I haven’t had a look at XEG for a long time but I gave it another once over. The classic diagonal waves were evident and it’s the main reason we see many zigzags. This oil-related ETF could work as a triangle but then I would have to label it all with primary degree waves.
We are close to an 11-year bear market so far and frankly, that may not be long enough for a Cycle degree correction to complete. XEG definitely follows the sun cycle matching 2011, and 2014 peaks in solar cycle 24.
I don’t see the 5th wave decline in Intermediate degree finished, as the Minute degree 4th wave may still have a surprise rally left.
Once solar cycle 25 starts up, then I’m sure XEG prices will rise with it.
Not until the third major bottom shows can I get bullish on XEG and even then another bear market rally could follow.
I’m looking at other energy related ETFs in the Canadian market to see if it is still on the bearish side or the bullish side. Some of my bullish friends don’t agree at all, but I can’t ignore what I see. The bottom trend line points to another potential bearish bottom, but that only matters if you have a bearish outlook in the short term. Most energy related major peaks happened in 2008 which is my Cycle degree wave 3 peak.
Without a doubt the bear market is a diagonal decline and many say the bear market was over in 2016. In wave 3-4 correction, we can have expanded patterns that are very normal and plentiful, and if we miss them expanded corrections wreck havoc on our wave counts. A diagonal “C” wave decline is what I’m looking at and I don’t think it’s finished already.
When the planet is bullish on any asset class, then I “always” start looking for the bearish move. Sure, this pattern can be obnoxious and fool around much longer, but it could drop perciptiously as well. Any Cycle degree bear market should be confirmed with a minimum of three lower degree levels in Primary, Intermediate and Minor degree positions. If I see 5 waves down in Primary degree, then I know instantly that they think they are in Supercycle degree.
Stand in line folks as Cycle degree wave 4 and 5 come first before any SC degree wave even gets close. With the COT reports on crude oil being so bearish, this market has little chance of a continuing in a northerly direction. Oil soared this afternoon, but this energy ETF only moved a small amount. I don’t believe in the “catch-up” theory at all, as XEG is more like a leading indicator for oil.
This ETF still needs work, but a bearish drop will also give us another fantastic buying opportunity. Only a small majority can take advantage of buying low as the majority of investors only love to buy “high”. Right now there is a 10 year difference between oil’s Cycle degree wave 3 peak and the indices Cycle degree wave three peaks. This can lead to an early Cycle degree wave 4 bottom. Gold and Silver peaks happened 3 years later, so they could also take 3 years longer to hit a Cycle degree 4th wave bottom.