Daily Archives: June 19, 2017

RBOB Gasoline Blendstock 2008-2017 Review


Since crude oil is being stubborn in trying to find a bottom, so looking at the Gasoline Blendstock futures may give a better bigger scale picture.  Well, that hope was dashed, when I saw that gasoline did not exceed the 2008 crash low. Besides not producing a new record low in 2016, we also have what looks like a huge gap still open. This gap will get closed, but I doubt it will get closed this time around.

This gap also tells us that after some future bull market top, gasoline can once again crash and go well below the gap, closing it in the process.  For now I will keep a potential triangle going, with the “A” wave, already completed. I can’t say that much for any potential Minor degree “B” wave being completed. 

With a potential triangle still in progress, we could get strong  resistance, at the top declining trend line.   This may still take all of 2017 before we can see that this market is confirming anything. There are many refining production problems that can happen, with maintenance shutdowns, or terrorists blowing up pipelines. 

Short term we can still see downside, but longer term I look at it from a big bullish phase still to come.

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SP500 Intraday New Record High Review

With all my index wave counts, we have now switched to the September contracts as there are no more June contracts left. There are only 4 contracts in the entire year, so a jump to September is very normal.  The markets, including this SP500 chart have gone wild, with mad emotional swings in both directions. 

The wild swings are signs that this market is unstable, but we know they can carry on like this much longer than we have the patience for.  From the 15th bottom the SP500 has now crossed to new record highs with a 3 wave pattern.  This could be part of a potential ending diagonal as well. The Russell 2000 also had basically the same pattern at the top, which helps to make the case that another correction is due, or the end of a big bull market can finally happen. 

Short term we are running low on the intraday possibilities, so any move down would give us more options to choose from.

These markets are pointing to a potential wave 3 peak in Cycle degree, and I have been building a potential bear market for some time already. Bull market tops are the breeding grounds for bear markets. Visualizing the idealized chart for the next 100 years will give us the wave counts needed to fulfill all the wave 3 extensions still to come. We are nowhere near SC degree wave 3 yet, as SC degree wave 3 must also extend. The wave “zero” start to SC degree wave 3, was in 1932 

 Any wave 3 peak in SC degree is still over a decade away, with any GSC degree top stretching closer to being another 89 to 100 years away. As time goes on,  my language will include SC degree commentary more often as I try to build a picture of what is to come.

Of course if I missed something big, any other pattern could still happen, but like I said options are starting to dwindle. Building a potential big wave count, is also helpful to detect mistakes as early as possible.

 

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DJIA 2009-2017 Bull Market Review

When the big markets are pointing up and the talking heads are also pointing the markets in the same direction, then this is when I’m already building the next pattern heading down. I’m not that concerned in how much higher this market can go, as I’m building a potential picture in how low it can go.

How low this market can go, all depends on where our original wave two starting point was, and how popular 5th wave extensions really are. With stocks 5th waves do extend, but many times it will be one of the last 5th waves in a run. It is wave 3 that has to be the longest wave.

The last 5th wave extension happen from the 1987 crash bottom to the 2000 peak. From the 1987 crash bottom, the markets exploded with a wild sequence of 5 waves in Minute degree, which translates into just one move in Minor degree.

It took me until about 2013 to finally look at the bull market from a 5th wave perspective. Not as an impulse, but as a diagonal wave structure.  Diagonals, are just zigzags connected together with flats or triangles in a 4th wave position, which the EWP does not explain very well.  In the book they label an ending diagonal like an impulse, but in reality they are zigzags linked together. To separate the normal impulse waves from diagonal impulse waves, I use a specific wave counting method that is also shown in the book, which most experts seemed to ignore.

When I see analysts turning diagonal wave patterns into impulse wave patterns, then they are ignoring all the zigzags that are linked together in waves 1, 3, and 5. 

On the chart above, I show 4 horizontal lines, that had significant meaning on the way up, which on the flip side can provide some major turning price levels on the way down.

We have been told over and over about markets, retracing back to the previous 4th wave of one lesser degree. When all wave analysts are walking to a different drummer, then who had late 2002 as a previous 4th wave?  The 2009 bottom 4th wave went much deeper than the late 2002 bottom, so the previous 4th wave is more of a guideline, than any strict rule. In short, I never use the previous 4th wave bottom like a rule, but I use it as a very strong guideline. 

 Now we are faced with a potential move that is two degrees higher than anything that the late 2002 bottom produced,  and one degree higher than the 2009 bottom. Many experts will look for new record lows, with DJIA forecasts to 5000, 3000 or even 1000, becoming very popular  again.

One thing is certain, by the time the markets get to the next major low, fear mongering by the experts and the mainstream will be front page news. When that day arrives, fear will keep investors out of the markets and at best you will be holding a token position just before the Roaring 2020’s get started again.  

 

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