decline.  Price alone will never give you the basis of a major reversal, but patterns do. Yes, I use price, but it’s always associated with the pattern I may be working. Price forecasts by the experts sure didn’t help to forecast the end of the US dollar bull market, so why should they know when the US dollar bear market is going to end?  The experts never saw the end of the 2008 US dollar bear market so why should they this time around?

Nobody was expecting a media trade war to be conducted at record peaks of the stock markets, but they did.  The big question is if the US dollar bull market that started in 2008 was actually a fake bull market. Bear market rallies always produce total retracements which in the US dollar case, would be well below the 70 price level. It will be a tough call once this US dollar 5 wave sequence is done, as a strong US dollar rally would have to happen.