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Category Archives: ENERGY

September Crude Oil Daily Chart: Record High Again.

I show that oil peaked at just below the $73 price level in the September contract, the August contract has just crashed so there are always differences in prices.  The December contract paints an entirely different picture as the December contract is at least $5 per barrel, this is well on the road to an extreme spread and it tells me that oil’s bull run will not last.

The gold bugs need higher oil prices to support their bullish claims, because you sure will not see the gold price soar as oil implodes. Sorry folks but that ain’t going to happen. Gold and oil are linked by an unbreakable elastic band, which can streach and contract by extreme ratios. The ratio is still around 17:1 which is also at an extreme, so this will change dramatically as we hit the Gold/Oil ratio brick wall! Hurricane season can have psychological reasons why oil is high, but summer driving will also end so the future of the WTI oil price does not look bullish from my perspective. COT reports also show commercials net long in oil, so the bearish indicators are still there and getting worse.

To think that the stock market is going to deflate but oil and gold inflate, then you should check all your premisses as one of them is sure to be wrong. When the oil bulls all start to sound alike, then I know it’s time to short the oil price. I use USO for that as I’m short 100 shares on USO. Sure, any trade will go against you but feathering into any  postion is the key. I can handle alot of Draw Down red, which freaks my friend “JP” when I show him my red positions. My entire short sell group is turning into my best performers so I have no intention of getting out. I trade small positions with ETFs but try and stay in for a 5 wave run. When you ride those bear runs down, then you pat your bear and tell him that he has done a good job. Yes there are buckaroo cowboys that can only ride the bulls, but up here in Canada we also ride the bears! It’s not a fricken horse race folks. It’s a bear and bull ride and to see who can last the longest before being thrown off!

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USO Impending Crash Update

The majority think that gold is still going above $1400 but what happens after that. If a market has just been a bear market rally the gold can crash from $1400 to $800 with little effort. USO and Crude oil will not take this lying down as they will also crash. A bear market rally “must” send USO back down below 2016 lows so that is a very strong bearish indicator to get out of any USO bullish positions.

The only thing USO is good for is for shorting as I will not go long on this ETF for any reason.  My wave counts are working wave positions, and they are not published for entertainment purposes like all other wave counts are!

In general if all bullish retoric all starts to sound alike, then chances are extremely high, that they are wrong, and therfore a short position is the only logical position to have.

 

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Gasoline Weekly Chart: Another Death Cross!

There are no wave positions with is weekly chart as wanted to show how damaging a Death Cross can be if your in long positions.  They say oil is still going to the moon and $150, and the Golden Cross has already formed. These crossings are all lagging to any wave positions but in 50 days or so the 50-day MA could slice down and through the 200-day MA,  instantly the second Death Cross is formed.  We also have a rising wedge which is extremely bearish and a “huge” gap that is still hanging around.

If you start from the 2016 bottom and look up to the 2018 peak, what is it that you see?  Is it a bear market rally, or a full-blown bull market?  Every wave analyst “must” know the difference between a bear market rally and a real bull market. Any bear market rally  “must always” retrace and return below the price point of its orgin. If gas futures hit below $.90 then the markets have confirmed a bear market rally was in progrees.

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Crude Oil Weekly Chart: Hunt For The Death Cross!

I delibertly kept off all may wave positions, so to focus on two main indicators. In this case it is always the 50-200 day SMA .  I might call the Death Cross as (DC) and the Golden Cross as (GC).   I also high lighted the wedge, which is very bearish for oil.  Just after the 2014 top the dreaded Death Cross struck. We all know what damage the death cross can do, so we have to have respect for it, but traders can use it to their advantage before it happens.

Count the crossings and watch the sequence they produce. In a 5 wave decline we could get two Death Crossings, and only one Golden Crossing.  (DC, GC, DC)

After the last Death Cross, and we suspect a bull market, then chances are good two Golden Crosses will develop with only one Death Cross. Sounds like Fibonacci relationships to me.

In June, the 50 day average came up from the bottom slicing the 200 day line again. This is a Golden Crossing, but notice how late it showed up. These are lagging indicators only to help confirm that the main bearish trend will resume. They would also produce high confident short bets on Oil, well in advance of the crossing.

The sequence to follow should be a Death Cross which could be just be 5-8 months away.  Even when we don’t know, I would look at the sequence to always  alternate from the previous crossing type.

I think the world is going to be forced on a deleveraging program, (Crash), that could send $100 Trillion up in smoke. No gold or oil bull will stand up to so much money disappearing back into thin air.

Gold will “NOT” protect you from deflation folks.  The majority  have been brainwashed to think that it does. Some of the two biggest crashes in gold, erased $300 and $500 dollars in 5-8 months.  So a $500 gold crash would be realistic.

I’am waiting for the impending Death Cross in gold a few months down the road, and we might not see the DC until gold crashes under $1047.  If you are wondering why gold is crashing just pay attention to the US dollar. It’s fast becoming a safe-haven as the EU strains under the weight of printed Euros.

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Crude Oil The Bull Market That Won’t stop!

 

This is the September month with oil just squeeking into a new high. The August contract scored a new high but all other contracts months are still far behind and lagging.  I believe an inverted zigzag is still in progress, as the wedge suggests. If we draw horizontal lines back to the bull market, then the $75-$80 price level is going to produce a stiff wall of resistance at the same time.  The $80 price level would also hit my wave 2 price range. In a pure impulse I would not allow that to happen, but in the diagonal world this happens on a regular basis. For over 500 years, Submillennium degree wave 3 has produced diagonal wave structures. Oil’s entire life span is also based on diagonals.  Modern wave analysts don’t care about diagoanls waves as they label everyting like simple impulse waves. Cheating in counting diagonal waves stands out like a sore thumb to me, and I reject any wave count that ignores diagonal wave structures.

Different contracts have different peaks, so this usually wrecks havoc with the wave count, at least in the short term.  Any “D” wave rally can look like this as well, and most of the time you will never know the difference, because the mood in a wave 1 and a “D” wave are much the same.  Every bear market rally we will ever run into, has a bullish mood attached to it. The majority will never learn what a bear market rally is, so we get sucked into thinking that every bull market is going to send prices to the moon.

At the 2011 peak everyone thought we were in a bull market, yet complete retracement ensued.  Gasoline futures are not following as they are lagging substantially. At about the 2014 peak the Gold/Oil ratio quickly jumped to 17:1 after which the oil price imploded. In the last few days this has happened again as oil pushed to 17.24:1 this morning.  If oil stayed in the same spot and gold keeps crashing, then oil would still get more expensive and it doesn’t even have to move.

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Crude Oil Present Rally Will Run Out Of Gas!

I will make this December contract a perminate contract month as other months have some wild moves in them that have much higher spikes than what we see.  The September contract produce a very small gap which oil is in the process of closing off.  We still have the 4th wave peak and since May this peak has not been breached. Technically it should not get breached if the bigger bearish trend is already in progress.  Every counter rally to the bigger trend is a mini bear market rally, and any price support level will not hold, but for only a short time period.  From my perspective price never confirms a wave count, as price is a result of the type of pattern in progress. Did price help you see the oil crash coming? Or did price of the DOW in 2009, tell you that a 10-11 year bull market was coming?  Did the price level of gold tell you that a gold crash was coming?  As long as you use price as your only indicator, then you will get the same results as the majority do. In this game if your not a contrarian you become the victim.

We could be in a wave 2 rally in Minute degree so this rally should eventually die when the big oil bear returns. Commercials are very bearish in their positions, so until they switch, the pressure on oil will be to go down not up.  Most E-wavers ignore these types of contrarian indicators which can produce massive unexpected reversals. I’m confident that any Cycle degree correction in the commodities world will produce a zigzag with some producing triangles.

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Crude Oil Intraday Wild Ride Update

The trading in the June contract started to come to a halt and it never had enough trades in it to push it as high as the December contract.  When they roll over into the July contract then the July contract pushed much higher. It’s not good to stay late in a contract month, so I took the December contract. There was a 3 wave crash that took oil to a new low, but that lasted all of a few minutes before it retraced that entire “D” wave drop. I could count out the “E” wave a bit different.

When I see a triangle I also have to be prepared to jump one degree.  If I don’t know what higher degree I would get, then I need to scramble to make sure I get one by the time we get there. I’m a big fan of always trying to find a “better fitting” wave count, and not just change wave positions for the sake of having to do it.  The herd of bulls are  looking for higher oil prices as they think that fundamentals somehow dictate higher oil prices.  They freak out about every little move in inventory levels when reports come out that are above or below expectations.  At this rate the oil price will never crash if they can execute a balancing act in inventory levels.  So if the price of oil keeps crashing, does that mean all the tanks are going to be full all the time?  The last thing they want is their tanks full with high price oil, with no room to store cheaper oil in.

Oil storage is big business and smart oil traders have private tanks that go deep in the ground, where  inventory levels cannot be seen. All Trump has to do is announce a sale from government reserves and the price of oil would crash.  Having the faith that somehow OPEC doesn’t cheat with their production numbers is rather naive as well.

A recession is coming folks, and we know painfully well how fast the oil price did crash during the last recession. The oil bulls think that a trade war will have no impact on the price of oil. Commercials have an extreme short position in WTI crude, while the speculators are all geared to the long side. Both groups can’t be right, so something has to break this summer.

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Brent Crude Oil Weekly Chart: 2012-2018 Review

 

This is the August Brent crude oil weekly chart. In the future I may switch to the December contract as it’s also very busy. I made this chart up for those who are addicted to trend lines. 🙄 I try to use trend lines sparingly with posted charts, but before I put a single mark on the chart, I work 2 or 3 sets of trend lines with my editor. The wave count I’m showing started at the July, 2008 peak when Brent peaked at $148. This is 4 dollars off, from the Fibonacci number of 144. I place a great deal of importance to all the even Fibonacci numbers as they encompass so many caclulations in the stock markets, and all of life as well. Today Brent peaked at $80 after which it started to back off.

Since a corretion seems to be initiated, the top trend line may hold. The brother to the top trend line is at the bottom. The entire 2011-2014 top gave the majority the good bullish feelings and forecasts that oil will never gold below $100 again was a popular theme. Oil rallied to $125 and then started to turn down until it crashed into the 2016 bottom.

This peak was a bear market rally and the market confirmed this with complete retracement of the entire bull market that started in Decenber of 2008. Technically, it looks like a Primary degree zigzag has completed, and we should be off in another 5 waves in Primary degree.

There are some huge loopholes in that thinking because gasoline futures do not confirm new record lows in 2016, unless you want to call it a running flat! That does not fit as well if WTI is a zigzag and Brent being a flat. Ain’t going to happen folks. From the 2016 bottom we have a fantasic rising wedge, which is a very bearish signal that most analysts ignore.

Every Elliott Wave student knows what an inverted zigzag is, but yet they conjure up a bull market just the same. At this pace, the majority got fooled by a Primary degree bullish phase, and now even an Intermediate degreee bullish phase has them convinced that much higher oil prices are on the way. There is no support for a bear market rally once it starts its reversal. The only support may be at the $40-$45 price level if the actual decline produces a zigzag 5th wave.

The majority think that oil can’t crash due to some fundamental reports, but oil has a reputation of doing just that. I have deep respect for oils ability to execute fantastic swan dives. How did the 2014 crash work out? How about the big crash into the 2008 bottom? That 2008 crash hardly showed any subdivisions that you could count. This 2008 crash was extremely steep and is acually a “big” clue that it’s a zigzag and not a flat. With most flat crashes, this pattern is mostly reversed, where the “C” wave part is the steepest. Many may not suspect that a 4th wave rally can go this high, but in my experience they sure can, especially in commodities.

To decide if our present bullish phase is a bear market rally or not, is critical to know and understand.

Another indicator is the Gold/Brent ratio. I have only one reading and todays reading hit a ratio of 16.79:1. In May it was 17:1. This has change little and I would consider that on the expensive side when compared to US dollar gold. In 2014 oil reached a 17:1 ratio before it started to crash down to $28 or so. I would have to do some back checking to find the ratio for the 2016 bottom, but we can use the WTI ratios for Brent as well.

I haven’t found a good Brent COT report yet, but with WTI the commercials are shifted to the short side. This doesn’t get me all excited, about some super oil bull market to suddenly erupt.

The speculators that are chasing this trend are all commited to the long side, the exact opposite of the commercials. Who is the smart money here?  When you get such a high degree of investors all committed to the long side, who is left to jump in? Who is going to jump in thinking oil is cheap at $80? Below our present “C” wave bullish phase, all the protective “SELL” stops accumulate, and when they get hit all the bulls instantly turn into bears.

While everybody turns extremely bullish on oil, I turn bearish as I see a huge downside move coming.

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Intraday Crude Oil Update: Wild Moves In Both Directions.

In the last 4 or 5 days crude oil prices have gone wild, soaring in both directions. This kind of action doesn’t send a clear signal confirming any trend in any direction.  Besides these wild swings I believe crude oil is back to its bearish trend. It all depends on our understanding of what a bear market rally really is. From the majority point of view anything that moves up, is in a bull market . Expert analysts jump on the same bandwagon and give us all sorts of fundamental reasons why oil is still going to the moon.

The entire oil bull market produced what can fit into an inverted zigzag with relative ease, and that means “bear market rally” in Elliott Wave speak.  The simple result of a bear market rally is the complete retracement of the entire bullish phase.  I cannot be any more direct about this, as staying invested at the top of a bear market rally can wipe you out in  short order.  As I post crude oil is still on a bullish run where this little wave count gets trashed as I post. What else is new as at these intraday levels, things can get pretty wild.

If oil still has a bearish phase to go through, then gold prices are not going to go to the moon. The Gold/Oil ratio keeps a mathmatical connection that doesn’t get broken or even expire. This morning the Gold/Oil ratio was 19.27:1 which is cheaper than what it has been, but by only a very small amount. In other words, the oil price can crash much further. Gold just crashed down to $1262 so gold is doing a good job of still confirming its bearish phase.

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Crude Oil Intraday Crash Update.

Since the peak last month nothing that has happened indicates a correction has taken place except for small counter rallies.  (Mini bear market rallies)  We have to understand any bear market rally is they will determine if we should hold a bullish position or get the hell out. There is nothing more horrifying than think about a bull market that some say is going to $300, but it turns and crashes to $40 or even lower. Bear market rallies in any degree always retrace themselves, so there is no sense in staying, as bear market rallies make for excelent short bets.  The trick is spotting a bear market rally before all others do and I will keep trying to do that as we all need that information early.

Most of the oil bulls do not understand the concept of a bear market rally as they treat anything that goes up as a real bull market. In commodaties and oil specifically is in a big Cycle degree wave 4 bear market, with most of them being giant zigzags. It may take the rest of the summer to play out so expect some wild counter rallies like we just had.

I switched mywave count to another wave 1-2 in Minute degree but ultimatley we need 5 waves down in Minor degree or one zigzag in Minor degree. Any zigzag could form where the “B”wave looks just like another 4th wave rally. These types of rallies would be very hard to spot if we’re not looking for them.  All this trade war rhetoric is just to much for the oil bulls to handle. Maybe $50 billion worth of duties, the markets could handle, but $200 billion, was just too much.

Fear drives the commodities, not some logical fundamental explanation why oil is going up or down.  Sure I can see another world oil glut coming up, but we know that oil gluts are very bullish for the price of oil. The last record oil bear market low was about $28, which technically should be breached again, if the 4th wave peak is on its true location.

My wave counts may make little sense to some, but my oil wave count starts with the 2008 peak. This makes the oil bear market about 10 years old so far. Thinking in 4-5-month steps, we could see September/October with another new record low.  I may be very bearish on oil, but I assure you I will turn very bullish after this 5th wave plays out.

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USO “C” Wave Bull Market Review

This is more about looking back to see the “C” wave bull market that the majority of us missed. If we use $9 as our average entry price then the $14 price level would be a great exit point. Selling at the $14.50 price level is next to impossiable, as you have to be a real contrarian to sell when all the experts are beating the bullish drums.

Once I multiplied $9 by 1.618 it pointed to a $14.56 price level where USO reversed its trend. Of course the experts are still looking for much higher oil prices when they keep calling this a “correction”.  If you read any analsyts slightest suggestion of a correction, you know that those analysts have no idea that USO is just in a bear market rally.

This “C” wave  is one move in Minor degree, which works perfectly with a 61% gain. It also measures the length of a one degree move.

Not too many experienced traders can stay in a position to ride up a 5 wave sequence in any degree, especially if you are trying to trade oil units in the Forex accounts. Every time this chart dips panic ensues as analysts drum up the bearish news. Stops get hit and when that happens the markets can leave without you.

Trying to hit a 5 wave run before it starts is the key as these 5 wave runs is what the EWP is all about. Bear market rallies may not make any sense if we don’t understand that bear market rallies can be huge and even many years long. With any bear market rally there are “No” support levels to consider as we always have to ask, “Support for what?”.  Any expression about a bear market rally in Elliott Wave terms, means complete retracement of the entire bullish phase. Any return to its bearish phase USO must travel well below the $9 price level, but then we would also be getting close to where any inverse stock split can happen. The reversals I look for are the ones that force all the players going in one direction, to switch and then go in the opposite direction.

Last week I initiated a small USO short position which turned green the following day. I prefer trading ETFs but my US funds are limited so in this case I can only take a very small token short position.

If we look closley at this USO peak we can see that a “Gap” has opened, which I think it will stay open for a few years.

Having one gap indicator already is a big plus, as we know that in the future that this gap will get closed. The only problem is that USO combines several other futures contracts which distorts wave counts and produces the slippage between contracts.

I do not give investment advice but I do like to speculate. If the holders of USO can’t escape a bull trap then they are going to get hit hard, and eventullay will be forced out. Very few trading or investment accounts in the world can handle any drawdown from $14 back to $9 which works out to the same as $13 down to $8 would. In other words a 61% crash sure can chop up any trading account, in very short order.

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RBOB Gasoline Intraday Crash Update

I don’t think we need any trend lines when we look at this chart as anyone can see this basic intraday trend. What is much harder to understand is the diffrence between a bull market and a big bear market rally.  Chances are good that another wave 1-2 has finished and we are heading down to a potential wave 3 in Minute degree. I believe all the oil related asset classes have been in a big bear market rally and what gasoline is doing is just resuming the bigger trend.  All the forecasting in the world is irrelivant when experts take a big bear market rally and turn it into a huge bull market. The experts have forecast much higher prices at every major top, but yet the markets does the opposite and crashes.

This may be very hard to understand but its very normal and I know that my bullish wave counts must also come to an end.  Applying stock market thinking to commodities will not work as commodaties come from the diagonal family of patterns. The more choppy the charts are, the less wave analysts will tackle them. So far gasoline futures show a pretty clean impulse decline, which is rather rare.

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Crude Oil Intraday Crash Update

Since late last night oil topped after which it produced a great swan dive.  Any asset class that was this choppy can always have a counting issue and therefore go higher than expected, but only time will tell if this crude oil counter rally is finished.  A move where crude oil falls below $64 will settle that argument, as bear market rallies are always completely retraced. The story that Europe is awash with crude oil was interesting.  They say, “It’s an unusual occurrence”. Europe is just hedging their bets on buying cheap US crude and not relying on Russian or mideast oil. It’s the perception of excess oil (glut) that can turn oil bulls into oil bears instantly.

We are going to get many more of these fake bullish moves, and each one will produce excitment thinking the worst is over for the oil correction. In the eyes of the public anything that goes up is in a bull market, but from an Elliott Wave perspective we can have very large bear market rallies.  My big bear market wave count starts way back with the 2008 peak, as we must never lose focus from where this WTI crude oil wave count comes from.  I’m sure we will see another counter rally in the next few trading days, but if the rally is finished, then no new highs should get established.

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USO United States Oil Fund Review

This USO Oil fund is not something you want to invest in. Even speculating in it will just frusturate you due to the slippage in the charts. About the only thing USO is good for is to short when all the bulls are confinced oil is going to the moon. The 5 1/2 year sideways market does not reflect the futures market one bit, even though I entertained the idea of a triangle in oil futures as well.  This is a very popular fund so many players are going to suffer huge losses if they don’t get out.

It contains not just WTI crude oil but contains heating oil futures, gasoline futures and even natural gas futures, so I can understand why this USO fund does not track oil with any consistancy.

Even the rally after the 2017 bottom was very weak, compared to what the oil futures did do. The entire move from the 2016 bottom looks like an inverted zigzag, which in Elliott wave speak means a bear market rally.  All USO ever has to do is fall to a new record lows, which will confirm that our present rally has indeed been a bear market rally.

In this case it’s an Intermediate degree bear market rally, which also gives us the clue that the next huge bull market will be at least one degree higher.  Two degrees higher and we would be looking at a Cycle degree bull move!

My records show that USO has not recorded an inverse stock split, but it is something that may happen if USO ever approaches the $5-7 price level.

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Crude Oil Intraday Topping Pattern Review

This morning crude oil created another higher high. There can always be another spike higher but this rally sure looks like it is fighting the bigger trend. Over lapping wave structures is the first clue, and a wedge is another. You usually don’t get one without the other as most bear market rallies can turn into wedges. The “C” wave part is all diagonal as it started near the bottom.  The only way we can see these small zigzags is with a 30 minute scale chart.  Anything bigger and you would not see many of these small zigzags.

The wedge looks impressive but we can dream up wedges just about anywhere if we are very biased. I believe there is more downside to come this summer so jumping on the oil bandwagon could overload it at a time, when the wheels are ready to fall of.

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Crude Oil Intraday Bullish Update

Crude oil has been in a rally but this rally is so choppy that oil looks like it still is in a counter trend rally.  We may still have more upside but this rally should end and then resume its bigger bearish phase.  The December contract is still $1.21 lower than the June contract and over time I would expect that to change which could still take many months to switch.  The December contract is also very busy so I may switch to the December contract soon.

Panics happen when a small group sees the same thing at the same time, and any unexpected inventory number can do that.  Markets will always do the opposite of what ever trend the majority have established, as the majority can never win at this game. The majority never practice buying low and then selling high becuase they only love it when things go up. If not enough bulls keep buying then sooner or later this crude oil bullish phase will have a hardtime in staying with this northerly direction.

Those traders that can play both ways care little about fundamentals as they only care of what their TA is telling them. On a short scale we could also be facing an inverted wedge which is also very bearish.  Overall I remain bearish until a correction completes that will push oil into a new bull market phase.  So far this idea is pretty remote but by the fall the bearish phase will show itself to more participants.

I see the $40-$45 price level as a good resting spot but if any rally is still choppy, then even the $40 price level will not hold.

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Intraday Crude Oil Rally Update

Declining inventories is the reason why oil has rallied. Does the news automatically reverse a bearish phase? Highly unlikely as even President Trump  wants OPEC to increase its production.  This rally has all the charatristicsof an inverted zigzag which could be just another 1-2 wave.  There may be one more higher high but then we should see another reversal happening soon.  I’ve moved my degree level up again by one degree, and only time will tell if I have to adjust again.

Many experts are gungho on oil prices, but only when the price of oil goes up. When the price of oil starts to dip again, the analysts will bring out all the news why they think oil prices will go lower.  Analysts go with the flow, but in reality this is worthless information when we see the action in the charts.

Until oil shows a very good sizable correction then I may turn bullish. This may not happen until oil falls well below $50. $40-$45 would be a very good base for a turning or just a long resting spot.  The entire oil move since the 2015 bottom looks like one wild inverted zigzag, which are bear market rallies. This happens at all degree of trends with the above chart being a small example what small bear market rallies look like.  We had a Primary degree bear market rally which fooled the majority thinking it’s going to $200 again, yet the oil market crashed from $115 to $28. In just a few short years, the entire bullish phase was retraced. Sure oil created an “A,B,C” move but I think the Cycle degree dip has not finished by a long shot.

This morning the Gold/Oil ratio sits at 19:1 which is not all that cheap when we use gold as money. We want this ratio number to reverse and expand where oil can buy many barrels of oil.

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Crude Oil Just Keeps on Crashing!

I have about a week or so before the June contracts expires, after which I will move to the next busiest month. I made a small degree change as the last thing I want is a degree that is to big early in the game. As I post oil is in a bit of a rally, and it to should come to an end.

In the long run, the big question is, “if oil was in a big bear market rally?”  Very few investors and analysts know the difference because any asset class that goes up by more than 20% is a bull market from their perspective.

In commodities a conventional 20% move is just a little bee sting. From an Elliott Wave perspective this is not the case as we can have 70-80% bear market rallies, that completely retrace their entire bull market moves.  Oil has done this once already, but that late 2015 low may still be a fake bottom. We may hear about the $45 price level become support, but I always ask, “Support for what?”  Support for the start of a brand new bull market, or just temporary support before the final leg down?  They used the excuse that inventory levels are too high, but that has happened many times already.  Storage and large crude oil carrier loading and off loading terminals as being built and expanded on, around the world. The last thing that any oil traders wants is to store high priced oil. Storing low price oil, they can make money on. They will pull out all the stops and even lease large crude oil carriers to store oil in. A month or so ago they declared the oil glut is officially dead, but that is a bad omen and not a good sign at all. The markets always do the opposite of what the majority think will happen, as “all” oil gluts of the past have produce major oil price bullish phases.

From a major oil glut in early 2016, it took fundamentals over 2 years to catch-up to the oil price. I’m pretty sure we are going to see another oil glut before we ever see another real oil shortage.

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Crude Oil Trade War Update.

Crude oil is on the verge of crashing through short term price support. The gloves are coming off, in the war on trade as they all try and fight back. All this trade war talk does it make you want to jump out and buy commodities?  My bearish stance on oil has not changed one bit even though there are many experts out that are still beating the bullish “oil drums”.  All the price forecasting in the world will not come true, if we don’t know the difference between a real bull market and a big bear market rally.

Recently they got worried that inventory levels have decreased , and then no sooner did they post the news, another report comes out saying the exact opposite.  I’m not concerned about any crude oil inventory levels as the big crude oil traders will buy, build or rent more storage space that prying eyes cannot see.  Traders don’t make money storing high priced oil, they make money storing low priced oil waiting for a price rebound. In South Africa there is a big crude oil depot that has huge storage capacity by going  deep below ground. More daily oil flows around South Africa than what travels through the Suez Canal so Cape Town is a prime location for a major world storage hub.

Another oil storage trick is to rent large crude carriers and just float them until prices improve. Some of these VLCC (Very Large Crude Carriers ) can hold 2 million barrels. (About 2000 contracts)  I’m sure that floating storage will come into play again in the next few years, and when it does it will be all over the oil news blogs. When all the oil storage is used up then the price of oil will rally.  There is no real shortage in oil to justify lofty expert price claims, as they have failed every time. In 2008 they were calling for $200 oil but oil then crashed to $34! We may get a brief halt in the crashing oil price, but that may not happen until crude oil gets close to the $40-$45 price level.

When commodities crash they can do so, with amazing speed, and that famous excuse, “It’s Different this time” will not stop an oil crash.

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RSX Russia ETF Bear Market Review

The RSX tracks many oil related asset classes which all had a major top in mid 2008. This makes it easy to call a Cycle degree wave 3 peak, but what followed is another bear market, that looks like a zigzag, but has not finished.  We need at least two major lows with the 2016 low still not being low enough for a zigzag to be called finished.  Of course we’ve been told the exact opposite as oil is heading to $300 as one biased expert claims.

I want to stress the point that this is just a quick count. It takes years of baby sitting to build a reliable wave count that you can trade without using stops.  There are no reliable trend lines that I can use but the big bearish trend seems to be obvious at this time.  It may take the rest of this year before this RSX bear market rally clears up, as increased OPEC output has caused this market to turn bearish.

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Crude Oil Intraday Rally Update

In the last 3-4 days crude oil has been in a small rally which sure has the pattern of a triangle. We are just finishing what looks like another zigzag “E” wave so anoterleg down should happen, followed by a bigger rally retracing any 5th wave we may get.  A triangle forces a degree change as well which could end up at a wave 1 in Minor degree.

All bullish oil news in a bear market will never turn a bear market into a bull market, as bear market rallies are all starts to a fake bull market. Many still believe that oil is going to $100 or even $300 as one biased expert claims.  Crazy bullish forecasts always get mentioned at the tips of bullish phases, after which the market crashes. It’s not any different this time, as the only thing that has changed, is we are in a different time period, after all were not in early 2008.  Any unexpected bearish move will force “all” bullish players to reconsider their positions.  They can do this by moving up their protective sell stops,  just below my wave 3 in Minute degree. Very few traders have the account to maintain a bullish position, besides the smart traders saw this oil crash coming.

The $66 price level will be a set-up for a downside breakout, with the potential for a diagonal 5th wave to develop. We have a long way to go, and it may take the rest of the year to play out.  All my commodity Cycle degree 4th waves are zigzags with a few triangles thrown in to keep us on our toes.

Figuring out where we are in this Cycle degree 4th wave is different between many commodities, and we are still far away for the “A” wave in Primary degree to arrive.

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Crude Oil Intraday OPEC Bear Attack Update.

We all now know the reason for the oil crash as the blame is all about OPEC increasing their crude oil output. Bears always attack from the top down and this time it is not any different than what happened in any other bear attack that oil ever had. This July contract is already well below the $67 support price level, and my bet is that much more downside is to come.  A Minuette degree 4th wave rally is still in progress, so that needs to play out before another leg down can happen. Any next leg down will run into a new set of 5 waves, but this time it should be 5 waves in Minute degree.  If any oil analysts are  looking for price support, then they clearly don’t understand a potential bear market rally.

The majority don’t know the differnce between a bull market and a big bear market rally, which the EWP is supposed to tell us the difference. From an EWP perspective all bear market rallies get completley retraced. The crude oil move from the 2016, $28  bottom, oil moved a net amount of about $44!  Even just a simple net 50% correction would send oil down to the $50 price level. Oil still has a very big base at the $40-$45 price level, so anything can still happen during the rest of this summer. All the COT reports still  show the commercials in net short positions and until that changes dramatically, the oil bearish trend should continue.

The Gold/Oil ratio is starting to get very close to 20:1 which needs to expand much more as the oil price keeps declining in price.  Sooner or later the oil price will take the gold price with it, as the ratio keeps gold and oil locked together.

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Natural Gas Correction Review

Natural gas is another one of these asset classes that belong in the diagoanl world as it’s entire life seems to be diagoanl wave structures. So far the 2016 bottom is an 18 year bottom as well. I think there is a bigger bullish phase in progress, but our present move needs to clear up some more in the short term.  Commercial traders are long NG but not by any extreme.  Short term NG can still give us bearish signals but I think a bigger bullish phase is still due.

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Gasoline Blendstock New York Harbor 2012-2018 Cycle Degree Review

If you want to see an ugly bullish phase then you don’t have to look any further than the bull market from the 2016 bottom to our present 2018 peak.  This choppy rise fits best as a big bear market rally as this choppy gasoline wave patterns is much worse than crude oil ever was.  I see one big mother of a wedge which we would see in ending bull markets.

What the majority of analysts ignore is the fact that this gasoline chart has one huge open gap, which I have mentioned many times before. Gaps have a 90% chance of getting closed off, but it could take the rest of the year for us to be convinced that the big bullish phase has completed.  Gasoline charts have a good track record of creating major crashes, so to say it can’t happen again, means we are ignoring chart history. At the 2016 bottom gasoline didn’t even go as low as crude oil did, which does not complete any Cycle degree wave 4 crash bottom.  Having a fake bull market, (bear market rally) in gasoline and not in crude oil is mathematically impossible.

Very few people understand the difference between a true bull market and a high degree bear market rally as from their point of  view,  anything that goes up is a bull market. At about the $1.30 price level we could see some major support, but if the bigger bearish pattern is in effect then the $1.30 price level will just be a temporary rest stop.

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Crude Oil Intraday Crash Update.

Crude oil has a bit to go before all of the May rally is  completley retraced. It also means that the fundamentals reasons they used for the price rise were all bogus. They were baffling us with bull shit like they have done many times before. Breaking below the psychological $70 price level is very important as now the entire world of analysts will look for all the bearish fundamentals. The big question facing all participants regarding the oil bullish phase, is if it was a true bull market or just another  big fancy bear market rally?

Very few analysts know this and the emotional players know even less what a bear market rally is. From an Elliott Wave perspective every bear market rally gets completely retraced. All my work is done from a Cycle degree perspective and in the case for oil the big peak in 2008, is the Cycle degree wave three top. Since then oil has been in a huge bear market that still has not completed.  The initial 2008 crash was followed by a big bullish phase, which convinced many of the experts that oil will never fall below $100 again.

What followed was another oil crash that completley retraced the entire oil bullish phase. From the 2016 bottom to our present May top was an Intermediate degree move, while $110 at the 2011-2013 top was a Primary degree top. Our present top is only “one” degree lower, yet that represents about a $43 oil price difference. Some analysts flip degree levels around like flipping hamburgers, but they don’t realize that being out by only “ONE” degree does make a huge difference in forecasting any price changes. Prices pull fundamantals up and down like a big bull or bear will follow you around with a big ring stuck in it’s nose.  Forecasting a big price move also forecasts the new fundamantals when that price crash has arrived. Since I have labeled this an Intermediate degree move, I basically have a conundrum. If I make a one-degree change at this top then all wave counts going backwards must all be checked and recounted. Cosmetic wave counting will not do it, as it’s all about the structural changes that have to be made. Being out by one degree, we can be out by a minimum of 61%, which is the same as the (.618) Fibonacci ratio.

Now the guessing game will start at what price level oil will bottom. Bottom for what? A bottom that breeds a new bull market or a bottom that confirms this rally was just another big bear market rally?

If I use an Intermediate degree “A” wave peak for our present top, then I have just bumped all my oil wave counts into the SC degree world. Of course a one degree change in oil, would also put all 30 of my Cycle degree wave counts into question. Needless to say being out by just one degree is very important from my Cycle degree perspective.

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Intraday Crude Oil Crash Update.

This is the July intraday chart of WTI crude oil. In the last couple of days oil has been crashing which is pretty obvious,  as the media is all over it giving you an excuse or reason for every little twist and turn in the crude oil price.  The question is in how big this correction will be as every expert on the planet only sees upside in the price of crude.

There are very big counter rallies which majority can’t tell the difference. With them any thing that moves up seems to be a bull narket. In the EWP huge bear market rallies always retrace their entire bullish moves.  Once the bearish phase kicks in, nothwill stop it until it is time.  An intermedeate degree decline does not happen over-night as we need more evidence that  this decline has more staying power.  Some say  oil may only correct to $50 but that would not even put a dent into all the COT positions. $50 would be about a net 50% correction which I think is not nearly deep enought.

In between $40 and $45 crude oil would get much better support, if the big bull market is still in play.  But if we all are fooled as to the natureof this oil bull market then, that $40 price level will mean little. When commodities crash they can crash fast, as oil has demonstrated many times before. The longer it takes oil to create a new record high, the bigger the odds are that oil is in a bigger bearish phase than what the majority expect.

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Crude Oil Intraday Record Highs Update.

This morning crude oil was trying for $73 with this June contract. We also have a very narrow run that can fit into an ending diagonal very well.  Gasoline has also been making new record highs, so crude oil is not alone in this. Oil keeps pushing higher as the world experts have all jumped on the oil bandwagon already.  This oil bull market is a top heavy trade by any stretch of the imagination.   A major correction must happen, or worse yet the entire bullish phase comes to an end and oil prices start to crash.  It’s hard to beleive that oil could crash but it has done this many times before and under much higher bullish conditions. Just review the 2008 peak when the experts were declaring a world oil shortage. Yet 5 months later we were in another complete oil glut. The world’s bullish oil analysts never saw the oil crash coming in mid 2008 and this time I see very little difference.

This morning the Gold/Oil ratio crashed below 18:1 which keeps making oil very expensive. All future bullish price forecasts become higher and higher, until that day when all the bullish buyers are already in.  Protective “sell” stops are piling up below present prices , but there is a $10 price limit where trading in oil my be stopped for the day.

Commercials do not support this bullish phase as it is the speculators that are chasing this bull market and they are in net long positions.  Bullish speculators leaving protective sell stops behind them, are sowing the seeds of their own destruction as sooner or later all trends trap the participants before they know it.

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Crude Oil 1980-2018 Monthly Chart Review: The Surplus Is Gone!

The story goes that the experts have now declared the world oil surplus over.    It took fundamentals close to 23 months to catch-up to the oil price.  Since 1980 we had about 4 major world oil gluts and each one was followed by a wild bullish phase. The exact opposite happens at every oil peak, crude oil shortages were declared, and as soon as concensus forecasting was unaminous, the oil price would crash.  All the takling heads agreed that oil prices were going much higher as inventories are starting to decline.

Storing oil is big business and the last thing smart money wants to do is store oil at high prices, so inventories are reduced. They can’t figure out why  the oil price would crash when inventories are declining. At the 2008 peak they were calling for a world oil shortage and price targets of $200-$300 a barrel were pretty common. In face of all that bullish oil news, within 6 months oil had crashed about $110.

Then again at the 2013-2014 oil peaks just above $110, they declared that oil would not fall below $100 again. Sure enough witnin two years oil had crashed from $115 to $28. Oil and commodities have a great track record of crashing when nobody expects them to crash. Oil has had no problem in moving $50-$60 at a crack, so another $40 oil crash would be a walk in the park. Now in 2018 we are faced yet with another major bullish scenario, as the fundamental forecasters are at it again. They don’t report the huge short positions commercials have in oil, they only brag about the long positions of the speculators.

With crude oil going vertical at about $72, two things are going to happen, one of them is another huge correction develops, and the other is an end to this entire bullish phase, which started in 2016. Very few can tell the difference between a bear market rally and a real bull market. A bear market rally “always” retraces its entire bullish phase, and we have to wait to see if this will start to happen in the next few months.  A turning will force all the players in the bullish direction, to switch or get out.

You can bet there are massive amounts of  protective “sell” stops below present crude oil prices, and once they get triggered, it can produce a cascading effect. There is a $10 limit to moves in oil futures but that rarely has been triggered. My “B” wave in Minor degree is sitting at about the $45 price level.  The public needs to switch to a very bearish mindset, before a major bullish move can happen again.  If oil is going to crash, there is no way that gold will go vertical heading the opposite way. It’s the Gold/Oil ratio that ties oil and gold together, and it’s just a bit above 18:1 as I post. During the 2013 oil peak the Gold/Oil ratio compressed to 17:1 before it crashed, so 18:1 makes a great fit at this time.

If I’m wrong about this impending decline in oil prices then oil “must” produce a clear corrective pattern in Intermediate degree. This corrective pattern must not create a new world record low price,  but it must produce another higher low. Think of “must” have as a hard EWP  “Rule”,  not a guideline.  Another 3 wave Minor degree move will not happen overnight, as it would take many months and even longer to fully correct.  Some little dip in the oil price will not even come close to force a change in direction onto the  bullish speculators.  As I post oil is getting closer to $72 again, so this will keep many of the bullish players locked in their positions for now. Buying low and then selling high is not the concept practiced today as even in commodaties they love to chase a bull market forcing higher and higher prices on us. Bullish moves have come to abrupt halts in the past, so I’m sure this big bullish phase will also end.

I could be faced with a degree change but making one change up or down would throw “all” my other wave counts out as well, by at least 61% or more.

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Crude Oil Intraday Record High Update

This bull market in oil keeps pushing higher and it still may not be finished. At this time it looks like and ending diagonal could be forming with a drop to the bottom trend line can still happen.

Higher and higher price forecasts for oil have flooded the internet and in the short term some of them may still get hit. The question always on my mind is “what is going to happen “after” thier price targets become true. In reality they have no clue as, and besides if they did, they might get fired for being bearish.  I have no such hang-ups in calling an oil bubble, but it is impossiableto define an exact top at this time. The big question is, “Is this bull market just a big bear market rally (fake bull market), or is it the real thing.

There is nothing wrong in playing any fake bull market, but then you really have to know when to sell or go short.

They all thought that the 2013 peak was a bull market yet another crash ensued producing a complete retracement. That was a Primary degree peak and at present we may be at an Intermediate degree peak.

Bear market rallies have a dubious reputation of  crashing with “complete 100% retracement”, even if it is retraced by only slimiest of margins. The EWP is still the best way of seeing bear market rallies depending on where we are counting from. My bearish wave counts come from the 2008 peak which is my Cycle degree wave 3 peak.

The entire oil bull market is so choppy that I find it hard to believe that oil prices are still going to the moon. Commercials have establish large short positions and the majority of experts are “all in”. The is a bullish top heavy trade set-up and it can only end badly. From a shortage to a glut it only took about 8 months in 2008, so this bull market can change dramaticly in a very short period of time.

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Gasoline Blendstock Weekly Chart Price Surge Update

I’m sure you can read all sorts of fundamental reasons why gasoline prices are soaring. I get the same bullshit from the man in the street, that have never ever looked at a futures chart. In the end there is not a single person that can tell you what made gasoline prices go up and down in anyone of these patterns. When the oil market was in a glut in 2016, nobody will know or will remember specificly what turned the oil market northward.  I sure can’t that’s why I use numbers and letters to track the emotional trips that investors make. Never forget where this big bullish cycle originated from.

The big Cycle degree wave 3 peak happened in July 2008, as the expert cries for shortages were heard everywhere. Within 5 months gasoline prices had crashed which  the majority of experts never saw coming. The contrarians were calling for a crash and the markets did not disapoint us.

Today we are faced with the same situation as gasoline prices are going “vertical”.  Summer months seems to be a great time for oil related markets to crash, but the exact date and time is never written in stone. From the 2016 low gasoline prices have charged up with some of the wildest patterns I’ve ever seen. Once again we will hear all sorts of fundamental reasons why prices should keep heading north.

When prices are pointing up, I look down and build the bearish scenerio that will always come.  At $2.26 gas prices are stuck in limbo with no previous resistance from the 2014 crash.  What we do have is a great Head and Shoulder pattern, that from my perspective is a very bearish H&S pattern. Then between the $1.30 and $1.10 price range we have the biggest open gap I have ever seen in any commodity. This gap will get closed and it is only a matter of time before this happens. If we look 5 months or so down the road into the fall, then this is plenty of time for a crash to show itself again.  They call this Gasoline Blendstock but it is much lower than any prices you may find at the pumps.

It seems that turnings happen closer to mid year but this market has no shortage of surprises at least in the short term.

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