Intraday Crude Oil Rally Update

This crude oil rally in the month of May looks like an inverted zigzag and can work as a bear market rally. Diagonal waves do make wild moves and can confuse us by breaking out to a new record high.

In a true blue bear market rally, this chart cannot push to a new high past that April peak of $64.89, otherwise we have to assume that the bull market had not completed in April.

In the next week or two oil should give us a better picture, but I sure would like to see oil breakout of this short term sideways market.

The Gold/Oil ratio hasn’t changed that much as at 20.30:1 the Gold/Oil ratio number is still hitting a brick wall which started in the first part of April 2019.

I will not repeat or entertain the reams of fundamental data being continuously spewed out, as it’s impossible for me to compete.

Fear of war can drive prices, but fear moves are highly overrated as they rarely last very long. Fear of war also happened in the first Gulf war so our present situation is not that much different.

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Solar Cycle 24 April Update!

The April numbers are in and the sunspot activity for April was just a bit less then what  March was. Each dot represents the total sunspots that were counted. There are those that are freaking-out declaring “Climate Change Emergency”.  The cause of climate change is in the chart above (Sun Cycles) but the majority of scientists or consensus opinion have no clue how the 11.5-year sun cycle effects economic activity and commodity prices here on earth.

We haven’t moved into solar cycle #25 yet as it may still be a few years away. We may have to wait out all of 2020 before we see the first sunspots of solar cycle 25 poke through.

Solar cycles travel up faster than they travel down and the entire move up and down is roughly a (40-60)) ratio which is the Fibonacci ratio!  If we printed out a very large chart of a solar cycle you can make out 5 and 3 wave Elliott Wave Sequences.

The end of the world has been declared as some countries are trying to declare, “Climate Emergency”. It’s no longer about global warming, now its all about climate change.

The very first peak in 2011 was enough to kill the “Golden Bull”  which happened in 1980 as well.  As the solar cycles fade away Cosmic rays increase in strength which shows up as an inverse move to the sun cycle chart.

 

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Crude Oil

It’s now obvious that crude oil has started to back off or decline.  What shape this decline is going to be is unknown but a bullish correction can retrace by about 60% of the entire bullish move. Many times we can just eyeball it to give us a quick look which looks like it could be at about the $53-$55 price level.

We do have a little spike forming already but crude oil will have to produce a much bigger spike before I’m convinced that crude oil is going to soar to the moon.

Crude oil is the commodity that is destroying the world yet it supplies about 80 percent of all the food we eat at our dinner tables. The war on fossil fuels seems to have picked up lately as some countries are on the verge of declaring a “Climate Change Emergency”.

I’m sure declaring any “Climate Change Emergency” in your local area will keep the tourist away for a long time. That’s just like yelling “Shark” at the beach during spring break! I guess the countries that are yelling, “Climate Change Emergency”, have never watched “Jaws”!

For now, the commercial hedgers do not paint a bullish scenario as they are still net short by a large amount. Until I see some of these numbers reverse I have to keep looking for a bearish wave count.

The Gold/Oil ratio improved lately but at 21:1 crude oil is far from being cheap, so wild fluctuations can keep any oil bears on his toes.

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Quick Crude Oil Intraday Update

Late last month oil soared to a new record high after which crude oil started to decline and turn bearish.  Sure we can just work another correction but to be blunt it’s still far too early to tell.  Comparing this June contract top to the December intraday top, we have a different wave count. What else is new as that happens often enough!

This June contract will disappear but for now, we have more than a month before this contract expires.

For now, I will work oil as a potential 5 wave sequence until It gets destroyed or no longer works. I trade oil with the Forex oil units and they make these futures contracts look pretty docile. I’m expecting a much bigger dip as this bearish phase could be just getting warmed up!

Oil hasen’t moved enough to make any big Gold/Oil ratio changes but the COT report tonight may give us a bit more insight.

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Brent Crude Daily Chart Taking A Dip?

This is a very rough wave count as I can’t count it as an impulse rally due to just too many diagonal wave structures. There are big differences between the May contract and this June contract that very few people see or even mention.

Brent has peaked on the 25th and about the $75.50 price level.  Any Brent move that will turn into a correction cannot completely retrace the run that oil has had since the 2016 bottom.  All we can do is sit and wait for this to play out as a 60% net crash can happen.

Actually, Brent oil is still under a death cross and oil would have to soar again to complete the impending golden cross or a couple of quick moves Brent oil could be back into a death cross. Right now the 2 MA lines are making a tweezer type of a move so something should happen to make this summer a bit less boring.

There are not daily trading limits in most commodities which is only one of the reasons why oil does produce wild moves in both directions.

I don’t have a very big Gold/Brent ratio database in progress but we are sitting at about a 17:1 ratio right now which is the most expensive Brent has been this year. We did record a 15:1 ratio, so Brent is very close to record expensive ratios. again.

Oil pushing record highs recently is exactly what the elected officials want as they conduct a war on fossil fuels. All the climate change alarmists are nowhere to be seen as they should be jumping for joy about higher gas prices.

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Crude Oil Weekly Chart Impending Correction Review?

This is the June 2019 contract where oil has just crossed the 50-day MA line which should give us some resistance. Crude oil shows a golden cross has formed in 2018, but it happened about 26 months after the 2016 bottom.

Crude oil would have to keep soaring to avoid a death cross from forming. Crude oil would have to crash well below $51  for the 50-day MA to cross the 200-day MA again. The $51 price level is also very close to a 60% correction so anything can still happen.

Commercial hedgers do not support the bullish herd, so its just a matter of time before oil will show us a correction or a crash that can take oil down to the previous support at the $45-$44 price level.

A complete retracement of the 2019 oil rally, would confirm that the 2019 move was just a bear rally. I’m looking at oil from a triangle perspective but could abandon that idea if a huge spike to the downside were to develop.

I track the gold/oil ratio and might make 3-4 calculations every month while in April I made about 6 calculations. All of April the Gold/Oil ratio averaged between 19-20:1 which is the most expensive readings I show since November 2018, about 6 months ago.

The 20:1 ratio seems to be a Gold/Oil ratio price brick wall which should start to spread again, once oil decides that this run has gone far enough.

The global warming alarmists should be jumping for joy that we have high gas prices at the pumps. Right?  Well, it’s not rocketed science folks but talking to local retail gas station staff, the feedback is people are not happy campers when in BC we could have one of the highest pump prices in the world.

The blame game continues as our fearless Prime Minister is blaming high gas prices on our BC government!

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Crude Oil Intraday Triple Top!

For the last 3-4 days, WTI crude oil ran into the $64.70 price level about 4 times since the December 2018 bottom. The entire 2019 bullish phase has been choppy and seems to have a slight  “Wedge” shape to it.

Crude oil could still turn into a triangle and we would be heading down to an “E” wave if that was the case.  $63.20 could be a bullish support price level but if the bigger bearish picture is true then $63.20 would just offer temporary support.  One day crude oil can soar and then the next day oil can drop like a rock.  Crude oil has been moving to the point where the analysts are having a tough time trying to figure out the real trend.

Just because some asset class is going up does not mean it automatically is in a new bull market.  Big bear market rallies can do exactly that but to confirm this, crude oil would have to crash well below the $44 price level.  We could have a long wait before that happens.

There are no daily limits on crude oil moves, so when it starts to act bearish it can move with stunning speed and price distance traveled.

The 2008 crash is a prime example of how fast prices can move.

 

The commercials are still net short by a wide margin which tells me the commercial hedgers have a bearish outlook which makes chasing a big bullish wave count a futile endeavor at this stage of the game.

The Crude/Oil ratio sits a bit above 20:1  which it has done only twice in 2019 and all in April.  I call this “Hitting a Gold/Oil price ratio brick wall”. At a 17:1 ratio,  oil has had no problem in crashing in the past but the ratio could still get worse in the short term.

Canada is a prime example of how the “War” on oil is being executed by forcing the “Carbon” tax onto the provinces that don’t want it. Here in BC, we had a big price jump at the pumps which will drive people across the border to get cheap US gas. My friends that drive to work are not happy campers and I’m sure higher gas taxes at the pumps does not increase the demand.

80%  of the world runs on fossil fuels just to keep the lights on, its more like keeping the Internet up and running. 5G and Bitcoin mining requires huge amounts of electricity that solar power can never supply.

 

 

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Crude Oil Daily Chart Bullish Action Review

The fundamentals regarding crude oil changes as fast as the wind, besides that I bet there isn’t a single analyst that knows what fundamental news made oil rise into last year, and then crash and burn into early 2019.  I sure don’t know as well but the gold/oil ratio sure gave me a clue that it was going to happen.  Even though satellite spying is extremely sophisticated as they can track the floating roofs on storage tanks.

The US has been accused of refined oil product contamination which happened recently in South Korea,  to where they refused shipments.  Of course, they just turned that oil around and sold it to China.

Beside that most fundamentals regarding oil supply and demand can be just pure false news to keep enemies guessing. In today’s world, it is very easy to manipulate the news, so unless you have a Bull Shit Detector App on your smartphone we will never know the facts.

Even though wave counts can be pretty foggy most of the time they still over more “Truth” than fundamental news does.

Yes, oil can go higher but we are at a 20.98:1 Gold/Oil ratio which is the most expensive it’s been since November 2018 when it was at 17.37:1.

Oil seems to love crashing at around 17:1 which it did in the 2014 decline.

Math doesn’t lie only people do, so any gold/oil ratio can supply more objectivity in a world filled with fake news. “Fake News” and “Propaganda” is the same thing, so its not rocket science to see which countries use the most propaganda.

The commercial hedger’s net short positions make the potential for a big bullish move very unlikely, as open interest is also hitting record lows.

There are “No” daily trading limits in crude oil so that does produce some very long free falling type moves. Traders will be piling on the protective sell stops and once they get triggered, there are no daily limits to slow it down.

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Crude Oil Monthly Chart Update

This is the June contract month and from the recent late 2018 bottom, crude oil looks like it wants to soar.  This may happen in the short term but the commercial trader’s positions do not support a major bull market to continue in oil. If the COT report showed that commercials are adding many long positions, then I would think otherwise.

World growth is slowing down and the oil trade wars are not going away as well.   Crude oil has been in a bear market since July  2008. Oil has tried to break out two major times and each time it failed to get its mojo back. The big question is if the 2016 low was the real bull market low, or will oil crash to new record lows again.  A complete retracement would sure confirm that our recent bearish rally has the oil bulls in a bull trap.

This could take the rest of the year to play out so don’t expect anything to happen just yet.

The Gold/Oil ratio became a bit more expensive in the last few weeks or so as it was 22.8:1 today as I post. Now if this same ratio were heading to 30:1 or more then chances are good I would be very bullish on crude oil.

Switching oil to a Cycle degree triangle may only last until the digital paint has dried. March is also a good month for reversals so we just have to have the patience, to see if the oil bear is going to attack again.

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Crude Oil Monthly Chart Death Cross Review

Crude oil follows the Idealized diagonal wave patterns which are mostly zigzags connected together and count out with a 7 wave count.

To put it bluntly diagonals can count out with, A,B,C,D,E, or  (ABC1,ABC2,ABC3,ABC4,ABC5) and or W,X,Y,X,Z.  They are all the same patterns and the only difference is where they are found.  Waves 1,3 and 5 can be zigzags and wave 2 and wave 4 can be flats, triangles or complex zigzags.

The history of oil only started in the 1840s. From 1980 to 1999 there was a Triangle inside a “B” wave, followed by a bull market where I now only see 7 waves. All other expert wave analysts saw 5 waves but the 5th wave was far too small so they forced a Primary degree 5th wave into the pattern.

Forcing a wave count will never work, and believe me I tried as well as I got sucked into believing that 1999 was a Cycle degree 4th wave low!

Many good contrarians saw the 2008 oil crash coming and never believed in the “Peak Oil” bullshit. Obviously, history has confirmed the Peak Oil BS, and about 8 months later crude oil was in another world glut!

The Gold/Oil ratio in 2008 was 9:1 and oil only had one option and that was to crash. By early 2009 this ratio stood at about 25:1. Oil rallied from a real-world glut as the experts were looking for lower and lower oil prices. Expert fundamental analysts missed most of the major important turnings. By the time the Gold/Oil ratio hit 17:1 it started another deep crash, but this time the rato hit 44:1.  Today we are sitting at 23.58:1.  I would like to see a much deeper ratio like 30:1 before I turn super bullish again.

Besides the Gold/Oil ratio numbers the commercial traders are not very bullish as well. With the monthly chart above, crude oil is still under a death cross, including the weekly and daily charts. That alone should give pause to oil investors or traders.

This morning crude oil had a bit of a meltdown, which gives a bearish outlook a lot more credibility.

The world economies are slowing and oil demand may slow right along with it.

80% of the world still runs on fossil fuels and if we jumped, or are forced off its addiction, the world could not feed or heat itself. Don’t think electric cars will save the world as one huge solar flare can knock them out very quickly.

 

 

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Brent Crude Daily Chart Update

This is the June 2019 contract which topped out on February 22 at the $67.60 price level.  Brent crude never made it to the 200-day MA where we normally would expect resistance. Brent is also on a little rally as I’m posting,  so the entire expanded pattern is not written in stone just yet.  Even if another leg up is goning to take Brent to new record highs I would like to see a deeper correction develop. That could take Brent down to the 50-day, MA at about the $60 price level.

Brent is still under the effect of a Death Cross and any Golden Cross is still nowhere to be seen.  The Gold/Brent ratio is at 20.30:1 which is much better, but getting back up to the 17:1 range we used to have.  The commercial hedgers positions are too close to being neutral, so they will just give us false readings at this time.

 

At this time there may not be anymore updates until next month.

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April Crude Oil Daily Chart Review

If I was a conventional wave analyst like the majority I would turn this into a bullish wave count with little effort. Easy wave counting is for suckers that have nothing better to do but count every little micro mini wave structure which we need an electron scanning microscope to see. Most all my wave counts that I’m after are three-degree levels below Cycle degree and three-degree levels above Cycle degree. Besides that “All” commodities run with idealized diagonal patterns that few wave analysts use.

The bull market from 1999 to the 2008 peak is a prime example of how forcing a 3 wave bull market into a 5 wave bull market can keep us chasing our tails for decades.  Any crude oil wave counts only started in 1850 which is close to the Grand Supercycle degree wave 1-2. Before 1850 the world ran on whale oil until they were hunted to extinction. The majority do not realize that without this energy source our present world could have never been built.

In a few years time, you will never even see these intraday waves and we will never know if an expanded pattern actually happened. Besides that, all the Miniscule wave counting is worthless if we can’t see a big crash or big bull market coming.  They say you can’t time the markets and to some extent they are right, but any investment is only as good as it’s timing.  The 2016 low was another prime example as analysts were forecasting that lower oil prices were still to come. Yet crude oil bottomed at about the $28 price level and then started to soar. Next thing we know investors started to jump on the oil bandwagon as $100 oil forecasts started to become popular again.

I use the gold ratio frequently which gives strong hints when some asset class is too expensive or is to cheap when compared to the cash price of gold. The cheap ratio in 2016 hit 44:1 which is the most extreme ratio that I have ever recorded. I was bullish before oil hit a bottom until this ratio started to shift again. The magic expensive ratio number in the past hit 17:1 twice and oil turned and crashed each time. Today, and since January 2019, this ratio has been averaging just below 24:1. This April contract is sitting at 23.81:1 and for 2019 seems to be hitting the 24:1 Gold/Oil ratio brick wall.

As I post, oil is still heading higher just above the Fibonacci $55 price level and at the very least we should get a strong correction.  Oil is still under the sign of the Death Cross but found support at the 50-day MA for now. All it takes is some fake fundamental news to get published and all these bullish traders can turn into instant bears. The world is changing folks, where false news or propaganda and Artificial Intelligence (AI) brainwashing is becoming normal. What the movie “1984” showed us would be a Sunday picnic compared to what is already happening.

 

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Natural Gas Weekly Chart Crash Update

I’ve made a few changes to my Wave count but the chances of the bullish phase that started in 2016 could be a false bull market or bear market rally. To help confirm that, Natural Gas charts must retrace the “Entire” bullish phase.  The $2.50 price level would be normal support but that has a slim chance of holding.

Gaps opened up but were also closed pretty quick. At the $3.00 price level, we have another open gap that would get closed on a potential 4 wave rally in Minor degree.

Commercials hedgers are still net short and I would like to see them switch before I turn bullish on NG again. You would figure due to the Great Arctic Vortex, natural gas price would be soaring?  In 2014 Natural Gas matched the secondary peak of solar cycle #24, after which it resumed its bearish move. NG also repelled from the 2011 solar cycle peak.  A few more years to go, as the start of solar cycle #25 would work like a magnet, drawing prices to it.  Once solar cycle #25 starts, natural gas prices could be propelled to the upside for years.

The Arctic Vortex has nothing to do with the amount of CO2 in our atmosphere because the amount of CO2 forcing (leverage) has no numbers they can measure.

Yes, we could end up with another little ice age, and the alarmists will still be calling it global warming. Low sunspot activity is a most likely cause of the Vortex.

This chart of the solar cycle decline includes the January numbers where we can see sunspot activity has increased. 61% of 2018 was spotless, which may not yet be a record. The record low spot count for 2008 was 73% which may get hit again.

I’m expecting solar cycle #24 to come to an end, and many good science sites will report and track the turning which may be a few years away.

 

 

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WTI Crude Oil Update

This March 2019 contract created another spike to the upside which may not be finished just yet. Is the $54-$55 price level resistance. From the bottom, the bullish oil move looks more and more like a 5 wave run.  A 5 wave run that could be part of an expanded pattern never lasts, and eventually, the entire 2019 run should get retraced.  COT report is worthless information until the government shutdown is settled. I do have the Market Vane report still coming in every Tuesday, and it shows 40% bulls are present. 40% is not nearly enough to push a huge bull market, especially if the 24 month high was only 59% bulls.  Now if yesterdays reading was just 20-30% bulls then, I would have to look for a bigger bullish wave count.

The Gold/Oil ratio got a bit more expensive around 24.12:1 but old records make a Gold/Ratio of 17:1 extremely expensive. Incidentally the 25:1 ratio has been hit about 2 times since the 1999 bottom and both times huge bull markets developed. We also have established a new ratio benchmark since then, as 44:1 showed that crude oil was extremely cheap.

Demand for oil also changes with the seasons but any fundamental supply and demand readings are not trustworthy. It’s too easy for any oil player to manipulate, cheat and lie about numbers especially when the oil or gas is still in the ground. Opec is trying to pump up its take on oil because of the Aramco IPO slated for this year.

In Canada, we have the federal government trying to block all pipeline construction because our smiling Photo Bomb leader is trying to turn Canada into a European country.  Canada has wasted its oil opportunity blocking First Nations who want the jobs and economic benefits from higher paying jobs.  What you don’t hear or read about in the media is there are far more First Nations that want to work with oil and mining companies, rather than against them. Native controlled energy companies are out there and more are being formed.

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Crude Oil: Another Spike to the Upside!

 

Another crude oil spike this morning can be a sign that another correction is due or spikes can also be the end of the entire trend. It now looks like I have 5 waves up, which can be part of an expanded pattern. I kept the wave counts small but chances are good I may need to change it at a later date.  We could get a correction back down to the $49 price range but if crude oil travels.

Many times 5 waves like this make a run and we can get excited about another large leg up in oil. Many times we can get fooled especially in an expanded 5 waves.  A wild move that completely retraces the $42 price level will confirm that this move was just another bear market rally.  Going long at this point is a FOMO move and chances are good your bullish bet will get stopped out pretty quick.

The Gold/Ratio has also become more expensive as we are at 23.81:1 today. 17:1 will put us back to where oil would become extremely expensive again when compared to gold.  A large zigzag decline is not of the table but we will not know that for some time.  If the present Gold/Oil ratio stays the same for a few weeks then it could be hitting what I call the “Ratio Brickwall”

We also have a very convicing H&S being set-up at the $54-$55 price level so anything can still happen in the next few weeks.

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Crude Oil: Big Dip Or A Little Dip?

Crude oil created a bottom on January 1-2 and then proceeded to make a bullish run that has now turned into a correction. If this entire bullish move is just a bear market rally then crude oil should still crash to new record lows below that $42.50 price level.  A bearish rally will slice the bottom trend line in two, but this correction can be the 4th wave as well.  We might get support at the $49 price level which may take several weeks before we find out. None of the COT reports are working while the US government is shut down.

Even my Gold/Oil ratio has not changed any recently, as we are now at 25.46:1, from a January 2, 2019, reading of 28.77:1. If the reading jumped back to a 17:1 ratio, then I sure would be very bearish on oil.

Crude oil sure developed a nice H&S pattern and if it fails and oil goes higher we know that the bullish trend might be real, at least for another leg up.

There are so much hype and BS regarding oil that the fundamentals can change over-night depending who you listen to. Saudia Arabia with it’s planned IPO is trying to come clean with its reserves which have been kept a secret for decades. Nobody will know unless independent sources verify their claims of all this new oil they have been hiding!

 

 

 

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Crude Oil Bullish Review

So far oil has been having a very bullish January which started in December 2018. This February crude oil chart has now developed a very nice vertical spike to the upside. This is usually a setup for correction or the end of an entire bullish move. A correction and then a leg higher would add a 5th wave to this bullish phase but then oil is facing stiff resistance near the $55 price level. I’m biased to Fibonacci numbers and we are facing the 50-day MA which will also produce resistance. We have a long way to go with price and time before any Death Cross can happen.

We had a Gold/Oil ratio low of just under 30:1, but with this present rally kicking in we are not at a 25.17:1 ratio. Readings of 17:1 has caused an oil price crash several times already. We may never reach any 17:1 ratio this time, but gold/oil ratios could hit a brick wall just the same. The ratio could stall which I can’t see unless I check it several times per week. During November 2018 I had about 14 calculations.

Commercial traders are still net long with the government COT report being delayed due to the government shutdown. It’s kind of ironic when the government is shut down and the stock markets still go up. I’m still bullish on oil but I sure would not take a bullish position when the spike is visible.

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Natural Gas Monthly Chart Review

Due to some downtime of this blog this I have just started posting.  I would say the NG crash we’ve had so far was pretty impressive! If I’m right we could be looking at a 5 wave run in Intermediate degree. Once I looked at it from a triangle perspective then, Natural Gas should see one more bear market low. The 200-day MA repelled the price of NG with little effort. Sure the “E” wave can fool us by still producing a fairly obvious correction. When NG hits the middle trend line then all support has failed already. I think NG cycles get attracted to0 or repelled by the solar cycles.  This could be a nice setup for solar cycle #25 propelling the price of NG north again. Commercial hedgers sure don’t see the bullish side of this story as they still have net short positions.

It’s still going to be a wild ride as any winter freeze scare could send NG flying. This can happen in the month of February which at times has been the coldest month of the year. The world economic activity is slowing down and a prime example is the iPhone sales slowdown in China and other countries.

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Crude Oil Daily Chart Update

This is the March oil contract month, which is a bit early to use but the end result will be the same. Yes, we hit a bottom, but we may still be a bit too early for another bullish move to crank up. There still may be a little upside to go and I’m taking a chance as one more downside move can also still happen.  The commercial hedgers are still net short crude oil which can keep a lid on oil prices. The speculators are the trend chasers and are building net short positions.

The Gold/Oil ratio tells us a different story as that ratio hit about 30:1 briefly in the last few weeks, but it is sitting at 28.25:1 right now.  44:1 was the last extreme bottom while 17:1 ended up being one of the extreme expensive ratios. Oil has crashed from this 17:1 ratio twice since the July 2008 peak.  Our present crude oil market is 6-7 months shy of a 10-year bear market, with no signs of an impending strong 5 wave run.

When we look at the crude oil monthly chart we can see a crash, then a huge rally and then another crash into the 2016 low. This would make a great looking zigzag crash which may not be finished.

It’s a game of splitting hairs and only short-term trades may work.  One thing is certain and that is if you are a crude oil follower for any reason then use the gold and oil price on a smartphone and calculate the gold/oil ratio several times a week. Using the little Forex gold and oil units works just as well. Making the calculations consistently about 2-3 times per week will get you started.  After a while, you will memorize the extremes and what can happen after extremes get hit.  Don’t try and forecast the price of gold this way as oil is not money, crude oil evaporates into thin air when it is burned but gold can’t be destroyed.

If some clown forecasts gold going to $5000 next year and our present gold/oil ratio is 28:1, then $5000 gold would produce a $178 oil price. Oil at $178 in 2019 is highly unlikely so you know that the gold price forecast is just a pipe dream!  At the 2008 oil peak, bullish oil price forecast was being made with $200-$300 oil prices still to come. All the experts were bullish on oil at that time, yet oil imploded from $147 down to $34 in just 8 months.  The Gold/Oil ratio was at 9:1 at that time and I knew that oil was going to crash.

The idea about gold ratios is that it gives us more of an objective look at the oil price and we can see through the emotions that are always present in any market.

 

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Brent Crude Daily Chart Update

The big drop in Brent coincides well with ETI oil but with a small price difference.  The near vertical drop in the oil crash with this daily chart does not do it justice as with a weekly chart this 10-12 day crash was straight down. It looks like there is an expanded pattern involved as the decline is just to steep for a normal 5th wave.  These fast moves travel at maximum speed and maximum speed can never be maintained for any length of time.  One day they will invent an indicator that actually measures the speed limit of the price move.

We should find out soon if the impending counter rally will happen and if it does, this rally should give us 5 waves up in Minuette degree. You can read a 1000 different analysts fundamental opinions, and you will get a 1000 different reasons why oil has crashed. It will make your head spin trying to figure it out. From my perspective technical indicators are far more trustworthy and objective. Besides fundamentals are lagging indicators.

There are many other reasons as well, like the Gold/Brent Oil ratio which reached 23.45:1. This is now the cheapest it has been in all of 2018! I don’t have a big database set-up with the Gold/Brent ratios but enough to see one type of extreme.  Once this rally does start to move then we should see the Gold/Brent ratio start to compress again.

Even the commercials are net long by a good margin but still not at an extreme. The speculators are in their normal Brent Crude bear traps as they figure that the trend is still down. The only way for the speculators to get out of their bear trap, is they have to buy or close off all their short positions.

I have been trading WTI Forex oil units and I added one Brent crude long position as I post.

The Death Cross on this chart happened at the $72 price level and we have witnessed the results of what Death Crosses can do to investments.  I would rather be early about any counter rally than miss a move that could contain a 5 wave run.

 

 

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Crude Oil: Can It Find Support?

Since the September peak, oil has plunged to what some call a “Historic Move”. Oil has crashed many times before, so I don’t call this “Historic” at all.  So far oil has hit a bottom just a bit above $45.

I had mentioned that $45-$40 could be support, but support for what? A new bull market going to the moon? I doubt it, but I sure would like to see this rally to continue for the rest of the trading year. The commercial hedgers positions are still net long but the Gold/Oil ratio was 27.52:1 this morning. This is the cheapest Gold/Oil ratio registered all year and hopefully the year-end bottom is in.  We could be landing on a Minor degree bottom, from where we could expect a wild counter rally with a run back up to about $50-$55!

For those that have any doubts what a Death Cross can bring, you are seeing it now with this daily chart.  It would have to be a strong rally before a “Golden Cross” might form but even then oil may be for short of a “Golden Cross” situation.  I’m sure bearish traders are in a bear trap as well and that the “Buy” orders are piling up above present prices.

Yes, the oil fundamentals change like the wind with many analysts each finding a different reason why oil is crashing.  If the Gold/Oil ratio hits the 27:1 brick wall for any length of time then that would also be a bullish sign! Flying and driving this holiday season can make a difference but only time will help to confirm that.

On a quick note, yesterday we had a very powerful storm come in that took out my power for over 6 hrs so my updating was curtailed.  I will also take a break but will post a little to cover a few asset classes for year-end review.

Happy Holidays and Best Wishes 🙂

 

 

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Crude Oil Intraday Bounce Update

My last posting price bottom did not hold for very long, maybe this crude oil bottom will last a little longer. This is the March 2019 intraday chart which can have completely different wave patterns. I look for the next busiest month contract which might have a slightly different price. I think oil is in for a bigger bullish phase but that might happen next year. In more move up and another move down would help to complete this wave count, which are diagonal wave structures.

Yesterdays Market Vane Report showed only 35% bull present. This is low but not an extreme just yet. The gold/oil ratio is a bit more telling as it registered 26.44:1 this morning. This is a record Gold/Oil ratio, in all of 2018. Getting close to the year-end also helps.

The fundamentals have been distorted and change at a whim as it seems every producer around the world is trying to manipulate the price of oil back up by cutting production.

Our oil policy is so screwed up that our government has tried to kill off our oil industry which got Alberta mad as hell. Then Prime Minister Justin Trudeau throws $1.6 billion cash at Alberta. Our government has no respect for the tax burden on ordinary working folks while the government drops cash out of a helicopter. Alberta has the upper hand here as cutting production will also cut oil revenues going back to the government.

 

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Crude Oil Intraday Chart: Bears Still In Control!

This morning WTI crude oil hit  a bottom  of $47.84 after which it started a bit of a rally. Since the December peak crude oil has been grinding down with many overlapping waves that I can’t count as impulse waves, but they sure look like they can fit into diagonal waves.  If we just bottomed then another zigzag rally should happen. This rally has no speed limit to it, so it can take its sweet time if need be. The only thing oil can’t do is soar above my wave 2 in Minuette degree.

The Commercial hedger COT report still shows that they are net short by a wide margin which hints that a super bull market in oil is not about to materialize this morning. We are dealing with wave position “unknown” to us most of the time. Fundamentals are also unknown as every country around the world is fudging its own oil related numbers. This is all about the process of eliminating wave counts that just don’t work. I manged to get in a couple of short trades on the way down but hesitant to go long with anything but a very small position. Even this mornings bottom may not hold, so I will wait it out.

The Gold/Oil ratio has improved with this recent oil price drop, but can still get much better. The Gold/Oil ratio sits at 25.65:1 which is much better but still far from being extreme. We don’t have to hit a new extreme ratio, as hitting the “Ratio Brick Wall” will do the same thing.

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Quick Natural Gas Update

This is the January 2019 NG weekly chart and it looks nothing like the daily chart. For the last month, Natural Gas Prices were correcting after which NG prices exploded. This morning NG prices exploded again, so chances are good a small 4th wave has developed. An NG rally going into the winter/spring season is not all that strange. There is an open gap open below, which could get filled at a later date. For now, one more push to the upside would be nice. There is an LNG terminal planned in BC, and I think that is a good thing. Still, there are seasonal changes that affect the NG prices which can still drive the prices a bit higher.

I would be very bullish longer term if the commercial hedgers were net long instead of net short. They are far from being net long, which does not support a huge impending bull run at this time. NG sure is not on a 5 wave impulse run as the angle of the 2018 move has been too fast and straight. Natural Gas prices are also diagonal wave structures so you can always expect a wild ride when you least expect them.

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Crude Oil Intraday Gyrations Update

Are we having fun yet?  Trying to figure out where oil is going next is always a challenge but I sure don’t think that the bearish situation is completely finished just yet.  One clue is that the waves are still overlapping each other which are signs of a bearish rally still in effect.  Another thing worth mentioning is that crude oil is just below the Fibonacci number 55. This support could fail before my digital ink even dries, as a move up or even a bit above $55 could still happen.  I have to run two sets of wave counts for oil, but both of them can be the same for most of the trip.

The Gold/Oil ratio has improved a bit recently at 24:1. This is not nearly close enough to be considered extreme but it’s making progress.  The Gold/Oil ratio only got better during November and we will have to see if it is running into a price ratio brick wall.

I would turn very bullish if the commercials were in a net long position, but they are far from that which will keep oil prices from running away to the moon. The fundamentals in oil change so fast which makes them worthless as well.  Did fundamentals give you the confidence to short oil in early October 2018? The experts were calling for $100 oil at that time. The October 2018 peak was one of most lopsided trades in the world as everybody was leverage to the long side and that didn’t include any COT positions.

The crude oil Death Cross on the daily chart happened closer to the $65 range, and oil would have to rally for a very long time before it creates a Golden Cross.  All my futures contracts that I follow are shifting or have shifted, into the 2019 year.

 

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Brent Crude Rally Update

 

 

This is a daily chart from the  February 2019 contract month as all 2018 contracts are starting to end. Brent like WTI has held its bottom price, but don’t get all excited about some major bullish move that will provide trading bliss with no worries. Good luck with that, as trends do not just reverse because of some single event or conference event.

Last month Brent crude hit a low of 57.78 and started a reversal producing another spike in the process. There should be more upside to come as small degree 5 wave sequences have started to develop. Any zigzag can produce nice impulse waves, and it is just a matter of time when this Brent crude run starts to run on empty.

Commercial hedgers have had net long positions for some time, but they have massive short positions in WTI. Two conflicting indicators by any stretch, so a call for this bullish move to eventually end will not be popular.

Since May 2018 I have been tracking the Gold/Brent ratio which can tell us a different story. Today it sits at 19.99:1, which is a bit cheaper than what it was at 16:1, but still on the very expensive side when compared to the gold cash price.  Yes, there are small differences between WTI and Brent which can change the ratio a bit.

I don’t look for some wild Fibonacci retracements as nobody really knows what wave count we are really on. Looking for a previous counter rally peak is quicker and far easier to look for another potential turning. This could be at the $68 price level. Everybody gets a Santa gift this December as investors jump back on the bullish bandwagon. Emotional panic moves in or out of an asset class never last that long as most of it can be due to panic short covering. All fundamental reasons for oil’s bullish move can’t be trusted as there is a lot of cheating going on with fake news as well. You’ve heard about fake news and one source of fake news is just propaganda practiced by every dictatorship around the world. Even democracies get in on the propaganda wars.

 

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Crude Oil Daily Chart Crash Update

 

 

In the last few days, crude oil did create another record bottom low of about $49.41, after which crude oil soared and so far has created another bullish set of 5 waves.  As I post crude oil has created another higher low, and it will be important to see if it the crude oil price will hold. I would like to see a counter rally of some sort, but a rally lasting a bit longer than just a few days.

A crash this long and deep sure has the potential to be part of an “A” wave as another 5 waves down in Minor degree sure might have a hard time as there may not be enough room.  Even a zigzag decline can crash to new record lows but that remains to be seen.

At this time the record low has a Gold/Oil ratio of 24.18:1, which is getting cheaper but that doesn’t mean we are at an extreme just yet. A Gold/Oil ratio of 30:1 would be better, but if crude oil rallies in the short term, this ratio will start to compress again.

The storage and pipeline networks have seen some extreme fluctuations, which in the longer term, will distort any supply-demand picture that is forming. I don’t rely on supply-demand numbers as there is no honest reporting that we can count on. If we think we are getting honest numbers from, Russia, China, Iran or any other dictatorship then we are just fooling ourselves.

The last month of the year could put supply numbers in focus again as the holiday season could kick in driving and flying plans. Until the airport gets buried in snow and all flights get canceled.

 

 

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OVX: CBOE Crude Oil Volatility Index (INDEX)

 

Terror has struck the Oil markets as crude oil plunges and OVX soars!  This OVX also is tied to the USO oil fund, so looking at the OVX will shed some more light on how deep the oil crash can still go.  The maximum spike to the upside registered about 95 in this chart.  Following the spike, OVX crashed and has now worked its way back up, to the point where stiff resistance can occur. We are presently at about 65, with the 80 price level coming up fast.

The chances that the OVX can make a double top are good right now, but 100 would run into my top trend line, adding another roadblock for the OVX in the near-term.

When it comes to fear moves, they all come to an end sooner or later as fear levels can’t be maintained forever. WTI crude oil has crashed and now has a Gold/Oil ratio of 24.25:1, which is so far the cheapest ratio I have measured during all of 2018! If the Gold/Oil ratio is going to hit 30:1, this would push crude oil to the extreme side.

Once this fear gauge reverses then chances are good another spike to the downside will occur, but it will take its sweet time about it. Any bearish scenario will have to show a correction of some type if the OVX is going to make another dash to a new record high. Only time can clear this up, but the Christmas holiday season can make for some stunning reversals.

Combine, the trade wars, with congested pipelines that can’t move the oil fast enough, this makes for a very distorted fundamental picture. Besides that, President Trump has been trying to crash the oil price for months as well.

In the long term, world economies are going to fail in spectacular fashion like Venezuela that has a million percent inflation rate, created by 2 dictators. The biggest bubbles and the number of different bubbles come from China, which makes North America look pretty tame in comparison.

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January Crude Oil Weekly Chart Update.

 

So far the oil crash has been un-eventfull, but analysts make it out like it’s the end of the world. The talking heads will always find a reason, “Why” oil or any asset has crashed because it’s their job!

The news is all about fundamentals, but fundamentals are always lagging indicators and change like the wind just as fast.

The fundamentals I find important is the COT (Commitment Of Traders)report, Market Vane Report, and the net long or net short positions of the traders. Right now, oil is just a bit above the 200-day MA.

Today the Gold/Oil ratio hit 22.41:1 which is the cheapest oil has been all year when we use gold as money.  At 22:1 this is not nearly extreme enough to expect a huge rally to bounce from, as 30: would start getting close to being oversold.

China Inventories Rise 416%

That is a big jump in inventory levels, but it’s more profitable to store oil at low prices as the smart traders that do that use big crude carriers as floating storage units. That usually happens near a big glut, which I don’t see just yet.

If by some odd chance that the world calls it an “Oil Glut”, then I know the oil bearish phase is over, and a new bullish phase will start. You may laugh about that, but its not rocket science folks. The first glut in late 1999 turned $10 priced oil into a $147 oil price by the 2008 peak. The experts went nuts in 2008 forecasting huge price gains still to come, but what really happened is the oil price reversed and crashed to about $34! During that same time, oil traveled from a Gold/Oil ratio of 25:1 to 9:1 in about 8 years.

Oil markets have always moved in the opposite directions than what the fundamentalists are telling us! All the squawking about $100-$300 oil just being around the corner has dried up!

The smallest move up in the price of oil can bring back any $100 price forecast very quick.

At the intraday scale, it sure looks like a potential expanded pattern is in progress, where some violent upside can still happen. I don’t think this decline is resolved, as another zigzag may yet develop but it’s still too early to tell.

 

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Natural Gas: Impending Correction Review?

The vertical move in the last day or so cannot be maintained as past historic spikes have obviously confirmed.  I understand a cold spell may have set this off, but what else is new. It’s the vertical move that could be the end of a run and not the beginning.

I also have an “A” wave peak in Intermediate degree but I have other choices as well. This bullish phase has been running since 2016, and since looks like an inverted zigzag I have look at it like’s a bear market rally as well. If this is a bear market rally, then a complete retracement of this NG bullish phase.

We’ve had three bear market rallies which all were completely retraced, so who says we can’t get the 5th bottom?

With my “A” wave peak then chances are good no new record low will happen but a good corrective wave has to form to convince me otherwise. Natural Gas is another prime example of diagonal wave structures, as there is nothing but overlapping wave structures everywhere.

For a correction, NG could drop well below the “B” wave bottom I show, and it would take time to play out. FOMO is also always part of any move, but so is fear of losing.

The commercial traders are short Natural Gas, but not by that much.  My Market Vane report this week showed about 77% bullish which is pretty high, but may not go to an extreme. Anything above 90% bulls, we are entering the extreme side of prices after which they can implode.

 

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