Tag Archives: Gold/Oil Ratio

Crude Oil Still Double Topping

This double top is so close to call that I switched back to a potential zigzag bullish phase that can work in a diagonal 5th wave. Gasoline is far from reaching any potential double top,  so we have a good divergence between the two types of commodities. There is not much we can add to the short term picture except that oil can head south right along with the stock market. The commercial traders don’t instill any great urgency to pile into this extended bullish push, as they have been net short for some time already. $65.50 is the price to beat with this very busy June contract. Once mid June rolls around, I will then switch to the December contract which is just as busy as this June contract is.

The December contract is also much lower in price by about $4. It would be far more bullish, if the December contract is higher in price!

The Gold/Oil ratio has not made any real dramatic moves as it has been averaging around the 20.5:1 ratio. This ratio must keep compressing otherwise it has a high probability of starting to spread. A spreading Gold/Oil ratio would then show us that oil is getting cheaper when we use the Troy gold ounce as a measuring tool.

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.

Crude Oil Intraday Crash Review

Since the mid February bottom, crude oil charged up producing a wild pattern that just will not work as a simple impulse wave structure. Rallies this choppy usually retraces the entire move, but we need oil to dip much further to help confirm my suspicions. As I post, a small rally is taking place, so anything can still happen. Inventory levels are being drained, and many large oil fields will be losing their production capabilities in the next few years. Crude oil inventory levels mean little if the stock market is going to enter into a recession.

In the 2008 crash even gold and oil plunged with the markets, so any event that has happened in the past can happen again. Commercial traders are net short crude oil but not with any real screaming bearish numbers. A quick calculation puts the net short ratio at about 1.35:1 which is not an extreme position.

If this bullish run is over then the $58 price level would be the next main price target to get hit. I’m looking for the big move to look like a correction has completed, but at this point I still can’t jump on the crude oil bullish bandwagon.

The Gold/Oil ratio hit 21.17:1 today, which has been pretty normal in the last month or so. Any fast move which compresses the Gold/Oil ratio very quickly can mean, a much bigger decline is just around the corner.

Crude Oil Intraday Rally Review

Crude oil soared after what looks like a double bottom. There is a strong probability that crude oil is completing a 4th wave rally due to its choppy rally.  There is a chance that crude oil can still break higher, but then we would also be getting very close to the bottom of my wave one in Minute degree.  We may have to wait out all of February for this move to clear up, but otherwise it could turn into a wave 2 in Minor degree.

I have nothing better at this time, but oil could still see downward pressure along with the general stock markets. Oil certainly rallied also with stocks, but stocks may still have upside left in the next few days.  The Gold/Oil ratio is hovering around 21.63:1 but this should expand if crude oil resumes its southerly direction.

I’m not going to turn bullish except for short term bullish runs. Until I see that a clear cut correction of sufficient physical size has completed, I can’t turn bullish for the longer term.

Crude Oil Explosive Rally Update!


I was expecting a 4th wave rally and the markets did not disappoint us. There was a strong small counter rally that may put a crimp into this wave count, but eventually the crude oil should resume it’s southerly path to what could be a new wave 1 but in Minor degree.

So far the Gold/Oil ratio of 22:1 has been improving, but it will be a slow process. I constantly look at the daily and weekly oil charts, but switching  from a daily chart to a weekly chart will dramatically change the wave counts. Until all the oil bears have come out of their caves and sliced every oil bull in the process will we be in a position when oil can start another huge leg up. Maybe crude oil can turn back into a glut when the US government sells off its reserves.

Fundamentals are lagging indicators so if the experts see that an oil glut has arrived, chances are good the glut is over and a new bullish phase will start.  The markets will always do the opposite of what fundamental reasoning suggests, as the biggest gluts produced the biggest oil bull markets.

Until I see a great looking corrective oil crash playing out, I can’t turn bullish for the longer term.

Crude Oil Crash Update

This is the April 2018 contract month, but it’s a bit too far ahead in time. It’s not a big deal as we still have to figure out what the potential wave count is.   We do have a double top kind of a pattern which I’m working as a diagonal set of 5 waves down. On Friday we ended with a sharp spike to the downside which can produce another rally push crude oil right back up to the $60 price level.

Even now this crude oil slump has not gone deep enough for the bearish phase to be called finished, so this impending rally could be another fake as well.  I’m looking for a possible zigzag correction in Minor degree which I can’t call completed at this time.

The Gold/Oil ratio has improved somewhat, but not by any great leaps and bounds. At 22.34:1 it is now back to where the ratio was in early December of 2017.  The ratio may not be any help to us at this time, unless it shifts dramatically in a very short period of time.

In the short term I may have to shift my degree levels a bit, but I might do that after this rally completely fails to materialize.

Crude Oil, Still In The Bullish Game?


Oil has not made the decline, like I hoped it would, but chances are good that a bigger correction still has to play out.  The bullish phase that started in June 2017 from the $44 price level, has a stubborn streak to it as it refuses to correct. This stunning rally could still see a 61% correction, which would bring oil back down to the previous 4th wave of one lesser degree.  One previous gully sits at the $50 price level so a 61% net retracement could end down at the second gully.

The Gold/Oil ratio isn’t exactly screaming cheap as it has been hanging around this 20.77:1 ratio for far too long.  Back in 2014 this ratio spiked to 17:1 before crude oil started to implode, so a 20:1 ratio is not all that far away from doing the same thing.

I wish I had a much better, wave count than what I see, but converting from winter fuels to summer fuels will change the crude oil dynamics somewhat. Of course the 2018 hurricane season could also have a huge impact, so oil could crash and then turn around and soar.

Crude Oil Intraday Record High Running Out Of Gas?

Crude Oil seems to be running out of gas and has started another move that could fall much lower or deeper than what the majority think will happen. When I think it is important, I will post multiple wave counts.Since I dropped the degree level down by one degree, but used the bottom of Minscule degree.  I will no longer post any wave count that is smaller than the official list of 15 degrees. By using only 15 degree levels, it helps to better gauge the end of a run across most intraday charts.

Simply put, “once we run out of degree levels, the bigger trend is also coming to an end. The size of the 4th waves get smaller and smaller, as we get near the end of a run. I have gone back to using the fixed degree list for some time already, which most readers will never notice the change.

Yes, I may still be a bit early, but we have to be a bit early so more readers can adjust their thinking.  If we go back to the daily chart, we can see a major bottom on June, 22, 2017 of $44. This would be a very bearish downside price target, which is hard to imagine, but I would consider a decline like that as pretty normal.

We are dealing with wildly leveraged commodities contracts, that have a very bad reputation for making crazy moves that are very hard to catch before they happen.

It will remain to be seen if we have more upside left, but I sure like the idea of a triangle in a 4th wave which was followed by a “thrust” to the upside. The triangle forces a degree change as well, and most of the time it can be a difference of two or more degree levels.

At $60,  oil has run into resistance and struggled as it touched $64 so far. There is also a huge H&S pattern with the daily charts, and we know these patterns can also produce violent reactions.

The Oil volatility index OVX also had a bottom at $22.98 and has now started to climb again in recent days. Technically speaking the OVX will rise much more if this bearish oil correction starts to take shape.

Crude OIl Daily Chart Vertical Move Update!

Oil has now exceeded that $60 price level, but oil has done so with a wild surge to the upside. This last wave I have is starting to look like a single long 5th wave after what was a potential triangle 4th wave. I can’t remain bullish on oil until oil has made a significant correction. Traders are chasing anything that goes up so oil makes for a perfect target. Even a normal correction could retrace this entire 5th wave in a hurry, as commodities just love to create fast unexpected corrections.  Remember, when any bullish phase moves higher, sell stops start to pile up below present prices. When they get triggered things can move pretty fast.

The Gold/Oil ratio is still decent, but it has compressed a bit more everyday. In 2014 the Gold/Ratio shifted to 17:1 just before it started to crash, so maybe 20.66:1 will do the same thing. If I’m correct, then the Gold/Oil ratio should start expanding again.

In this case oil can fall back down to our  previous 4th wave of one lesser degree, which would be close to the $40-$50 price range. That would mean about a $20 price drop from todays levels. Oil crashed along with the stock markets in 2008, so oil crashing with stocks this time, would not be that much of a stretch.

Sure, we could get more upside, but the combination of a triangle in the 4th wave, followed by a “thrust” sure has ominous meanings.

Crude Oil Daily Chart Bull Market Update

If there is any doubt from the public perspective, if oil is in a bull market or not, then this rally to $63 should help to dispell that. Of course the herd took about 2 years before they figured it out. The $60 price level produced some resistance, but now seems to have barely worked past it.  Oil should still correct, but it can do this very suddenly, and freak out all the oil bulls again. This last surge to the upside is the result of the previous correction, but diagonal wave structures can create havoc in forecasting any future price targets.

We need another price target as the $60 price has been achieved. Oil also wobbled around the $55 price level and the next even Fibonacci number would be $89  oil. Just in case that is not enough, we can use $115 and then $147. That would force a degree change in my present wave counts, but that is to be expected with such an ugly oil bull market start.

The Gold/Oil ratio is compressing a bit all the time, but nothing to get really excited about at this time. The Gold/Oil ratio crossed below the 21:1 ratio, but that is still a far cry from the 9:1 ratio we had at the top of 2008. If the ratio changes dramatically, in a short period of time, then a bigger bull market correction could happen.

The previous 4th wave dip is between $58 and $56 USD, which could turn all the bulls bearish again, when that illusive $60 price level doesn’t hold.

I know I give price projections, but the price is just for public consumption as the whole world works on price. The pattern is far more important than any price forecast as when we can identify any 3 wave decline, we know that the market will retrace the entire move from where this specific  “A” wave in question, started from.  Everything is relevant to the largest degree, we think we are working in.

Crude Oil Intraday Update: Up, Down, And Sideways

It may not sound right to many people, but technically, charts can only move in one of three main directions. North, South, and East. When a trend has soared North, we have 2 directions remaining where oil can go next. When it goes sideways, it’s in the process of switching directions. Which trend line will oil hit first? The top one, or the bottom one?

The wave count I’m showing is short term bullish, if a diagonal bullish phase is in progress.  I try not to present many alternates on one chart, as I have to use many of the past wave positions as a reference, for a new wave count. I checked the Gold/Oil ratio and it has compressed  to just a bit below 22:1. This may be due to the fact that we are in the February 2018 contract month, which usually smooths out over time.  Now if this ratio suddenly moved to say, 20:1 or 17:1, then we may be due for a longer correction.

The bearish move can still happen, so the bottom trend line would get sliced in two, once oil charges below $55.  The $60 oil price  is a previous bear market resistance level, so it stands to reason that oil is giving the oil bulls a hard time. I mentioned it many times that bull markets end when their charts are pointing up, but this is not one of those times. The vertical move would be obvious on a weekly or monthly chart as well. Far more bullish media would have to be present, which are still missing today.

Some analysts are calling for a very bearish $40 oil market in 2018, but I don’t see it that way at all. Any bearish target is worthless information if oil does crash to $40 but then drives to $89-$115 or more.

The idea is to never waste a bull market in asset classes, but being late chasing a bull market is not what I mean. I like it better when the markets make a firm commitment in one direction, as after that we usually get a soaring reversal.

Any zigzag or flat that is pointing down in a bullish phase ending with a C5 wave, will get completely retraced over time. Since the crash from the 2008 peak looks like an “ABC” pattern, then eventually crude oil should rise above $147 highs.

Crude Oil Intraday Gyrations With Oilcoin Commentary!

This is the January 2018 crude oil contract. It’s starting to look like a triangle at this time, or a zigzag to a new wave 1-2 can also work. The triangle could head back down to the $55.20 price level so in the short term we could see some more bearish action.  Elliott Wave triangles do not show up in any wave 1-2 positions, they can  show up in “B” waves and any 4th wave. 

I’m sure the oil bulls will freak out when a deep correction happens, as bearish news could dominate,  as the oil price takes another hit.  It is harder to gauge the bearish mood during intraday corrections, but we have to keep in mind that a much bigger crude oil bullish phase, is still going to come.

Any big bullish phase that’s still to come could take all of 2018 and then some,  for this oil bull market to play out.  If we bring the same mentality to the oil market like there is in Bitcoin,  then any emotional commodities investor will get burned. Commodities are extremely cyclical and these cycles happen much more frequently than they happen in stocks.  From my perspective, I will remain bullish until this entire oil bull market has completed. 

If oil goes to $89 or to the old record $147 (double top), is irrelevant at this stage of the game. All the bearish news they can throw at us will mean nothing, as bull markets do not end when the charts are pointing down. They end when all the experts are in agreement, and are painting us  a wonderful picture with the oil price going much higher.  This may be hard for the majority to understand, but for the seasoned contrarians it’s all old school stuff.   A seasoned contrarian is someone that has been through 3 or 4 bear/bull cycles and has benefited from each one. 

For Bitcoin Zombies, staring at their mobile device, they will be happy to know that a potential “Oilcoin” is being developed! Yes, another ICO  joins the pack of 500 other coin offerings.

The Gold/Oil ratio is sitting at about 22:1, which changed little in the last month or so.  This ratio would have to compress much more before oil gets into an over-bought condition. 

Crude Oil Intraday Correction Update

Since my last update on oil, it was heading for another high, followed by another correction.  At this time it looks like the correction needs more time to play out.  A little bit of panic selling and crude oil could create a nice spike to the downside, which happens many times just before oil reverses again.   Gasoline futures are also declining, and it looks like it is in a correction with as well. 

Back down at the June 2017 low, I’m using a 4th wave in Minor degree as a position. This is only a temporary position, and it would require that this wave count to end on an “A” wave in Intermediate degree. This $60 price level seems to be providing a strong resistance price level.  I’m sure the oil price will still have some problems bumping its head on this invisible $60 ceiling, but it will eventually push higher.

When we check the Gold/Oil ratio this morning we are at an even number of 22:1. This is a bit more expensive when we use gold as money, but not anywhere near crazy enough, like they are in the 5 stock market indices I track.  

Oil could spend most of 2018 rolling around acting like the bull market has come to an end, but many times it also takes a “C” wave to go vertical before a bull market dies. 

Until the time when the crude oil ratio starts to compress much more, or it compresses  with high speed, then another bearish trend can start, or it will be the end of this oil bull market. 

I always go back and look at the oil charts that started in 1850, and oil has shown diagonals wave structures for the entire time. It’s not entirely a puzzle why the markets are so choppy.

Refineries have to switch to winter fuels as summer driving demand has curtailed. Hurricane season has also ended in December so refineries had the time to get back their production to normal winter levels. I don’t trust any fundamental reasoning why markets go up and down, as they can change as fast as the wind.

We still get analysts that say oil is going back down to $40 while others say oil is going to $80! At least the $80 price is closer to my $89 forecast. For those who are supply and demand freaks, remember that this oil bull market started from a massive world oil  glut. I bet no expert can point to any single fundamental news story, that triggered the oil bull market.

Crude Oil Intraday Correction And the Gold/Oil Ratio!

This morning crude oil stop at $59 before it started a small correction. Small corrections can turn into bigger corrections, and with such a choppy base we can get wild corrections that can go deeper than expected. Even then it does not mean that this oil bull market is finished.

The crude oil prices have seemed to converge closer together across the futures contracts, which is a good thing as it helps with the Gold/Oil ratio.   The $60-$62 price range is also stiff resistance, but if gold still has a few more legs to go then this $60 barrier will get sliced in two. 

$55 would be a nice previous turning point that might supply support, but then the bottom trend line may also help with support. 

I mentioned that the Gold/Oil ratio was also compressing and $59 represented a 22:1 ratio.  This ratio may give us a correction, but it sure is not close to any extreme, or the end of the oil bull market.  Markets come to an end when they are pointing up, not when they are pointing down, which is the opposite of what the public sees. 

Jumping on the bandwagon when markets are going vertical displays the FOMO syndrome perfectly. (Fear Of Missing Out) At the Gold/Oil ratio of 22.35:1 this morning it shows that the ratio has started to expand a bit again.  At this time 17:1 is still a target for the future, but other indicators must also come in. One of my favorite indicators is that the consensus forecasts for oil will start to use $200 crude oil again.   They have been trying for $200 for over 8 years, but crude oil fooled all the expert forecasters and proceeded to crash to $34.

 Not only did this happen once but again in late 2015  when crude oil crashed to $28 producing yet another world oil glut. With their infinite, consensus forecasting abilities, the experts were calling for $10 oil. Oil couldn’t care less about any forecast and proceeded to turn up to our present high. 

Crude Oil Intraday Record Highs Review


Crude oil has been cranking up as many fundamentals continually conspired against any bearish calls. 

 WTI Prices Surge On Keystone Spill | OilPrice.com

This news is another example how unexpected events can change fundamental supply and demand numbers. With this surge crude oil has cleared the previous major high of $57.60 back in early 2017.  I’m using an intermediate degree as my base, followed by one crazy pattern that defies any great looking impulse. I’m sure I will have to adjust this wave count at a later date, but at this time we are approaching the peak of the top trend line for the third time. 

A correction should be coming even though bull markets end when the charts are pointing up, but not when they are pointing down. The Gold/Oil ratio has been compressing in the last few days at 22:1 but we need crude oil to compress much more before it becomes expensive again.  A rapid ratio compression move can be an early warning for a correction. This correction may be a bit bigger than what most bulls might expect at this time.  A very fast dip or “mini crash” usually means an “ABC” correction has just happened, which will follow with yet another leg up. 

The bottom trend line may give us a clue where any substantial oil correction can stop at, but a diagonal move sure can make any two trend lines obsolete very quickly. I’m not a fan of trend lines at the best of times as they are extremely subjective, and they have been abused to the point they are useless. 

Crude oil could just drop back down to the $55 price level and then start back up, so there is not just one number oil can turn on.  As I post, crude oil is still struggling to go higher, but oil could reverse just before closing time. 

Crude Oil Intraday Crash Update

In the last few days crude oil has finally started to correct as oil plunges this morning. So far we have a spike to the downside, but that can just be the start of a diagonal decline. Oil may have to get close to the bottom trend line before it is ready to crank up again. I’m sure the bearish news will come out again, depending on how long this correction might take.

Without a doubt this oil market is about as choppy as it can get, which indicates a diagonal bull market is in progress. Oil may not reach the bottom trend line, but if a good correction plays out, then crude oil will resume its march northeast again.

The Gold/Oil ratio is about 23:1 which is not near any extreme ratio, so in the longer term there should be more upside to come. 

Crude Oil Vertical Move Update

This is the January crude oil daily chart contract which has a different price than a weekly chart has. On the weekly charts crude oil has pushed above the early 2017 high. It would be nice to see a bit more, to help confirm that the last 9-10 months,  was just a correction. 

The next target price level to beat will be the $61 price level. We could find stiff resistance at $61 and pattern wise could also become a 4th wave rally top, if  oil was just in a small bear market rally. A bullish phase is either finished or not finished, but large degree bear market rallies will fool us as they can rally for years before they implode.   Any “D” wave rally in Primary degree will certainly fool everyone as they can have the same bullish mood as any wave 1 would give us. 

Gold also has charged up which would distort the Gold/Oil ratio a bit. Using the January contract the Gold/Oil ratio did compress a bit to 22.21:1 which was a very small change. I’d like to see far more compression for a longer period of time before we get too excited that this bull market is coming to an end! 

WTI Soars As U.S. Oil Rigs See Biggest Decline Of The Year | OilPrice.com

The fundamental news can change like the wind, as the world is in turmoil regarding supply and demand numbers.  Markets are not driven by logic or fundamentals,  as our emotions are the primary forces at play.  At this time the 2008 top was a Cycle degree top with the potential of being in a triangle. This can still take all of 2018 to finish, and oil may even go vertical again before it dies. Many claim the oil will die when electric cars become mainstream, and they could be right, but fossil fuels are still used for electricity production all around the world. Our future depends on low cost electricity with India and China are having the lowest cost electrical energy production in the world.  They can afford the juice to crank out Bitcoins and became the center for Bitcoin production. It takes the equivalent of 20 barrels of crude oil, of electricity production, just to create one Bitcoin!   

“To put this in perspective, the total energy consumption of the world’s Bitcoin mining activities is more than 40 times greater than that required to power the entire Visa network.”

November, 1, 2017 Crude Oil Weekly Chart Double Top Review

This weekly chart has $55 as a double top, so some we could get some stiff resistance at this time. Eventually crude oil should create an upside breakout as I think there is much more to go before this oil bull market is ready to die. Yes, we can experience and unexpected dramatic drop in the oil price, but I think there are far too many fast moving fundamentals still at play in this choppy world of oil. 

Any triangle I may be working we could be in a “D” wave bull market, which can still take us to the $89 price level. Gasoline did not crash to new lows like crude oil did, so that keeps and “D” wave alive as well. 

Once I calculate the Gold/Oil ratio from this weekly chart, the ratio is a bit more expensive at 23.5:1. This is still not enough to kill this bull market, as I would like to see these numbers compress much more. Taking a reading once or twice a week should be enough to see a potential extreme creeping up on us.  In the long run electric cars my kill the petrol driven cars, but that has to be a natural market driven process. If electric cars are a natural  good thing, then there is no need for governments to kill all fossil fuel driven cars. 

I don’t think the electrical grids can handle all these electric cars on the road, as all it would take is overload the grid and the majority of electric cars will be sitting going nowhere.  Any wild solar storms or solar hurricanes can do major damage to the electrical grid and all major satellites and ISS out in orbit, also get dragged down by solar storms.

Every chart I create, be it intraday, daily, or weekly will produce different patterns and prices, so the wave counts do get scrambled many times.

Crude Oil, Powering Higher, With Gold/Oil Ratio Commentary

Crude oil has powered higher, and now contains a vertical move. Short term, there may be more to go, but if the zigzag bullish phase is close, then we could see a correction sooner than we think.   Crude oil is still far away from crossing that $58 price level of this December contract, so I won’t be a happy camper until it does so.

One thing that did happen this morning the Gold/Oil ratio shifted to the expensive side at 23.57:1. This is about the second most expensive time since the start of 2017 and it would have to beat 22:1 if it wants to make a new record ratio high.  This is nothing to get all worked up about as the Gold/Oil ratio would have to compress much more. Any correction may bring it to the 24:1 range again, which seems to be normal at this time.

Crude Oil Intraday Bull Market Review

As choppy as these chart patterns show, it looks like the bullish phase still wants to move higher. Another zigzag looks like it has formed, so crude oil should break out to a new higher high.  Since the late 2015 bottom (daily chart), oil has been on one wild ride where most critical waves have overlapped. All these overlapping waves surely points to a potential zig zag bull market that should still take crude oil well above the $58 on the daily charts.

Since the June 2017 bottom crude oil is far more choppy that many other wave structures, so after oil breaks to a new high, it could implode again with a complete retracement of this June 2017 low of about $43. That would be the worst scenario in the short term.

The Gold/oil ratio has not really changed that much and is still sitting around the 24.32:1 ratio. I want this ratio to change in a big way by compressing this ratio towards the 20:1 ratio.  This will still take a long time before this happens and taking 2-3 calculations every few weeks, should give us an early warning, when oil starts getting expensive in real money terms. Gold is the real money, as all so called paper money is just an illusion. Paper money is just an electronic entry with only about 4% being real cash money that we can see and touch.

The crude oil chart started in 1860 and I’m working it is a big 5th wave extension for now. The 2008 top can work as a Cycle degree wave 3 position, but with a potential triangle still to play out.

Short term oil has to work through some price hurdles, that all need to get retraced until we see the last peaks in the rear view mirrors.

Crude Oil Intraday Gyrations Review

Crude oil created one more leg up before it started to implode again. The wave 3 on your top left side is in Subminuette degree. I had to use all degree levels down to the Miniscule degree level. Eventually I may have to increase my degree level by at least one degree, but for now I can keep what I have. What can throw this wave count into the electronic trash can is that another leg up starts to develop.  Any short term drop to $50.40 cannot be ruled out as well, but a complete retracement of the October rally would help to confirm that what we had was just a bearish rally. 

Chasing the fundamentals in oil is irrelevant as they change about as fast as the directions of Hurricanes do. Hurricane Ophelia is way out in the mid Atlantic and still heading east by northeast, and far away from any drilling rigs in the gulf.

Many analysts have made the $100 price level as a target for 2018, and at this time I am the last person to argue with those forecasts.  Mind you it took them well over 21 months to come up with that forecast. 

The Gold/Oil ratio is still at 25.30:1 which is not a concern at this time. With this December contract the price levels still to beat is about $53, with $58+ being the real goal to confirm that what we did have was just a big correction.  

In the long run I would love to see the $89 price level get hit, but it will depend on the Gold/Oil ratio, as $115 would be the last price peak that can get hit. 

Crude Oil Intraday Update

Crude Oil did dip a little lower than the $49.80 I had shown. There was about a 30 cent difference before oil blasted up again. Due to the choppy nature of these oil charts, it is next to impossible to sequence a good looking impulse set of wave together, except on a very small degree basis.  The present oil rally could also be a fake, but with a deep correction crude oil could charge up again, and break another bullish record high. 

The $53 price level seems to be the short term peak to retrace, but the $58 price level must eventually be retraced to help confirm that the entire 2017 bear market has been or still is just a correction. 

Even if we are in a big “D” wave bull market, the majority can’t tell the difference between a big bear market rally and a bull market. They both go up and participants jump onto both types. They only care about one thing and that is that it keeps going up. 

Bear riders did the same thing on the way down, which just about always produces a bear trap sooner or later.  The Gold/Oil ratio helps in keeping an objective perspective on how expensive oil is when we use gold as money.

In late 2015 this Gold/Oil ratio touched an insane 44:1 ratio, which is the widest ratio I have ever recorded. Today we are sitting at a bit over 25:1 which has been the low average this year. Tracking the Gold/oil ratio several times a week gives us a heads up when oil becomes expensive when compared to gold. If the ratio jumps to 20:1 or lower, then we have to pay attention.  Crude oil could one day sit at $89 with  the world experts calling for $100 oil, but if the Gold/Oil ratio is sitting at 15:1 or less, then be prepared for the price of oil to crash one more time.

Of course, another real world oil glut would also show up again. Until that happens the oil bull market is alive and well, no matter how choppy and wild the bull market still becomes. 

This makes wave counting oil a real challenge, due to the leverage which is part of the commodities landscape. I would love to see this rally hold and push higher, but only time can answer that question. 

Crude Oil Intraday Correction Update

I think crude oil is looking for a correction. The trend lines are there only to show the top line has touched several peaks. Any correction could slice through the bottom trend line with ease if a bigger correction is about to play out. Either way its not the end of the crude oil bull market just yet, even though any impending correction can surprise us. Diagonal waves can produce some unexpected moves to say the least, as they can traveling much deeper than what a bottom trend line would suggest.

Another zigzag could develop, but a wild looking flat connecting a bigger zigzag can also happen.

It is always useful to know the Gold/Oil ratio extremes we’ve had since the 2008 oil peak. The ratio will remind us when things get cheaper or more expensive when compared to gold. At 24.82:1 we are not at any extreme. In late 1999 the gold oil ratio was also around 25:1 and look what happened to oil after that bottom.  Crude oil may never achieve another run like that, but it can crash just as fast, as the oil crash of 2014 reminded us.

Oil still has to battle above the $51 price level, and that is only to help confirm that crude oil was in a corrective bearish phase for all of 2017.  I try not to use trend lines that much, as they are so abused to the point that trend lines have little meaning. 

September, 2, 2017 Crude Oil Daily Chart Review

There is lots of turmoil surrounding crude oil and potential gasoline shortages these days during hurricane season. Gasoline has charged up, but crude oil has remained well below gasoline futures.  I looked over the weekly chart and labeled  the 2008 peak as a Cycle degree wave 3. Don’t count on that as being glued to its position, just yet as we have to wait until this entire anticipated bullish phase is a done deal. Crude oil shot up in the last days of August, and if this zigzag that I’m working is true, then we should still move a bit over $48. At $50 I will start to scream “Uncle” as at the $51 price level, this wave count will get trashed.

Another 5 wave decline would have to follow with $43-$42 being the best target price. From the early 2016 low crude oil moved in such a choppy fashion that many of the wave positions I used, did not last long. I think there is a huge expanded “B” wave, with a diagonal decline. They are not impulse waves as every single rally wave, overlapped at critical positions. Expanded patterns in “B” waves or 4th waves can make dramatic reversals and push oil to new record highs.  Any “c” wave decline can drop like a rock in a very fast move down, like a mini flash crash. Those flash crashes or algorithms wrecking havoc, can produce those long down spikes that we can see. 

We are heading into the fall, but hopefully we will see this bottom by the end of this month. I feel pretty confident that the bigger bullish phase is nowhere near a done deal as the Gold/Oil ratio is still lethargic at this time. At 27.28:1 crude oil got a bit cheaper when compared to gold, which is a good thing. 

At the 2008 peak this ratio was about 9:1, and with the 2016 low it registered 44:1. This was a massive shift by any stretch of the imagination. In 2014 this ratio was about 17:1 before crude oil start to crash again. I think we could end up going well below 17-20:1 again. If this Gold/Oil ratio becomes compressed to the point that at $89 it becomes silly again, then oil will be setting up for another crash. The mainstream media could be hyping $100-$200 oil again by that time, but we know that markets will head the exact opposite way, when those days arrive. 

WTI Intraday Bearish Mood Review

Oil has now fallen further than what I would like to see. I have been staring at the blank crude oil daily chart to see if there is a better fit. All my wave counts that I had in Minor degree, are now bumped up one degree.   I have tried this before so basically I’m using a wave count from inventory with a few updated adjustments.   It was that secondary top, that I now have to call it a truncated (shortened)  5th wave of a diagonal. That short top is a potential 4th wave top in Minute degree which leaves us with a potential decline to new bear market lows. 

I do have a set of nice 5 waves going down, followed by a violent rally that sure could work as a zigzag ending at an “A” wave in Subminuette degree. Down from that “A” wave, we now are faced with another low. At this time the chances are good that an expanded zigzag has formed, from which oil could blast upwards traveling well above the “A”wave peak. Since this looks like a 3-3-5 we could end up at a “B” wave top  followed by another set of 5 waves down. 

It may all be wishful thinking, but moves like this happen many times. At $43-$41 oil would come up to serious support again as it completes another zigzag.  It sounds like an ugly picture, but it should be shorter term only. Obviously, Hurricane Harvey had a huge impact with many of the refineries shut down and unable to open. We see the huge spike in gasoline futures as those inventories plunge. Have no fear, Europe is all geared up to send refined products to the USA. Mexico gets its gasoline from the USA, so they will feel the pinch as well. The US is not only an importer of oil, but it sells a lot back to other countries that need the light sweet crude to mix with other heavy crude oils.  There is a lot of turmoil in the world as oil production has dropped due to fires, bombs, hurricanes and just plain bad management. All this could suck down inventories very low, and one day the herd wakes up to this,  and suddenly we have a shortage. 

The Gold/Oil ratio became a bit more expensive this time at about 26:1. It’s still well within the average range of being cheap. If and when we consistently start to push closer to 17:1 or so, then we may have to take another hard look at how our wave count is looking, at that time. 

Oil may hold at $46.60 in the short term, but the entire wave count could fail and continue heading south.  Any anticipated rally should happen sooner than later, as there is not that much room left to wiggling around. 

Crude Oil Intraday Crash Review

Crude oil has been very uncooperative as it refuses to act out the script I had started.  Any good impulse I had, died as soon as the critical waves started to overlap. If crude oil does stop short of going to a new low, then another diagonal set of waves could happen. The worst case scenario would be that the late July peak is a potential “D” wave in an unfinished triangle in Minor degree.  If the worst case is still to play out, then $42 or $43 could still be the  price target that would have to get hit. 

Right now crude oil is getting cheaper as the Gold/oil ratio is sitting at 27:1 This is still rather cheap and the spread may still widen a bit, if oil keeps crashing. There are only 3 directions that charts can travel,  either the bear market still needs to finish,  or there is a bullish phase still to come.  Any big bullish phase can be a false bull market, but the difference is the degree level of any big bearish rally. 

The $47.50 is one price level where any short term bullish scenario can still work. Today’s decline was rather sharp and steep, which is a bullish sign. 

There is just too much turmoil in the oil market these days,  to take any fundamental inventory numbers seriously. I have mentioned it before, but if you hear fundamental news being spouted more than three times, then this news is already irrelevant. 

It gets worse if our friends or family members are parroting the same news. You may laugh, but we are in an electronic delivery world, where news travels fast. How fast? As fast as it takes the wave to travel around a hockey arena, or as fast as you can count out 20 even Fibonacci numbers from a list.  😉 

Crude Oil Intraday Crash Review

So far the $47 price level is the low to beat at this time. 7 waves of the impulse looking wave can still form as that would make it a diagonal “C” wave decline. $46 is not ruled out, but the longer oil keeps going up the better the odds of not seeing $46. 

There has been little change, but the Gold/Oil ratio got better as gold touched the $1300 price level. This morning the ratio was about 27.16:1 which just about seems like the norm. I don’t like “norm” as that would suggest an average or fair value of any asset class. A Gold/Oil ratio of 44:1 is not normal by any standards, so when that ratio shifts back, or compresses to the 20-17:1 range, oil is still on the cheap side.

We could run into a situation where oil could run to $89 but when we check the ratio it is sitting at an insane 10:1, then the oil bull market would be ready to crash once again. The experts can spew out all the bullish oil price forecasts that they want, but oil will ignore them and start to crash again when the ratio gets skewed. 

As I post oil has just soared past the last two highs, which is a good sign at this time.

Crude Oil Intraday Bullish Review

I have switched to the December contract which has more volume, creating better detail on the intraday and daily charts.  Any Gold/Oil ratio I calculate with the December contract will compress the Gold/Oil ratio a bit, but in the long run it will create a minimum amount of distortion. 

I’m sure that many reasons have been used to explain this bull market, while some even say that the glut is disappearing fast. The news about the glut, has miraculously vanished or has been drastically reduced, but I’m sure these glut stories will return once a longer or bigger correction starts to play out. 

The world is in disarray when it is related to oil production, as fundamentals change so fast, they think we are going to  crash to new record lows. From my perspective, I think any big bearish decline only has a slim to none chance of coming true at this time. Yes, some bearish rallies are huge, but the majority does not know the difference. They only care that oil keeps going in the same direction they are betting on. Crude oil has had a very choppy start since the 2016 bottom, and we could be on a “D” wave bullish phase.

This bullish phase may still take until late 2018 to finish, which would match the peak in commodities back 100 years ago in 1918.  Many cycles repeat in 100 years, and at that time some commodities experienced a 13 year bear market that didn’t end until 1932. If we use 2008 as a major peak and no new record highs get broken, then 2021 would also give us a 13 year market. 

I haven’t had to make big adjustments in my wave counts at this time, but I’m sure some unforeseen violent move will keep us guessing and doubting this bullish phase. Bullish phases don’t end when the charts are pointing down, they end when the price is near vertical, like what happen after the oil price peak in 2008. At that time the fundamentalists were screaming for  the price of oil to head to $200 +, yet oil turned and crashed right down to about $34.

Today the Gold/oil ratio sits at 25.52:1 which is still very decent from my perspective. Crude oil started to crash in 2014, from a 17:1 ratio, and stopped when this ratio became a 44:1 ratio. This is a dramatic shift in the Gold/Oil ratio, which would take many years before this ratio becomes compressed again. One day, this ratio will start to push 17:1 or even 9:1, and until then this oil bullish phase should continue. Our next 3 big prices highs to beat would be, $53, $55 and $89 

Crude Oil Intraday Bullish Update

So far, crude oil seems to be starting on another bullish phase, that technically would have to charge  up and retrace its entire short term decline, if it is going to confirm that a bigger bullish phase is still in progress.  Crude oil turned at about the $43.70 price level and has created a small higher low. 

Now it just has to keep going , but choppy moves will look much like impulse waves, so for now I will maintain an impulse count until it no longer works. The last part of the zigzag crash, fits into a diagonal wave with an ending diagonal.

The next short term price goals would be above $46.50 and then above $47.40  as it would take that just to confirm the oil crash was indeed a zigzag. 

The Gold/oil ratio is sitting at 27:1 so that is a bit cheaper from the July 7th calculation of 27.30:1.  A ratio of 27:1 is not a concern at this time, but when this Gold/Oil ratio starts to compress much further like below 20:1, then we may be getting into a crude oil over-bought condition once more.  

Until that day arrives, I will maintain a bullish outlook. 

Crude Oil Intraday Crash Update.

The last attempt at a bottom turned into a failure as crude oil kept right on crashing to a new low. The $44.20 price level is about a 60% decline, but there still could be a bit of downside to come.  If any impending rally just refuses to play nice, then we could be looking at a potential 4th wave top. 

Any potential 4th wave top would then produce a new bear market low as  it would also be a technical requirement to do so. Right now it looks like a great potential zig zag decline, which is a corrective wave from my perspective.

 In a line type chart, that “A” wave spike does not show up making the zigzag more even in length. Rarely are zigzags perfectly even, like what the little blue book says, and the 1929-1932 zigzag decline clearly demonstrated this.

The Gold/Oil ratio is still very decent at 27.30:1. Eventually we should reach a price when crude oil will become expensive again, but this may not happen until the Gold/Oil ratio reaches 17:1 or lower.  I don’t think we will reach any extreme ratio like it was in 2008, (8:1) so when we get close it will be a good idea to make more frequent calculations.  

The fundamentals change faster than we can change  our socks, but in commodaties the markets do the opposite of what any bear market usually suggests.  Huge bullish phases have all started right in the middle of  world gluts, as this is also the time when crude oil is the most hated asset class. 

I visited my contrarian friend yesterday who gets Steven Jon Kaplan’s newsletter, and there is no indication that contrarians are in a panic to sell. 

The time will come when they will get bearish, but that still can be a year or so into the future.