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.