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Category Archives: ENERGY

Gasoline Cycle Degree Update.

 

This gasoline futures chart is on a different wave pattern as it’s Cycle degree 4th wave bottom was in late 2008 not in 2016.  The British Pound is very much the same so it’s not an isolated rare pattern as the 2016 bottom would be a running type wave.  This doesn’t mean a very deep correction is coming as another leg up may still happen in the next few years. Even Brent hitting the $80 price level, may break-out to the upside again. This has taken far to long for a bear market rally, so that always forces me to look for a better fit. More and more commodities are seeing Cycle degree 4th wave lows,  and that should only increase in the next few years. By about 2022 many other stock indices will join the 4th wave Cycle degree club.

I keep track of all the completed 4th waves under a seperate page heading, so check that page as the Cycle degree 4th wave count is growing slowly!

In this case the huge gap we do have can also act as support, as prices also repell from gaps. I’m sure in the future that this monster gap in gasoline will close off, but that may be a Supercycle degree crash when it happens. Gasoline is just in a huge zigzag bull market and between the two sets of 5 waves virtually any pattern can develop.  I haven’t checked the weekly chart Death Cross but the 200-day MA could be support, as on a daily chart we could hit a Golden Cross. Even now the correction is not as impulsive as you would expect, so this can always crank up and add another leg to this insane bullish move.

We can also see a big H&S pattern, so if gasoline prices are still very bullish, then the right shoulder will not hold and a push higher should happen. In a bearish situation a H&S pattern like this would go to new record lows.

Hits: 2

Crude Oil Weekly Chart 2008-2016, 8 Year Bear Market Review!

 

Last week things changed as there is a 99.999% chance that gold has a bottom at the $1160 price level. This also forces me to make changes to my oil positions as it refuses to die, or correct at this time.  All commodaties are zigzags linked together which follow a completely different idealized wave structure than what stocks do. When we choose to ignore them, then our wave positions will never produce positions we can’t stay in for more than a day.

The biggest clue that crude oil is in a diagonal, are the 7 waves up from 1999 to the 2008 peak. (3 years before the gold peak) All experts call the bull market to 2008 as 5 waves up in Primary degree but I count 7 waves up, which means a diagonal wave structure is in progress.

We can only wait for so long before we have to throw in the towel and succumb to the oil bulls. I moved my oil wave 4 in Cycle degree to the 2016 bottom  and this would technically complete my 4th wave. Oil will enter my Cycle degree 4th wave club, and gasoline should as well once I update it.

If the wave 4 in Cycle degree is in then oil will produce another zigzag looking pattern, but that may not happen until gold hits it’s “B” wave peak. We can’t have a strong gold bullish move to the upside without the Gold/Oil ratio making a big move as well. The ratio stood at 44:1 at the 2016 bottom, and has now hit 17:1. This is an extreme but could also just produce a correction.

Even Brent crude may join my Cycle degree 4th wave club, and I will update the Brent crude wave positions when I can.

I will not trade any oil related asset classes as the gold market and ETFs is my trading world. If gold is going to lift-off then the oil price should react bullish as well. That would be something if gold continued its bullish return, as then the Gold/Oil ratio will not stay the same.

When we count from the crude oil 2008 peak, the 2016 bottom gave crude oil an 8-year bear market, which makes a much better Fibonacci fit.

Hits: 6

Brent Crude: Still Pushing The Bullish Buttons.

 

One more push to a new record high! Sure that can happen as we approach the $80 price level again. Of course the stories about oil going to $100 again all are starting to sound like a broken record stuck on “repeat”. Can a 4th wave rally surge this high and still be in a bear market rally? Of course it can, as it could even dip into my wave 1 bottom. Commodities play a different game and normal wave counting methods will never work. This is all part of a Cycle degree zigzag correction which has 3 parts to it.

It may seem like the 2015 bottom was part 3, but fooling the majority all the time is the job of the markets. When the Gold/Brent ratio is an eye-popping 15.10:1 then we are pushing the bounderies of being very expensive when priced against gold. In the long run I’m sure we will end up with another major world oil glut as recessions happen every 10 years or so. Any recession in the future would be over as soon as solar cycle #25 starts to break through.

 

Hits: 5

Crude Oil December Contract Intraday Rally Update.

 

A beautifull counter rally is happening but due to its vertical move, this rally can’t be maintained and must correct or even end this inverted zigzag. If the bears are in control of oil, then this little zigzag will get completley retraced. If this is correct then we will still see many of these bearish rallies develop during the rest of this year.

 

The commercial traders are about as bearish as you will ever see, while the speculators are in the biggest bull trap that you will ever see. This makes it next to impossible for crude oil to charge into some bullish phase that many analysts are still forecasting.  Fundamentals will “always” tell us the wrong things at the extremes, especially when the experts all are thinking alike! When they all sound or think alike, then chances are good it’s an instant short bet!

I also have what I call my “Ratio Pool” which contains about 20 Gold/Ratios in the ETFs I track. Nobody I know of keeps a ratio group of this size, and only with face to face meetings can this be explained in detail.

There is a mathematical connection in ratios that will never break, but they swing from one extreme to another. I sample the Gold/Oil ratio 2-3 times per month, and my latest gold/Oil ratio has been at 17:1. This is already at an extreme as the Gold/Oil ratio has been hitting a brick wall for months already.

Even the Market Vane Report doesn’t confirm a huge bullish phase to come, even with hurricanes forcing a spike in the oil price.  As soon as any storm passes the oil price will start to crash again.

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Blendstock Gasoline Daily Chart Update

 

This is the December gasoline futures chart and it had it’s last extreme peak back in May of 2018. In this case gasoline was leading the way in its bear market. A short zigzag that looks like a flat is very common in wave 2 bear rallies. I call them running zigzags just like a flat, as I use no “truncation” as an excuse why a certain zigzag did not extened any further. Zigzags also streach so long that it’s hard to believe it’s a zigzag. The 1929-1932 bear market had an extended “C” wave far exceeding anything in our EWP book. If it happens once in the real world, then I use it for all degree levels.

In any wave 2 rally situation we know that the Death Cross is just below present prices, with the 200-day MA just below the triple bottom support price. Gasoline prices are going to head south as gasoline is also in an Intermediate degree 4th wave bear market rally. All bear market rallies completley retrace themselves back too and below the point of orgin, which was in February 2016 at the $.90 price level.

You can read every single fundamental reason but fundamentals “ALWAYS” tell us the wrong things at the extremes! I always bet against any wave count that is just as bullish as the crowd is.

On the monthly chart the Death Cross has already happened with the daily chart next, and then the weekly chart Death Cross further down the road. Technically the Death Crosses are about as bearish of a set-up you will ever run into. Wave analysts, investors and fundamental analysts are basically oblivious to any Death Cross fact.  Smart people have been using the 50-200-day MA since 1929 so it has a long history of forecasting huge bear markets.

This could take all of 2018 to play out, and my in-house indicators will start giving me feedback when the readings start to shift to the bullish side again. In this case not until wave 3-4-5 in Minor degree have played out. A deflationary, crash or depression-like conditions are coming, and the main reason is that an entire boomer generation is now retiring at a pace of 10,000 per day, for the next 18 years!

This will overwhelm any pension system as all “boomers” will be drawing on something that has no money in it!  The government pension system is so underfunded that my boomer generation will suck it dry!

We are facing a dual H&S pattern which when found at major tops, is also very bearish! In addition to all this the gasoline weekly chart contains a rising wedge which is also about as bearish of a situation as we will ever run into. This doesn’t even include the massive gap still open below us, on the weekly charts.

 

 

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Crude Oil Daily Chart: Impending Crash Review

 

Since the early 2016 low oil has been in a bear market rally in Intermediate degree.Many are convinced that the world is running out of oil and that higher price could happen at any time.

Folks we have a big triple top, which created two fairly large H&S patterns. This is about as bearish of a signal that you can get as Blendstock gas is looking much the same.  I checked for the Death Cross and it has not happened yet but is next inline to do so. That might not happen until crude falls below $60. On the monthly scale we have a different situation, where the Death Cross has already happened.

This is about as bearish of a technical signal you can get and fundamental analysts ignore them on most part. Fundamentals will always tell us the wrong things at the extremes, as commodities  always go the opposite way of what the majority think.

The Gold/Oil ratio is as close to 17:1 as we can get and that was the same extreme ratio when oil crashed in 2014-2015. You can stretch and compress any ratio, but you can “never” break the mathematical connection. I keep a group of about 20 Gold/Ratios and it gives me feedback instantly. When someone forecasts a crazy gold price like $2225 then at 17:1 we should have $130 oil.

Oil will most likely go below $12 before we will ever see $130 crude oil. Gold investors that think that oil can imploded while gold soars are in living in a fantasy world. The world is going through a deflationary crash and bear market, that nobody expects.

Oil topped 3 years before gold, back in 2008 and what you can see so far is just a big zigzag crash in Cycle degree, which is still not finished. KOL is another Cycle degree zigzag crash, as well as the US dollar has done. All conditions that were before the 2008 crash are present now, and worse.  You don’t want to be bullish on oil when it is sitting on a potential Death Cross.

Chances are good this world is going to get another oil glut and then when they all start to think alike, then the oil market will turn and soar once again. All commodities are connected with giant zigzags and oil is no different.  Any SC degree wave 3 peak in oil should not peak until 2041, so that is a long wait if you are an investor.

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KOL: Cycle Degree Wave 5 Review!

 

I’m convinced that the pattern of this KOL crash is a single completed zigzag crash that had its start back when all energy related EFTs started to crash. This was 3 years ahead of all gold related peaks which is also a Fibonacci number. The secondary peak in 2011, matched the precious metals mania peak. Previous presidents killed the coal market but president Trump sure brought it back to life. Sure, I like clean energy just like anyone else, but they can also use some very clean coal burning technologies that scrubs many of the harmful by-products that are associated with coal burning as a source of electricity.

Commodatity wave patterns in some respects look like normal patterns but “ALL” commodities are connected with giant zigzags. Using normal stock market wave analysis will never work because we have to count them like big diagonals. Diagonals are the wildest patterns you will ever run across and they must be labeled correctly if they are being used.

If the 2016 bottom is a 4th wave bottom in Cycle degree, then we could be facing a big KOL correction with the next major peak not expected until 2o41. That still leaves lots of time for a huge bear market to still play out.  KOL should not break to new record lows if  the next big bullish phase is in progress.  I will not count out all the little waves as there could still be many adjustments along the way that will need to be done. I will not be trading this ETF as the gold sector has all of my attention, but KOL offers a climpse into the future that is too hard for me to ignore.

There may only be a few Cycle degree 4th wave bottoms completed, with the US dollar index being another.  2018 seems to be a peak at this time, and not until I see that a clear or better looking correction has taken place, will I turn bullish on KOL. 2019 could be positive for all commodaties, as a rebound is most likely to happen.

Deflation is coming so for the next three years KOL could act very bearish. The start of solar cycle #25 should turn KOL into acting bullish, as solar cycle bottoms are bear market assasins!  Markets usually crash 1-2 years before solar cycle bottoms,  just like they did during the 2008 crash. KOL and stocks hit bottom together in 2009 as they seemed to synchronize very well.

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Gasoline Daily Chart Quick Update

 

Since the May 2018 peak gasoline blend stock has been going sideways which just about looks like a triangle.  I see a potential inverted zigzag that could be in progress, and once they drop then we should expect a Death Cross to happen. Death Crosses rarely happen very close to the top, and this chart would still have to dip deep for the 50-day MA to slice through the 200-day MA.

Yesterdays Market Vane report with Blendstock Gas and Heating oil showed close to 80% bulls present. 24 month bullish high has been around 80% as well, so these numbers tell me there is very little room left for traders to flock to the bullish side.

Markets have been pretty slow today, but this all could change as we count down into the fall.

Hits: 5

Brent Crude Weekly Chart Update

 

Brent crude is struggling trying to break higher, and next month should tell us more if this so called bull market has any chance to soar higher. I see a rising wedge which is an extremely bearish pattern, which should never be ignored. The bullish phase that started in early 2016 is a bear market rally from my perspective and in order for that to get confirmed then Brent crude will completley retrace this bull market and crash to new record lows. Deflation is coming folks, where commodities also take big hits in prices.

Today the Gold/Brent ratio is sitting at 15.84:1 which makes Brent more expensive that I have records for. I will continue to calculate this ratio, so I have a better longer term data base to work from. In many respects the Gold/Brent ratio is the same as the Gold/WTI ratio is from which I have a huge data base of ratio records.  I have a pool of about 20 ratios that I keep and is one of my best in-house generated signals. Math doesn’t lie, only people do, so ratios are a good objective set of indicators to follow. Very few are willing to do this work, so out working the lazy analysts is a walk in the park.

You can tell any lazy wave analyst by all the detailed wave counts they always make. I always try to be 3 steps ahead of the crowd and confirm a wave count 3 degrees lower, which is also 3 steps ahead of the crowd. Being one step ahead of the crowd is not good enough in today’s world, when we make longer-term trading decisions. There is no way that gold will soar if the oils are going to crash as the Gold/Brent ratio will stop that silly thinking in a flash.  Any kid that knows how to track the Gold/Brent ratios can do a better job of forecasting the oil price than what the experts do.

At the extremes fundamentals will always tell us the wrong things as the 2008 peak was. The experts did not see the oil crash coming in 2008 as I had it documented very well.  You don’t even need extremes if you pay attention to the news headlines. When they all start to think alike, then chances are very high that they are also wrong.  It just about always justifies betting on the opposite direction when the herd starts to sound all the same!  In the gold sectors this works very well as it is made up of very emotional investors. Oil investors get a bit hostile when you mention that oil can crash to new record lows.

Just look at the nose dive that oil took in 2014 and 2015, so what has happened once before, can happen again.

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Crude Oil Daily Chart Update: Bull Market Or Bear Market Rally?

 

This is the December Daily chart but it’s stretched to 1500 days back in time. I do this to always look for alternates that I may have missed. As far as I’m concerned the entire crude oil bullish phase is nothing but a big bear market rally. It’s an Intermediate degree bear market rally  and this low degree bear market rally is fooling all the hedge funds who at one point were so bullish that it was the most one side trade that good crude oil analysts have seen. It’s the emotional hedge funds that always get into a trap, not the commercial traders. Commercial traders work with the industry, while hedge funds think they are chasing performance, they are working themselves into a bull trap.

The Gold/Oil ratio has been bouncing around at 17:1 and it seems like this 17:1 ratio is hitting another price brick wall. In 2014 the ratio also hit 17:1 and that produced the 2015 oil crash. My entire “Ratio Pool” consists of about 20 ratios and I consider the ratios as in-house generated indicators or tool. Ratios always give us a reality check if they are calculated consistently.

When all the expert fundamental analysts all start to sound alike, then chances are extremely strong that they are wrong! They were wrong when they consistantly forecast $200-$500 oil prices which is what they were calling for at the 2008 peak. (3 years before gold)  At that time the Gold/Oil ratio was about 9:1 and oil had no choice but to crash.

Such a distortion will not clean up with a mere 10-20% correction, as it will take much longer for the markets to become even, and it usally gets oversold on the way down as well.

Of course oil investors are sitting on an impending Death Cross, but the 200-day MA is still at the $62.00 price level. The oil price has to crash below this $62 price level before the 50-day MA bends down and actually crosses. Gold  and silver are also sitting on a weekly chart Death Cross.  It’s not just about one crossing, as the entire investment world seems to be invested on top of impending Death Crosses.  We can also draw in a nice rising wedge in oil, which is another tool I use regularly even when I don’t post them. Oil could break to new record highs, but we’ll deal with that when the time comes.  Summer driving holidays are almost over and hurricane season has been pretty mild.

Trying to forecast where the price of oil is going with fundamentals has never work before and will not work this time as well. Markets always do the opposite of fundamentals as every glut ever produce, started a huge oil bullish phase.  The markets are never right, because the majority of investors cannot making money from the same majority they are mixed upwith.

There are only so many “Greater Fools” that can still arrive which my weekly Market Vane tracks.  Even at 50% bulls present, is still to many bulls. I would like to see less than 20% bulls present, so we still have some ways to go before that happens.

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Brent Crude 2008-2018 Review

This is the September weekly chart with 1500 custom bar settings. The COT reports do not show any real extreme, but the Gold/Brent ratio does. Since May this ratio has been averaging 17:1 .Which is about the same as the Gold/WTI ratio is. They are still so very bullish on oil that recently they say that “$150” crude oil is coming. That will not work as gold and oil are linked via their respective ratios. At 17:1 any oil price can crash like WTI did in 2014.

No Death Cross on Brent has happened, on the daily, weekly and monthly charts! We had the Brent Death Cross at the top in 2014, and the Golden Cross just formed earlier this year. With a Golden Cross already done Brent crude should explode in price! The 50-day MA can bend down and slice right through the 200-day MA. Before you know it the Death Cross has formed and Brent Crude keeps heading south.

The hedge funds with WTI are still so bullish that they are net long by a ratio of 8.35:1. I consider 4:1 ratio to the extreme side while the commercials only have 1.89:1 net short position. The Brent crude COT reports are not that skewed at all, matter of fact it looks pretty boring. I’m very confident at this time, that the  impending Death Cross, has more power than any COT report, but I need to get more confirming evidence to have faith in what I’m reading.  Commercials can also make dramatic flip flops which I saw some of the currencies do.

No little $10-$20 correction will fix the problem. $40-$45 Brent crude could supply short term support but in the end the world is going to deflate and the Brent crude price will also crash. Fundamentals will “Allways” tell you the wrong things at the extremes, and when the analysts all sound the same, then it’s time to bet against them.

The gold price has been closing below $1200 which is not a good sign, as I expect gold and oil to still crash much more during the rest of this year. Brent crude will not standup to this, so it will crash as well. I will not trade any oil move with USO as it does not reflect pure oil very well at all. I closed my USO short position becuase it was so small of a position, I wanted a bit of extra margin space on my US dollar side.

Have patience as by the end of this year we could be facing a different energy landscape. Oil is being drawn to the solar cycle #24 bottom, but after that oil could soar one more time.

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October Crude Oil Update

This is the October contract and they all have different patterns for this 2018 top. Oil takes alot more work to get a decent position at this top, escpecially in trading the little Forex oil units. I have been short crude oil with real money for many months already and most of the time the short trade was in the green, except for the beginning. When I talk about being in the green, I always mean it’s to the good, regardless in what direction I have bet on. Some readers may not understand the concept of trading up or down, and they will never do it.

To be blunt, not knowing how to bet both ways, only allows you a 50% efficiency rate at best! This rate doubles if you can bet down just as easily. When any trade is all green in Forex, then you even get paid some interest for staying in the green.  I do not give out Intraday day trading setups as you will have to find that somewhere else. I trade between Minor, Intermediate, and Primary degree turns, that can take  8-13 months to play out.

The crude oil market is one of the most skewed trades that I have seen since the 2008 peak and crude oil will eventually crash right along with gold and all other markets as well. You can’t seperate oil from gold as they are intricately linked with the Gold/Oil ratio. Ratios are just glorified ways of producing odds, and knowing your odds is the what you must know, to trade in both directions. In the future I will not trade oil, as there are easier pickings in the gold sectors.

The Gold/Oil ratio was just under 18:1 which seemed to be hitting a brick wall all summer long. When oil started to crash in 2014, this ratio was also 17:1. There is no way that I would bet on long positions if they paid me. Then we have the Wedge sending us a clear signal as well, which they call a “bearish Flag”. It’s a rising wedge and they preceed any deadly bearish situation. One of the most deadliest indicators of a longer-term bearish decline, is the Death Cross! The Death Cross on this daily chart still needs to happen, but on the monthly charts the Death Cross has already happened.

In short the entire investing world are in long positions at the tops of Death Crosses, in all asset classes that I cover. A basic market decline/crash is coming and all those who are not prepared will get hit hard.

A bear market rally always retraces everything back down to it’s point of orgin, so only time will tell when this will come true. No little $40-$45 support level will hold for very long. Anything related to the heating and gas sectors, the Market Vane reports over 76% bulls still present. These are very bearish indicators as it leaves very few bulls to join in.

Deflation is going to be the real threat in the next three years, and oil and gold investors still haven’t figured that out yet!

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PetroChina, the first $1 trillion company, has sunk since 2007

https://www.bloomberg.com/news/articles/2017-10-29/the-biggest-stock-collapse-in-world-history-has-no-end-in-sight

This is an old story but they say it was the first trillion dollar campany. It flamed out into the biggest stock collapse in history. Apple has just closed off at over $207 which makes it the third trillion dollar company after Amazon. I want readers to look hard how PTR imploded as I’m sure AAPL or even AMZN will end up looking about the same.  For the last few years PTR has been going sideways and these moves are just bear market rallies and PTR should crash to new record lows by the end of this year.  This pattern is a zigzag folks and even once it hits rock bottom, chances are good another new new zigzag will form.

In late 2007 PTR peaked which is part of the 30 year cycle, and the next Super Cycle may not arrive until a few years before gold peaks.

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Crude Oil: A look at the August Contract Bear Rally.

Fundamentals will “always” tell you the wrong things at the extremes. Was the 2008 peak extreme enough for you? This was also a mania oil peak and part of the 30 year cycle as well. Gold stocks peaked out 3 years later and have been in a bear market ever since. Oil is not on some rocket ride to the moon, as high oil prices kills any real profit growth.  Does this “wedge” look like a promosing trend, because if it does you better learn what a rising wedge can do to a long portfolio. Then add a few death crosses to the mix, and we have about the most skewed oil trade in history, that has only one way to go and that is down. Please do not whine about fundamentals as in the traders world, they are called “Funny-Mentals”. Markets will always travel in the direction that will do the most harm to the complacent investor.

This oil COT report is so skewed that there is no chance any big bullish move is still ahead of us. The top part is all the spectulators and hedge fund positions, that are all extremely leveraged to the upside. Well, when things don’t go their way they will panic and run at a moments notice.

Over the years I  have developped my own in house indicators using a dozen or more gold ratios, which I used to call the 2008 crash. This is when the Gold/oil ratio was about 9:1. We are at about 18:1 right now and in 2014 this ratio hit 17:1 before the oil price imploded. No extreme ratio exists in the Market Vane report yet so that will change by the end of this year. My Market Vane subscription will run out and I don’t plan on renewing it, as I have enough in house indicators to track.

Oil is going to suffer a huge price crash that will be part of a the “deflationary market crash”, not experienced by anyone still alive today. Stock markets and all commodities had Cycle degree wave 3 bubble peaks and their corrections are still far from over.

If you are a trader then I suggest  to always have an emergency phone number  that you can all and they will execute to your insructions. The reason I say that is because our local power went dead in the middle of posting this oil chart.

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August Crude Oil: Will It Hold Its Peak?

You can automatically assume that commodaties are sitting on a Death Cross, even if I don’t show them. I will be reducing my intraday positions as I’m not a day trader, and have no desire to become one. I’m short crude oil in a small forex account and have not been urged  to take profit. Let the bet ride, as the support bullish trend line is not going to hold oil back for any reason.  Traders are starting to get very nervous with any small decline, but they ain’t seen nothing yet. Oil bulls are going to see “red” while the short player sees green. Shamrock Green.  🙄

There are a host of indicators all confirming the same thing, as the commercials are so heavy short that there is no way a super bull market in oil can even get off the ground.

This morning the Gold/Oil ratio was still getting close to 17:1, which means that the Gold/Oil ratio is hitting a brick wall. Of course our great Photo Bomb leader wants a carbon tax to help stop climate change. Carbon tax on oil is the biggest mistake any governmet can make, as it is based on falsified data from the experts. The people know this and the conservatives know they can form a new government, based solely on fighting the Carbon Tax. The world fertility crash will fix the CO2 problem, and my bet is that the CO2 PPM (410) will implode in the next 50 years.

Oil is in a bear market rally,and incase you don’t know what that is or means then I strongly suggest you do some research on it. A bear market rally “always” returns to the point of orgin and below. That makes oil at below $28 a distinct possibility again.

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WTI Crude Oil, Intraday Update.

Every contract month has a different wave position, so I though I would give you the one that looks the most bullish and has reached a new record high.  It has dipped so we don’t need any new record highs. If you see an intricate oil wave count covering every little wave then those wavers are painting you a picture!  There pianting us a picture saying, ” Hey I got nothing better to do and no money at stake, so I can dick with the wave counts all I want.” I have little problem in shredding any wave position you want to show me because they are all just painters playing with a big 15 color Paint by Number set. I paint bear markets and oil will take a huge hit when gold crashes again.

This daily chart has its Death Cross at about $71 so when this crosses then the game is up.  Gold/Oil ratio is at 18:1 which is nowhere near being cheap as it was 17:1 that oil crashed in 2014.  Everything including gold oil and all your commodities are going to get a crushing blow in prices, as they are investing on top of a 4th wave rally in oil and oil could crash back down to $21.  We would be in a glut by then, but as we all are supposed to know, gluts produce massive bull markets that can shock us because fundamentals didn’t see it coming. Fundamentals didn’t see the 2008 oil crash coming, while an oil crash at that time was one of my first publications.

Oil is in a big bear market rally in Intermediate degree, and only a complete retracement should happen.

The recent drop in oil has got the world in a panic already, and we are just getting going so and further drop in the price of oil could get hedge funds on a selling panic to get out other bullish positions fast.

End Of The Oil Rally and World In a Panic Mode   are very typical stories that I look for and it fits in with my bearish outlook very well. It’s only the beginning as oil can crash much deeper than all oil experts once thought. Investors have no clue that a deflationary crash is coming but I will be tracking this deflatinary crash as best as I can.

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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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