Once the December 2018 crash had completed RBOB gasoline started to roar, well sort of because it was choppy all the way up. It peaked in April 2019 and then again proceeded to crash. The decline can only fit into a diagonal as the 4th wave has come back, well into my wave 2 top in Minute degree.
Forcing a diagonal wave into an impulse is not an option from my perspective. Violent swings are pretty normal in commodities so if a reversal is due then any price support will not hold. Analysts that will call for price support are still thinking “Bull Market” not bear market rally.
Gasoline has been in a bear market since the 2008 peak which most investors know little about. Elliott wave positions are emotional reminders so we can never forget.
This Decembers 2018 weekly chart of Gasoline Blendstock. When I make the switch to the daily chart settings then the 2018 peak changes as well. This will throw any wave count into a confused mess which looks more like a “Truncated 5th wave” and a diagonal 5th wave as well. We can argue for eons what the power is when we see a “shortened 5th wave”‘.
Truncated or shortened 5th waves at peaks are extremely bearish patterns and truncated 5th waves at a major bottom are extremely bullish signals. Nobody will tell you this but there is no shortage of real-world charts with major reversals at a 5th wave. Being bearish on a truncated 5th wave is the worst wave counting mistake we can make. Silver is a prime example of a truncated wave structure, as its major bottom was in 1993, not in 1999 or 2000 like most analysts tell us.
Tuesdays Market Vane Report showed about 75% bulls present so this tells me that most gasoline traders are already into the long side leaving little room for another herd of bullish investors still to come in. Besides massive crude oil short positions, the commercial traders don’t see it the way the talking heads do.
From the 2016 bottom, RBOB produced a choppy bull market that sure kept me guessing as overlapping wave structures abounded. This is usually a sign that this market is in a rally that is going against the larger trend. Any sized bear market rally always retraces itself, and it is only a question of time before this will get confirmed by the markets.
The crude oil markets are just about at a standstill as China took no imports from the USA in August. Hurricane season destruction usually doesn’t last that long, besides that the media does a poor job of reporting what is going on anyway.
The biggest draw for RBOB gasoline prices is that huge open gap below. For the next few months or longer, RBOB could also form another zigzag decline, as diagonal waves are all about connecting zigzags. Either way, expect some violent moves in both directions as the new trend looks like it is down.
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.
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.
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.
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.
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.
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.
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.
Here in BC, Canada, we have the highest gasoline prices at the pumps in North America! These high gas prices will be high for the rest of the year or until the futures gasoline prices also crash. At major record tops, I always ask, “Who is left to get in?” When every expert fund manager, futures trader and guru specialist have already taken bullish positions, “Who is left?” Only the emotional people are in as they believe all the fundamental hype broadcast to us on a daily basis. Even $300 oil is on the table. When forecasting the oil price you can’t forget the Gold/Oil ratio is also at work, so a $300 oil price would give us a $6000 gold price! That will never happen in todays world, so it is pretty easy to throw out the very biased forecast altogether.
Gasoline may have reached a peak in April, and was followed by a nasty little decline. Degree wise it is a very small move, which can still reverse dramatically if the bull market is not finished. Gasoline has one of the biggest gaps on the planet well below present day prices, and sooner or later the open gap will get closed shut. Is oil in a big bear rally or are prices going to keep soaring? If this is a big fake run, then without a doubt that huge gap will get closed!
Gold has also enjoyed a bit of a surge this morning, but it would still have a long way to go to break new record highs.
This is the COT report for crude oil! Short positions are on the bottom while long positions are at the top. The light color bars are the speculators and hedge fund managers with massive long positions, while the commercials are building a massive short position! Does this look like a healthy picture for the oil bull market to continue? Not from my perspective, it’s not!
From my perspective, we are looking at a rising wedge in Minuette degree. The wide part spans 2 of the same degree levels so we understand that we are looking at a Subminuette degree rising wedge. Rising wedges are used in bull markets and their endings, while falling wedges are used for the ends of bear markets. Right at the top we see a funny pattern that looks like the gasoline market is giving viewers the middle finger. I think it is flashing a signal to all the gasoline bulls presently driving this market nuts.
Do supply and demand pictures change that fast in such a short period of time to justify the wild gasoline swings? I doubt it as algorithms can’t figure out the fundamentals, yet the fundamentals is what is supposed to drive the markets. In the end no matter what if we think that this market is manipulated, they sure know how to manipulate it in Elliott Wave fashion. Wow, are those manipulators ever good if they can manipulate Elliott Waves at will.
The fact is they always blame “maniulation” when the markets go down, but use fundamentals as an excuse when it goes up! Investors think that there should be no volatility in the markets, as they get scared when it starts to move violently. “Take a pill folks”, as this is the name of the game in commodities. “Fear” dominates the commodities markets and fundamentals are just lagging indicators not leading indicators. It took 2 years for analyst’s to see the improving fundamentals, as the expert consensus is extremely bullish right now.
The biggest trend is not going to take gasoline prices to the moon, at least not on this trip! The biggest gap in all my charts is open in this gasoline chart, so I think that gap will get closed first in the next few years.
You heard about Peak Oil back a long, long time ago in 2008. I’m sure most have already forgotten that time period as investors were told we were going to run out of oil. How wrong those experts were at that time as there were forecasting $200 or more oil prices to come. What happened is that crude oil peaked at $147 and then proceeded to crash to about the $34 price level.
This gasoline chart is on the output side of refineries and could be mixed with other blends to get the desired fuel. Aviation fuel is part of it, but the yearly switching to and summer demand is starting to happen. Of course, if we have a stock market crash, then demand can falter. Gasoline did not go to a new record high like crude oil did, so gasoline will have to have a separate wave count as a potential bear market in gasoline could be looming.
Just below the 2017 low, gasoline has one of the biggest open gaps, that I have seen on in a futures chart. This mother of all gaps will get closed once the bearish picture shows itself to more of the gasoline traders. For starters $1.84 must get retraced and then the $1.46 will also have to get retraced. That 2017 bottom would be a target price where a bear market can turn into a huge bull market again.
Any 4th wave bear market rally usually gets completely retraced, which means lows below 2015 should also happen. It will take some time before we can confirm anything. Commodities have the amazing ability to crash when the experts think it can never crash, so ample warning is prudent.
First this present wave 2 rally has to be retraced before we can jump up and down, looking for a 5 wave decline. Another full zigzag decline is also high on my list, which will need degree adjusting later on. (Minute degree wave 2).
The difference in the wave patterns between gasoline and crude oil charts is substantial. Well below the 2016 low, there is a huge open gap. The largest gap that I have, across all the commodities that I have looked at. This mother of all gaps, will get closed off in the years ahead, which will produce a bearish phase, that very few people will see coming.
Gasoline has created a choppy bullish phase that works better as an inverted zigzag 4th wave rally, in Intermediate degree. Our recent rally runs out of steam well before any upside breakout, which could be a wave 2 top in Minor degree. We also have an inverted Head&Shoulder (H&S) with three support price levels that technically should not hold.
There are sell stops piling up below present prices, which work as landmines that can blow-up and wreck havoc with our wave counts. Inverted “C” waves can produce some stunning moves, but they can also deposit a spike in the charts and then proceed to crash.
It may take well into April before we see a better picture, but I sure would not remain bullish with this type of pattern.
In both crude oil and gasoline COT numbers, the commercials have net short positions, and this alone can give the gasoline bulls a big headache!
Since the June 2017 bottom, gasoline futures have a much better looking impulse pattern than crude oil. After the January chart peak, gasoline started to crash in a dramatic fashion. It may seem dramatic to investors that don’t expect it, but commodities act like this most of the time. Trend changes can be very dramatic as volatility goes crazy.
I may have to change my “C” wave top, but any 5 waves down in Minute degree, shouldn’t need to be changed just yet. We can see that this gasoline chart has formed a H&S pattern, which at major tops should be a very bearish indicator. It may take a week or so, but gasoline can still break to the downside by a wide margin. In order for a full fledged bull market to materialize, we need a very obvious 3 wave decline, not a 5 wave decline.
With a potential 5 waves still coming I would be foolish to give readers a clear cut retracement price level. At 1.50 we could get temporary support, but who says gasoline can’t fall to 90 cents?
With the world going into a recession, why would the demand for gasoline get stronger? The mass media, is the last group of people to figure this out, and when they do, then all the news they spew out will already be irrelevant.
General elections in Mexico will be in July 2018, and if a new president gets in, they plan on taking over the oil refineries and build more. This would hurt all the US refineries and send gasoline prices crashing as another gasoline glut can develop.
This is the April gasoline contract with a daily chart setting. Since about June 2017 this contract charged up, in what looks like a pretty good looking impulse wave structure. Gasoline topped out on January, 26th and then proceeded to nose dive. So far gasoline has completely retraced below what could be the previous 4th wave of one lesser degree, but it’s far from being finished.
I can switch this daily chart to a weekly chart and you will never see this pattern to help confirm it. When I turn it to a weekly chart setting, gasoline fits better as a single inverted zigzag, in Minor degree.
An inverted zigzag can mean that a 100% retracement of the entire bullish phase can happen. The little double top in gasoline did not happen like it did in crude oil, which is a good thing. At this time gasoline is making a 5 wave declining run, but we should get a 4th wave rally for the next few weeks or so.
Not until I see a clear cut correction completing, can I turn bullish on gasoline, so be prepared for a long ride south bound. Well below this June bottom is the mother of all gaps which has never been closed off. This gap is one of the largest in any futures contract I have ever seen. Open gaps work like magnets, but can also repel prices once the “Big Gap” is closed.
Even after this Minute degree 5 wave decline plays out, we could be looking at another 5 waves down in Minor degree. I may need to adjust this bearish phase degree level, down by one degree, but I will do that once this set of 5 waves is completed.
Since late June 2017 gasoline futures have soared. At first glance we can see 5 waves up, but that doesn’t tell us much if we don’t know what degree this one leg is in. There is a very good chance a correction is coming, but how long and how deep this impending correction can go is directly related to the degree we may be finishing. Since the late 2016 start both crude oil and gasoline futures had an extremely choppy start, which fits best into a diagonal 5 waves.
When I look at this with a weekly chart, the pattern changes and it looks nothing like what we have. I can turn this into a “C” wave bullish move which would allow a better looking impulse wave, because of the alternation. Gasoline is more connected to the fundamentals, so if a slowdown were to show itself gasoline and crude oil can start to take a hit.
Oil sure crashed along with stocks in 2008 so it’s not like it has never happened before. Gasoline is still heading up as I post, so it may take until the end of the month before it reacts.
The entire decline can be retraced, by a net move of 60% or more (. 618) The forward momentum has also slowed with all the waves getting smaller.
What I will be looking for is to identify the correction when I can see another zigzag or flat type of pattern correction.
Since the June 2016 bottom gasoline futures also blasted off in a record run. I believe this could be a 5th wave rally, with better formed impulse wave structures than oil has with the same degree wave structure. When the mainstream starts to get bullish then this is a sign that an impending correction is coming. Just a simple bull market correction or a downright bearish move is the big question? In any case markets can crash back down to any previous 4th wave dip,of one lesser degree which is wave 4 in Minute degree. Even if another full leg up were to happen, this oil chart could crash 60% or more, just to get warmed up. Any big correction must not travel to new record lows, as then gasoline would have been just another bear market rally.
I think there is a big chance that this gasoline futures chart could be on another leg up as a 5th wave. It would also play out as another potential diagonal 5th wave, so it could end up being as choppy if not worse, than anything we’ve had so far. At this point a zigzag has completed, and if the majority does not find a new Tesla in their garage this holiday season, I don’t see gasoline crashing just yet.
I refrain as much as possible from reciting all the fundamental reasons why gasoline goes up and down, besides, nobody will remember any fundamental reasoning even a few months from now. We know that there is turmoil in the refining sectors when pipelines blow up or break. It all depends on how investors react to any given news about an asset class.
Good healthy corrections are necessary, so that prices never become very predictable. I rule out a triangle at this time because the pattern is too smooth to fit into a triangle. Hopefully this will carry on into the spring of 2018, as gasoline continues to defy the bears.
David Bowie – Putting out the fire (Gasoline).wmv – YouTube
As you can tell, I’m a big fan of David Bowie’s music, and when I create this gasoline chart this song always come to mind.
Gasoline has been on a rampage, but with many overlapping wave positions that kill the generally accepted impulse wave formations. RBOB gas has charged to new record bull market highs, which still has a bit to go before another big correction could happen. The gasoline pattern will be a bit different than crude oil as the added step of processing has a huge impact with any supply and demand situation.
Once the bull market started in early 2016 a huge gap opened up which we can clearly see in the monthly charts. This mother of all gaps will get closed, but it may take until after this entire bullish cycle has completed. A small spike is starting to form, but that can also push a bit higher.
There are huge differences between daily and weekly charts. I use the standard 500 bars in a chart, but many times I do switch them to 1500 bars, which keeps the entire bullish phase in view.
At the $2 price level, we could run into stiff resistance, with the $3 price being a distant possibility.
Gasoline futures have a very different wave pattern from the 2008, than crude oil has. At the 2016 low, gasoline did not implode to a new record low so its not a big single zigzag gasoline bear market. It sure can be a triangle, and an ugly one at that. At this time I will use Cycle degree wave 3 at the top in 2008, but I may have to adjust this in the future.
The start of the 2016 bull market turned into a choppy mess very quickly. When an impulse is this hard to count out, then we must be open minded to a big bearish rally. The two trend lines do not do it justice as gasoline could spike much further, than what the trend lines suggest. The general public really can’t tell the difference between a fake bull market or a real one. The only way wave analysts know the difference is what the patterns looks and behaves like.
Recently gasoline made a huge spike to the upside which didn’t show up on many charts. This move diverged for crude oil, which is understandable, because they go through different processes. When I saw that massive spike, I thought this would produce a longer and deeper correction.
Below present prices, I have a small gap at the $1.54 price level. I think this gap still has to get filled, before gasoline prices can move much higher again.
Further below, between $1.05 and $1.25 we have a monster gap that Godzilla could walk through, but this gap should remain open for the entire crude oil and gasoline bullish phases still in progress. In the long run this monster gap will get closed when the next big bearish phase starts to end.
When it comes to analyzing some of these futures charts, it is very easy to manipulate the wave patterns. Turn it to a weekly chart, we get waves that don’t overlap, but then turn that same chart to a daily chart setting, we get completely different wave patterns.
Crude oil plunged this morning while gasoline futures ran to the upside. This sounds logical as Hurricane Harvey hit the core of Americas gasoline production.
Hurricane Harvey Has Knocked Out 25 Percent of Gulf Gas Production
The media have proclaimed that Harvey is a ‘catastrophic’ or ‘unprecedented’ event. These catch words are used to keep brainwashing us that the end of the world is coming and not just a hurricane that happened once in 10 years.
The problem with gasoline and distillate products is that they all need to be run through a refinery, which do get shut down for many reasons, including hurricanes and flooding. Many refineries took early steps to protect themselves, and I’m sure once the flooding subsides things will get back to normal.
It just proves that the fundamentals of any asset class can be very unstable and unpredictable. It was no surprise to the people that watched the hurricane coming on their satellite feeds. Of course, this all helps in chopping down any inventories, which will show up in prices at the pumps.
The 2008 peak could be the Cycle degree top, followed by a potential zigzag that still needs to play out. The 2014-2016 crash did not go as low as crude oil so that gives gasoline a completely different pattern. Some of these rallies and plunges have lasted 2-3 years, so I don’t think this bull market is going to last much longer than the longest run we have had so far.
Between $1.10 and $1.30 we have a huge gap that is still open. In a future bear market this big gap will still get closed, but for now this gap is not an issue.
Since crude oil is being stubborn in trying to find a bottom, so looking at the Gasoline Blendstock futures may give a better bigger scale picture. Well, that hope was dashed, when I saw that gasoline did not exceed the 2008 crash low. Besides not producing a new record low in 2016, we also have what looks like a huge gap still open. This gap will get closed, but I doubt it will get closed this time around.
This gap also tells us that after some future bull market top, gasoline can once again crash and go well below the gap, closing it in the process. For now I will keep a potential triangle going, with the “A” wave, already completed. I can’t say that much for any potential Minor degree “B” wave being completed.
With a potential triangle still in progress, we could get strong resistance, at the top declining trend line. This may still take all of 2017 before we can see that this market is confirming anything. There are many refining production problems that can happen, with maintenance shutdowns, or terrorists blowing up pipelines.
Short term we can still see downside, but longer term I look at it from a big bullish phase still to come.