Since the early 2016 low oil has been in a bear market rally in Intermediate degree.Many are convinced that the world is running out of oil and that higher price could happen at any time.
Folks we have a big triple top, which created two fairly large H&S patterns. This is about as bearish of a signal that you can get as Blendstock gas is looking much the same. I checked for the Death Cross and it has not happened yet but is next inline to do so. That might not happen until crude falls below $60. On the monthly scale we have a different situation, where the Death Cross has already happened.
This is about as bearish of a technical signal you can get and fundamental analysts ignore them on most part. Fundamentals will always tell us the wrong things at the extremes, as commodities always go the opposite way of what the majority think.
The Gold/Oil ratio is as close to 17:1 as we can get and that was the same extreme ratio when oil crashed in 2014-2015. You can stretch and compress any ratio, but you can “never” break the mathematical connection. I keep a group of about 20 Gold/Ratios and it gives me feedback instantly. When someone forecasts a crazy gold price like $2225 then at 17:1 we should have $130 oil.
Oil will most likely go below $12 before we will ever see $130 crude oil. Gold investors that think that oil can imploded while gold soars are in living in a fantasy world. The world is going through a deflationary crash and bear market, that nobody expects.
Oil topped 3 years before gold, back in 2008 and what you can see so far is just a big zigzag crash in Cycle degree, which is still not finished. KOL is another Cycle degree zigzag crash, as well as the US dollar has done. All conditions that were before the 2008 crash are present now, and worse. You don’t want to be bullish on oil when it is sitting on a potential Death Cross.
Chances are good this world is going to get another oil glut and then when they all start to think alike, then the oil market will turn and soar once again. All commodities are connected with giant zigzags and oil is no different. Any SC degree wave 3 peak in oil should not peak until 2041, so that is a long wait if you are an investor.
It looks like the Euro is resuming its bearish trend where no support will hold except for a short term basis. We also had the Euro Death Cross at the Euro price level of 1.200 and we still have the Euro weekly Death Cross ahead of us. The Euro bearish trend is much bigger than what the majority think. Gold needs for the Euro to soar and not head south, but I see no signs that this will happen any time soon. Even the hedge funds and commercials have net short positions on the Euro which definitely confirms that the Euro is not going to keep heading north. A 4:1 net short ratio would be at the extreme range and we are not even close to that just now.
Last weeks Market Vane report still has far too many bulls present so even that does not confirm a major bull market in the Euro will happen.
The speculators or hedge funds always get into one trap or another, but it must be a far bigger bear trap than what we presently have. What power that any Death Cross has over the COT reports remains to be seen, and I’m watching this on a regular basis. This may take the rest of 2018 to play out but then 2019 could be very bullish for this Euro cash futures contract. Again, if the Euro is in a bigger bear market, then complete retracement of the entire 4th wave rally will happen as the Euro must eventually slice through the bottom trend line. as well.
I made this chart last night but it’s still relevant as SLV added more downside with the start of early trading. Any price below $13 for SLV, then the markets will have confirmed that silver was in a bear market rally. SLV was only about $.50 away from breaking to new bear market lows. It’s impossible for silver to go back into a bear market while gold is still far from doing the same thing.
Being brainwashed by the gold sector happens all the time as it also happens at peaks as well. SLV and gold stock ETFs are far better early warning ETFs to watch as they act like leading indicators.
The majority will never learn what a bear market rally is, but for those that don’t understand a bear market rally, a bear market rally completley retraces itself back to and below the point of origin. In this case the late 2015 low. I add a little to this downside requirement as charts do show different results most of the time. GOEX is also another ETF that should cross to new lows, so more will be added to the list as September can be very bearish.
My main focus is with GDX and GDXJ as they are also my main trading ETFs at this time. I have many more ETFs that I track which are also in my “Ratio Pool” and in bear market rallies this “Ratio Pool” hits a price brick wall. I have mentioned this many times when it was happening as I have about 20 ratios in this pool. Ratios can bend stretch to the extremes, but it’s mathamatical connection will never break! Math doesn’t lie, only people do!