Intraday Crude Oil Rally Update

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

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

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

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

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

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

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Crude Oil

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

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

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

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

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

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

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Quick Crude Oil Intraday Update

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

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

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

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

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Crude Oil Weekly Chart Impending Correction Review?

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

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

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

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

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

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

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

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

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Crude Oil Intraday Triple Top!

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

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

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

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

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

 

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

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

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

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

 

 

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Crude Oil Daily Chart Bullish Action Review

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

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

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

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

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

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

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

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

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

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Crude Oil Monthly Chart Update

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

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

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

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

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

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Crude Oil Monthly Chart Death Cross Review

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

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

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

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

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

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

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

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

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

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

 

 

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April Crude Oil Daily Chart Review

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

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

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

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

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

 

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WTI Crude Oil Update

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

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

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

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

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Crude Oil: Another Spike to the Upside!

 

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

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

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

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

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Crude Oil: Big Dip Or A Little Dip?

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

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

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

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

 

 

 

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Crude Oil Bullish Review

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

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

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

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Crude Oil Daily Chart Update

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

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

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

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

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

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

 

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Crude Oil: Can It Find Support?

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

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

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

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

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

Happy Holidays and Best Wishes 🙂

 

 

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Crude Oil Intraday Bounce Update

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

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

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

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

 

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Crude Oil Intraday Chart: Bears Still In Control!

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

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

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

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Crude Oil Intraday Gyrations Update

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

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

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

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

 

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Crude Oil Daily Chart Crash Update

 

 

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

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

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

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

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

 

 

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January Crude Oil Weekly Chart Update.

 

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

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

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

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

China Inventories Rise 416%

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

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

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

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

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

 

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Crude Oil Crash And Rally Update.

Crude oil created a fast move to the downside which usually happens just before another turning. On the daily chart this left a nice spike and the potential for a turning as oil bears could be in a small bear trap. Crude oil stopped dead at $54.90 and has now been in a rally that may not be finished. We could have  landed at a potential “A” wave in Minor degree, but we need time to help confirm this.

Any “B” wave can be a flat type with the first move being a zigzag. Two zigzags back to back and then 5 waves up in Minute degree could finish this rally. That’s if we were in a perfect world, as oil could drag out going sideways in a triangle nightmare as well.

What I really noticed shortly after the oil bottom on the 13th, was that the amount of bearish news just exploded and became, “Intense”. Opec is freaking out as they try to cut production again. The oil world is in such a turmoil state that fundamentals can change very fast from one week to the next.

https://www.cnn.com/2018/11/14/business/oil-prices-opec-what-next/index.html

One announcer called it the end of a 10-year bull market in oil! What? It was early 2016 when we had our last world oil glut which is not even a 3-year bull market.

The Gold/Ratio got a little better but is only a bit over 22:1,  which is nowhere near any extreme at this time.

Crude oil could also slip to a new low but then reverse just as fast, as an expanded bottom can still happen as well.

 

 

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Crude Oil Daily Chart Crash Update.

It could be a bit early, but I think a reversal is coming as crude oil is forming a great looking spike with this daily chart.

WTI crude oil price is also approaching the Fibonacci $55 price level and potential support going back to early 2017.  It could be a violent reversal as some fundamental news will come out and get the oil bulls all excited again. The $56 price level is a far cry from the $100+ price forecasts they did have. The Gold/Oil ratio improved nicely and is now sitting at the 21.42:1 ratio. Oil still has a long way to go before this ratio turns extreme, but in the short-term, a rally should ensue.

They have already declared oil in a conventional bear market, but from an EWP perspective, the entire bull market could be a bear market rally. Using stock market descriptions in the commodities markets is like mixing oil and water, they will not work if we don’t understand how big bear market rallies can actually get!

How high the counter rally could go is just the best guess, but $60-$67 will start to give crude oil some resistance. Wave 1-2 rally or a “B” wave rally in Minor degree would also work.

The crude oil price is still crashing as I post, so trying to catch a Falling Knife, will put you in the read very quickly.

Any choppy counter rally that we do run into would be a small version of a “Bear market rally”. The 200-day MA is at the $64 price level after which the Death Cross on a daily chart could also happen.

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Weekly Chart Crude Oil Crash Update. In A Bear Market Already?

 

One oil expert has declared that oil is in a bear market already!  The oil rout became a bear market pretty quick. With all the oil bear market experts hitting the front pages of news blogs, I wonder if they will tell us that the next rally is a bear market rally or not?  Close to a 3-year bullish phase sure had them convinced that oil was going much higher, but as usual, the markets seemed to behave the opposite of the herd! Every ridiculous extreme bullish oil price forecast was tossed around, yet what did the oil price do? It Crashed!

Since gold also crashed below short-term support, you would figure the Gold/Oil ratio would change. This morning the Gold/Oil ratio jumped back to a bit above 17:1, which still makes oil very expensive when compared to gold. This rapid change is nothing new, only that it’s hard to catch if you don’t take readings more frequently. When there is a fast move, then I use that event as a trigger to quickly take another Gold/Oil ratio reading.

What happened this morning, happened in 2014 as well, with the same ratio, just before crude oil prices imploded. That was a bit less than a 2-year crash when oil imploded from $105 down to about $28 USD.

There is a lot more crude oil downside that has to happen before we even get close when oil becomes cheap again. The only question is what pattern has the most likely chance of showing up to this bear party?  I have to keep 2-3 versions active at the same time. Even Crammer got into the oil forecasting business as he says oil still could drop to $40 before we see good support.

The big question is if this decline produces a zigzag, so common in commodities, or a set of 5 waves continue to develop.

No amount of bullish jawboning will change the trend once it takes hold or resumes, so keeping an eye on the COT reports or the Gold/Oil ratio is a more objective look at the oil markets.

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Crude Oil Bearish Update

 

This is just a quick crude oil update which has a lot to do with the fears of oil shortages due to the trade sanctions against Iran. Market moves based on fear never last that long if the real trend is still down.  Most of the oil rhetoric we have witnessed has more to do with the midterm elections that any real fundamental reasoning.  Some analysts also say that there is “no” fundamental reason why oil is heading down.  I laughed when I read that as the “fundamentalists” have no fundamental reasoning for crude oils decline.

Maybe they should look at the Gold/Oil ratio as it was hitting a brick wall at 17:1. Today we are at over 19.53:1, which is a bit cheaper in recent weeks, but not near any extreme at this time. Commercials are not even close to becoming net long, any time soon. That doesn’t mean oil can’t rally, but chances are slim a new trend will develop from it.

Any real support is down at the $40-$45 price level but the Gold/Oil ratio also has to confirm it. The Gold/Oil ratio would be much better between 25 and 30:1, but not match that 2016 bottom of 44:1.

If the declining pattern starts to look like a zigzag then, yes I would turn into an oil bull. The weekly chart 200-day moving average is down at the $52 price level after which we hit a “Death Cross”.

On the daily charts, $65 would get us close to another Death Cross position. The 200-day MA can also give us support so it will be critical to watch once we get closer.

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WTI Crude Oil Weekly Chart Review

 

I have made a few changes for crude oil, as I’m bringing back that a potential 4th wave bear market rally has completed.  Since the 2016 bottom, wild swings and overlapping wave patterns seemed to have been normal for oils bullish run. Technically I have no problem in making this fit as a 4th wave bear market rally, but time will have the biggest impact if it turns out to be true.

All sorts of reasons are being used to justify the recent decline in oil, but what good are these reasons when they constantly change. Not too many experts follow the Commercial hedger’s Commitment of Trader reports but the ones that do I find are more believable.  We are witnessing the results of a trade war where it gets to the point when the inventory of crude oil is piling up. Any news that inventory levels have dropped can send crude oil prices soaring. Even a 61% or more bearish correction may change my mind, but then I want to see a zigzag decline and not travel to new record lows.

This is just one COT report on Oil and the commercials show that they don’t see a huge bull market coming. Mind you the speculators most certainly do. Speculators follow the “Herd Theory” because once a small group turns bullish then all their buddies seen to jump in as well. This kind of action always puts the speculators in a trap, and in this case, they are in a bull trap.

The media reports the action of the large speculators as the smart money, which their not! I have notifications set up from Oilprice.com so this is about as real-time fundamental news as I can make it. It’s never about the stories but it’s all about the intensity of the news. If in one week only 2 oil bearish news article gets posted, but a month later there are 10 or more bearish news releases, then this has increased in intensity dramatically.

China-Turns-Its-Back-On-US-Oil

I would say this is one big reason why the oil price is crashing as the trade wars start to have an effect. Fear about Iran is also overblown as Iran can keep China well supplied.

The Gold/Oil ratio will give us a clues when crude oil becomes cheap again. Today it sat at 19.38:1, which is a bit cheaper in recent weeks but, not even close to being cheap when compared to the gold cash price.  A real extreme low was 44:1 back in 2016, so the Gold/Oil ratio still has to spread a lot! Until some of these numbers change, I have to remain bearish towards oil.

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Crude Oil Impending Correction?

 

The 2016 bottom has a different price, with these extra bars I have added. The big thing is that this low sure can fit into my Cycle degree wave 4 low. Yes, they are all diagonal wave structures, which contain connecting zigzags.

The bull market from the 1999 bottom to the 2008 peak contained a zigzag, so I would be looking for about the same pattern to develop. The Gold/Oil ratio has hit below 16:1 today, but that may still be not enough to topple or correct this oil bullish phase.

Everybody is talking $100 oil price, but I think the $89 price level might have more importance this time. The most challenging pattern until Cycle degree wave 5 is reached, is 5 diagonals waves, where this would be an “ABC1” wave count in Primary degree.

Heating oil and RBOB gasoline have an 88% reading of bulls present in my recent Market Vane Report (M.V)

This does not mean, that more bulls can’t come to the party, but it means there is not much room left on the bullish side. Any vertical move has a speed limit to it, as most vertical moves cannot be maintained.

Can gold head north and crude oil head south at the same time? Yes, they can, but the gold/oil ratio will not allow that to happen for very long.

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Crude Oil Daily Chart Bullish Wave Count Update.

 

I have been working on all my long-term oil charts and I think that 2016 low is a Cycle degree wave 4 bottom, which means  this bull market has much more to go, but we could get a violent reaction as the Gold/Oil ratio is at 16.62:1, the most expensive reading I have so far.  A fast or violent correction in oil would change that ratio around a bit. If we continue then a ratio of 10:1 or event 8:1 may still happen. I changed my positions and started a 5 wave sequence in Intermediate degree, which could lead up to a Primary degree “A” wave.

All commodities have a diagonal idealized custom pattern I visualize, taken from the real world lcharts ike the CRB index.  A short example of this diagonal is the ending diagonal in our EWP books, but just forget the “ending” part and stretch it 600 years. The DOW up to the early 1920’s were all diagonal wave structures. This stopped as financial instruments were invented and the majority of people could own stocks. The more people in the markets smoothed all the diagoanls waves out.

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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.

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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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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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