Tag Archives: Gold/Oil Ratio

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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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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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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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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Intraday Crude Oil Rally Update

Declining inventories is the reason why oil has rallied. Does the news automatically reverse a bearish phase? Highly unlikely as even President Trump  wants OPEC to increase its production.  This rally has all the charatristicsof an inverted zigzag which could be just another 1-2 wave.  There may be one more higher high but then we should see another reversal happening soon.  I’ve moved my degree level up again by one degree, and only time will tell if I have to adjust again.

Many experts are gungho on oil prices, but only when the price of oil goes up. When the price of oil starts to dip again, the analysts will bring out all the news why they think oil prices will go lower.  Analysts go with the flow, but in reality this is worthless information when we see the action in the charts.

Until oil shows a very good sizable correction then I may turn bullish. This may not happen until oil falls well below $50. $40-$45 would be a very good base for a turning or just a long resting spot.  The entire oil move since the 2015 bottom looks like one wild inverted zigzag, which are bear market rallies. This happens at all degree of trends with the above chart being a small example what small bear market rallies look like.  We had a Primary degree bear market rally which fooled the majority thinking it’s going to $200 again, yet the oil market crashed from $115 to $28. In just a few short years, the entire bullish phase was retraced. Sure oil created an “A,B,C” move but I think the Cycle degree dip has not finished by a long shot.

This morning the Gold/Oil ratio sits at 19:1 which is not all that cheap when we use gold as money. We want this ratio number to reverse and expand where oil can buy many barrels of oil.

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Crude Oil Intraday OPEC Bear Attack Update.

We all now know the reason for the oil crash as the blame is all about OPEC increasing their crude oil output. Bears always attack from the top down and this time it is not any different than what happened in any other bear attack that oil ever had. This July contract is already well below the $67 support price level, and my bet is that much more downside is to come.  A Minuette degree 4th wave rally is still in progress, so that needs to play out before another leg down can happen. Any next leg down will run into a new set of 5 waves, but this time it should be 5 waves in Minute degree.  If any oil analysts are  looking for price support, then they clearly don’t understand a potential bear market rally.

The majority don’t know the differnce between a bull market and a big bear market rally, which the EWP is supposed to tell us the difference. From an EWP perspective all bear market rallies get completley retraced. The crude oil move from the 2016, $28  bottom, oil moved a net amount of about $44!  Even just a simple net 50% correction would send oil down to the $50 price level. Oil still has a very big base at the $40-$45 price level, so anything can still happen during the rest of this summer. All the COT reports still  show the commercials in net short positions and until that changes dramatically, the oil bearish trend should continue.

The Gold/Oil ratio is starting to get very close to 20:1 which needs to expand much more as the oil price keeps declining in price.  Sooner or later the oil price will take the gold price with it, as the ratio keeps gold and oil locked together.

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Crude Oil Intraday Record Highs Update.

This morning crude oil was trying for $73 with this June contract. We also have a very narrow run that can fit into an ending diagonal very well.  Gasoline has also been making new record highs, so crude oil is not alone in this. Oil keeps pushing higher as the world experts have all jumped on the oil bandwagon already.  This oil bull market is a top heavy trade by any stretch of the imagination.   A major correction must happen, or worse yet the entire bullish phase comes to an end and oil prices start to crash.  It’s hard to beleive that oil could crash but it has done this many times before and under much higher bullish conditions. Just review the 2008 peak when the experts were declaring a world oil shortage. Yet 5 months later we were in another complete oil glut. The world’s bullish oil analysts never saw the oil crash coming in mid 2008 and this time I see very little difference.

This morning the Gold/Oil ratio crashed below 18:1 which keeps making oil very expensive. All future bullish price forecasts become higher and higher, until that day when all the bullish buyers are already in.  Protective “sell” stops are piling up below present prices , but there is a $10 price limit where trading in oil my be stopped for the day.

Commercials do not support this bullish phase as it is the speculators that are chasing this bull market and they are in net long positions.  Bullish speculators leaving protective sell stops behind them, are sowing the seeds of their own destruction as sooner or later all trends trap the participants before they know it.

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Crude Oil 1980-2018 Monthly Chart Review: The Surplus Is Gone!

The story goes that the experts have now declared the world oil surplus over.    It took fundamentals close to 23 months to catch-up to the oil price.  Since 1980 we had about 4 major world oil gluts and each one was followed by a wild bullish phase. The exact opposite happens at every oil peak, crude oil shortages were declared, and as soon as concensus forecasting was unaminous, the oil price would crash.  All the takling heads agreed that oil prices were going much higher as inventories are starting to decline.

Storing oil is big business and the last thing smart money wants to do is store oil at high prices, so inventories are reduced. They can’t figure out why  the oil price would crash when inventories are declining. At the 2008 peak they were calling for a world oil shortage and price targets of $200-$300 a barrel were pretty common. In face of all that bullish oil news, within 6 months oil had crashed about $110.

Then again at the 2013-2014 oil peaks just above $110, they declared that oil would not fall below $100 again. Sure enough witnin two years oil had crashed from $115 to $28. Oil and commodities have a great track record of crashing when nobody expects them to crash. Oil has had no problem in moving $50-$60 at a crack, so another $40 oil crash would be a walk in the park. Now in 2018 we are faced yet with another major bullish scenario, as the fundamental forecasters are at it again. They don’t report the huge short positions commercials have in oil, they only brag about the long positions of the speculators.

With crude oil going vertical at about $72, two things are going to happen, one of them is another huge correction develops, and the other is an end to this entire bullish phase, which started in 2016. Very few can tell the difference between a bear market rally and a real bull market. A bear market rally “always” retraces its entire bullish phase, and we have to wait to see if this will start to happen in the next few months.  A turning will force all the players in the bullish direction, to switch or get out.

You can bet there are massive amounts of  protective “sell” stops below present crude oil prices, and once they get triggered, it can produce a cascading effect. There is a $10 limit to moves in oil futures but that rarely has been triggered. My “B” wave in Minor degree is sitting at about the $45 price level.  The public needs to switch to a very bearish mindset, before a major bullish move can happen again.  If oil is going to crash, there is no way that gold will go vertical heading the opposite way. It’s the Gold/Oil ratio that ties oil and gold together, and it’s just a bit above 18:1 as I post. During the 2013 oil peak the Gold/Oil ratio compressed to 17:1 before it crashed, so 18:1 makes a great fit at this time.

If I’m wrong about this impending decline in oil prices then oil “must” produce a clear corrective pattern in Intermediate degree. This corrective pattern must not create a new world record low price,  but it must produce another higher low. Think of “must” have as a hard EWP  “Rule”,  not a guideline.  Another 3 wave Minor degree move will not happen overnight, as it would take many months and even longer to fully correct.  Some little dip in the oil price will not even come close to force a change in direction onto the  bullish speculators.  As I post oil is getting closer to $72 again, so this will keep many of the bullish players locked in their positions for now. Buying low and then selling high is not the concept practiced today as even in commodaties they love to chase a bull market forcing higher and higher prices on us. Bullish moves have come to abrupt halts in the past, so I’m sure this big bullish phase will also end.

I could be faced with a degree change but making one change up or down would throw “all” my other wave counts out as well, by at least 61% or more.

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Crude Oil Intraday Record High Update

This bull market in oil keeps pushing higher and it still may not be finished. At this time it looks like and ending diagonal could be forming with a drop to the bottom trend line can still happen.

Higher and higher price forecasts for oil have flooded the internet and in the short term some of them may still get hit. The question always on my mind is “what is going to happen “after” thier price targets become true. In reality they have no clue as, and besides if they did, they might get fired for being bearish.  I have no such hang-ups in calling an oil bubble, but it is impossiableto define an exact top at this time. The big question is, “Is this bull market just a big bear market rally (fake bull market), or is it the real thing.

There is nothing wrong in playing any fake bull market, but then you really have to know when to sell or go short.

They all thought that the 2013 peak was a bull market yet another crash ensued producing a complete retracement. That was a Primary degree peak and at present we may be at an Intermediate degree peak.

Bear market rallies have a dubious reputation of  crashing with “complete 100% retracement”, even if it is retraced by only slimiest of margins. The EWP is still the best way of seeing bear market rallies depending on where we are counting from. My bearish wave counts come from the 2008 peak which is my Cycle degree wave 3 peak.

The entire oil bull market is so choppy that I find it hard to believe that oil prices are still going to the moon. Commercials have establish large short positions and the majority of experts are “all in”. The is a bullish top heavy trade set-up and it can only end badly. From a shortage to a glut it only took about 8 months in 2008, so this bull market can change dramaticly in a very short period of time.

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Crude Oil Intraday Gyrations Update

This morning crude oil also spiked to a new record before it backed off a bit. As I post a reversal is in progress so short term this recent high could still get retraced. The more violent, crude oil gets is the sign of a trend change that oil could be switching to. The price gap between this June contract and the December contract,  has compressed dramatically,  as the December contract is now only  a 65 cent difference.

The Gold/Oil ratio is also at record lows as it hit the mid 18:1 range since early April 2018.  Before oil crashed in 2014-2015 the Gold/Oil ratio managed to hit 17:1 so 18:1 is not that far away.  The entire world seems to be bullish on oil prices, as every price forecast imaginable is thrown at us. I’ve heard all this before  as this potential peak has happened two times before.  This will be my third oil, bearish phase I will be tracking and they all started with very high gold/oil ratios.

The WTI commercials are short oil, and even with the ICE futures they are in short positions. Until this scenario changes I remain bearish on oil.

Some only expect a pull back to $60 or so, but that is a very bullish corrective forecast. Even if oil is ending on an “A” wave in Intermediate degree, a net pull back of 50% can take us to the $40 price range.  A $10-$12 correction is peanuts, as that would not force too many oil bulls to reverse their positions.

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Crude OIl Makes A Swan Dive.

I extended my Minuette degree wave 3-4 with this run into last night being one ugly 5th wave. Early this morning crude oil started to implode, which was also a diagonal. Trump dumps the Iran Deal and oil implodes. Of course, all the forecasts for higher oil prices soon emerged with one forecast at $82.50. I laughed when I read that as it is another example of consensus forecasting.  This morning this June oil contract peaked at $71.80 and then started a decline.

Only time will tell if this peak will hold as my 4th wave in Intermediate degree might find a home for a little longer than just a few hours.

What is far more interesting, is what happened with the Gold/Oil Ratio as oil went vertical. We had a June Gold/Oil ratio managing to compress to a little over 18:61.

This morning the Gold/Oil ratio hit 18.35, which is still the most expensive ratio for this bull market so far.  As the crude oil prices decline further, this ratio will start to expand again.

This crude oil bull market is one of the most lopsided trade setups that I’ve seen in years,  as the professionals are geared for higher oil prices to come.

All these expert fund managers are already in, which has been reported on in great detail.  From my perspective, there is no one left to get in as the “Greatest Fool” has arrived buying into crude oil at $71.80.

The Gold/Oil ratio is a powerful tool as it works on a mathematical base, which the majority ignore. Many of these extreme oil price forecasts mean nothing if you just make a simple ratio calculation.  A $300 oil forecast would give us a $5400 gold price, which is not going to happen. A quick calculation will tell us that the $300 oil forecast is just a mythical dream, not based on reality!

Crude oil is very close to cracking the $70 price level again and that could be the trigger for “sell”orders to kick in.

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$70 Crude Oil Forecast Reached: What’s Supposed To Happen Next?

I get a real kick out of these consensus forecasts as they know that a certain move in oil could hit $70, which it did today.  One thing they never will tell you is what is supposed to happen after their price target gets hit!  You will never hear them say and BTW, “when crude oil hits $70 it will tank to $40”!

When oil is at $65 it’s not rocket science to forecast that oil could go to $70. Crude oil is pushing all the buttons, but every new record high could be the last record high just as well. Sooner or later we will achieve the high for all of 2018. I have posted many links and COT charts showing how the experts are all leveraged to the bullish side in oil, and even the commercial COT reports back that up. When a trade is this lopsided, it has no choice but to crash.  All the protective “Sell” stops are piling up below present prices and some professional traders know how to trigger them.

To say the least I’m very bearish on crude oil, until such a time when I can see a real and proper correction has taken place. That will all depend if the entire oil bull market was a fake or not! Otherwise known as a “Bear Market Rally”  All bear market rallies eventually return to where they started from and bullish investor will be in shock that an oil crash can even happen. Of course, then the blame game will start again as it usually does.

Everyone will regurgitate fundamental reasons why oil should continue to soar, but the biggest fundamental they are all ignoring is the huge amount of bullish bets in one direction. Who is left to get in?  All these one sided bets are all looking for the greatest fool to sell too, but usually all they have to do is look in the mirror, and they will see the last greatest fool still standing!

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Crude Oil Price Soaring To New Record Highs?

 

Crude oil is trying to break out, but it may not happen today. We  may have to wait until next week or during Sunday night trading session.  I’m squeezing out every degree level I have and only have one more left after which we hit rock bottom on my list of 15 degree levels. At such small degree levels I know that  I had a wave in the past that I missed.  This crude oil mania is being pushed to the limits as the COT positions are clearly telling us.

This June contract is still higher than the December contract which is not very bullish as well. Indicators that the majority of analysts use may be good for the short term, but longer term all trends must come to an end and the only question is when. Most of the time trends peak when I run out of degree levels to use. Anything smaller, I’d need an electron scanning microscope to see, never mind to try counting it out.  I’m very bearish towards oil and will remain that way until any major decline has started to kick in.

There should be a massive amounts of sell orders stacking up below present prices so when they start to get hit, a cascading domino effect takes place.

Even the Gold/Oil ratio touched 19:1 this morning, which is getting very close to the 17:1 ratio we had back in 2015 before it crashed. One report from a fund manager suggests $300 oil is doable, but all we need to do is take a quick inverse Gold/Oil ratio calculation, would give us a $5700 gold price. That little calculation gives you a good idea that the $300 oil price forecast is a figment of someones imagination.

As I post crude oil seems to have broken through to new record highs with a big intraday spike. That intraday spike probably triggered many of  the protective buy stops laid down by early short players. The jobs report this morning could have been the trigger!

In the end my 4th wave peak will get moved a bit higher, but this still is a pretty normal inverted zigzag for now. Yes, its a bit longer, but look what the another zigzag did from 1999 to 2008.

Many people thing that crude oil or even gold will not crash as gold/oil bull markets can work inversely to the stock markets. The facts are that during the 2008 crash gold, gold stocks and oil crashed together. I know because I tried to short GDX at that time, but got freaked out when it went against me.

To say that this scenario cannot happen again is ignoring market history, and if we forget market history so fast then investors will pay dearly for that mistake. As a wave anaalyst we have to jot down little numbers and letters so we never forget the past!   🙄

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Crude Oil Daily Chart $300 0r $21?

It’s a new month and crude oil seems to be at a peak. One little desperate spike last night before it started to back off this morning. I have used this zigzag for some time and this last bullish phase is a diagonal 5th wave. I just read the story that a $300 crude oil was forecast in the next few years. I talked about all the crazy forecasts that we will hear, and this one is the icing on the cake.

On the bullish side, we had the $100 forecast, but they seemed to jump to a $300 forecast. Well folks, I trust my wave counting instincts a lot more, than price forecasts from the most bullish sector on the planet right now. These bullish forecasts from a biased bull inside any sector  is a magazine cover or “blog cover” story  indicator, and usually marks a peak as well. The Bitcoin peak had the same thing. I have been using the crazy forecasts as indicators for a long time, but they are a bit on the rare side.

$64.40 is the first resistance price level to break and from this May 1st peak it could be downhill for oil prices for the rest of this year. This oil bull market is ready for a “Big Dip” that will be far bigger that anyone expects at this time. An inverted zigzag is a very bearish pattern, and definitely not a bullish pattern, so this so called “oil” bull” market is just a big bear market rally and technically must get completely retraced. This is not based on some mythical isolated wave pattern, but I have “many” of these types of patterns I’m working.  Even with gold down and oil pointing up the gold ratio never broke a sweat and is still just under 20:1 today!

Once it starts to dip the $300 oil price forecast will disappear and the $40, $28, $21, and $10 oil forecasts will appear again. I’m very bearish on oil and when a small group sees that fact at the same time, then we usually have a mini price panic. All futures are leveraged asset classes and if you don’t understand the volatility yet to come, then you better run to cash!

Volitility just means a trend change is coming, so hang onto your hat because the oil winds are shifting from the  SW to the NW this summer.

Elliott Wave 5.0 is all about Cycle degree wave counting and at this time I have a preliminary “Peak Count” of about 16 wave 3 peaks in Cycle degree. That is the “most” Cycle degree peaks  that you will ever find on the internet anywhere!  Not a single expert wave analyst can even find one SC Degree wave 3 peak that will hold, but I’m dealing with 16 at this time. Technically speaking, we should have 16 Supercycle degree wave 3 peaks if all wave counts were shifted up by just one degree. In the EWP if you are out by one degree, we are out by a mile as that can mean being out by 60% or more. (.618)

Not until all 5 waves in Cycle degree are found and they hold, then after this is where wave counting enters the realm of Supercycle degree. If we are lucky this may happen closer to the 2029 time frame.

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December 2018 Crude Oil Review

When I looked over the crude oil December 2018 contract, I found an extra diagonal wave 1-2. With the June contract, no way would that fit as a 1-2 wave.

December is also a little less busy as the waves seem a little less jerky. Rising wedges happen in bull markets and this oil chart has a pretty good rising wedge right now.  Wave 3-4 in Subminuette degree,  are the two starting points which makes this a Subminuette degree rising wedge. I will always try to keep my wedges between two of the same degree levels at all degree levels. From the 4th wave bottom in Subminuette degree is a diagonal 5th wave, not an impulse 5th wave. If we count oblivious to the diagonal, then you end up with 7 waves. We need 5 diagonal waves before they finish and that is what I counted out.

This is also a very common diagonal and gives us big hints that we are in a 5th wave location. One of my own rules is that all 5th waves must always be capped by one degree higher. If there is no “cap”  then the Elliott Wave sequence has been broken and it can no longer be trusted.

I don’t have enough room to fill all the degree levels, but it’s not ending on a “5”.  🙄

I will be switching to this December chart form now on but it is $2.79 per barrel less than the June contract. This doesn’t  instill bullish fever from my perspective. Experts are not even looking that far ahead, otherwise they would be reporting it as well.

Does this change the Gold/Oil ratio? Not really, as we are at 20.14:1 today. It’s been around this average for over 3 months and does not seem like the ratio is dramatically changing.

Some are calling for $100 oil this year, but they forget about the gold/oil ratio as $100 oil would mean a $2000 gold price.

We could be at a fake top so oil would have to dip soon to help the bearish case.

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Crude Oil Rocket Rally Update

What a great vertical spike crude oil just had, but it also looks like an inverted expanded zigzag which I’m hesitant in labeling it as a wave 1-2.  Any decline could just be another set of 5 waves which would place us at a diagonal wave 1, one degree higher. One minute it’s all about the inventory, then the next it’s about the rig counts. Even the news of hijacked tankers could have made this spike. https://oilprice.com/Energy/Energy-General/19-Oil-Tankers-Held-Hostage-Off-Yemeni-Coast.html.   It matters little if the news is fake or real, but emotional traders will react. I”m sure that many stop lost buy orders were hit as well. If the story of the 19 tankers is false, then the oil price can crash right back down, and go much deeper adding on another leg down.

The violent move up in oil and a violent move down in gold made put crude oil back on the expensive side with a Gold/Oil ratio of 19.2:1.

I show a 4th wave top in Intermediate degree, but it is still a bit early to see if it will hold.  Analysts are still extremely bullish as talk of $100 seems to be increasing.  The oil experts were also telling us the same story at the top in 2008, and the only thing than has changed since then is  the price!

What ever happen to $200 oil?  If we use the 19:1 ratio and the $100 oil price this would translate to a $3800 gold price. All I can say is good luck with that $100 oil forecast,  as it’s not going to happen on this trip. Even Trump is trying to crash the oil price as he blames the Saudis (OPEC) for price manipulation.  Give me a break! Tweeting oils price destruction is not going to do it, as this has been going on for decades and will continue.

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Crude Oil Intraday Update

About 5 days ago crude oil peaked which produce what looks like a triple top. The third peak is a wild spike which you can ignore, which doesn’t happen in line type charts.  After yesterday’s bottom oil rallied before it started to grind back down, which does not fit into an impulse anymore. I labeled the entire move as a zigzag, but a diagonal can also fit into a 5th wave decline, so both wave counts have to be kept in play until one gets eliminated. Oil is a wild animal at best of times so violent moves are going to happen.  We can draw trend lines, but it is far too early to start doing that. In a bear market lower lows is the  pattern of a decline, so lower lows below $65.60 should happen.

Our present little rally as the makings of a 1-2 wave so if the quality of any 5 wave decline remains very high, then this would be a very good bearish sign.

This may be wishful thinking, but wave structures do smooth out a bit once any  bearish decline is more accepted by the majority.

On a bigger scale crude oil has a Cycle degree declining wedge in it, so that alone can forecast another huge bull market in a few years time.  The whole idea of high degree wave counts is to “see” it coming long before the majority ever will. When a big group of investors  also seen the same thing, then you can get what would be a mini panic.  This has only happened in a very small scale, so bigger panic situations will arrive as more and more people get suspicious to the staying power of this so called bull market.

The Gold/Oil ratio has not changed hardly at all, as it has been hitting the ratio brick wall for months already.  Today the Gold/Oil ratio is at 20.23:1.

In Canada, Alberta is talking about conduction pipeline wars, as Alberta wants to cut oil supplies into BC, if the pipeline does not get built. If this actually happens, then BC could see some explosive gas price increases at the pumps, crushing BC’s economy along with them.

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Crude Oil Intraday Rocket Ride Update!

I was suspicious about my March peak, which I now counted out with an expanded top, followed by two sets of 5 waves down. All my degrees are being used up and I will not longer count out smaller than the 15th degree. When I consistently run into the 15th degree level, and still see a few smaller wave sets, then I might have to look at a higher degree, but so far there may not be the need. The bottom of April 6th is now a diagonal 4th wave bottom. Just today it is getting close to the top of my trend line, so another correction should be due. Fears and uncertainty have arrived in the oil market and we can thank Trumps Tweets for that.

Since the March bottom we have been in a “C” wave bullish phase, and this oil move is a prime example what can and does happen in “C” wave bull markets.

How much more crude oil will run is uncertain, but the end could also be near.  Even with all these wild swings the Gold/Oil ratio hasn’t changed that much and is still bouncing around the 20.29:1 range. Eventually I would like to see the Gold/Oil ratio expanded closer to the 30:1 ratio, but that is not going to happen for quite sometime yet.

Remember, as fast as oil has gone up, it can come down just as fast. You will not be safe in this bullish trend for very long. With this move it just extends the “C” wave in Minor degree.

I’m starting to mention that crude has a huge Cycle degree Megaphone in the works, between the Cycle degree wave 3 top and a Cycle degree wave bottom, which once completed should produce yet another rocking bull market in oil. This may still be 2 3 years away so don’t get too excited just yet. Megaphones have open cones, but wedges and even Scalene triangles have mostly closed cones. I will start calling Megahope patterns by the size of their degree levels, as Cycle degree Megaphones can produce 5 waves in Primary degree. The US dollar also has a Cycle degree Megaphone in progress, and I think there are more out there I haven’t discovered yet.

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Crude Oil Rocket Rally Update

Crude oil made an ugly decline (diagonal) into the bottom of April, 6, before crude oil soared once again.  Crude oil has now rallied far enough to where it has resistance at my previous wave 2 peak in Micro degree.  Also a H&S pattern is developing, which in a bear market rally is a bearish sign. In a bull market this H&S pattern would be just a temporary stop.  The real reason for the rally is that all of the protective buy stops are being triggered by some news release regarding declining inventories. The news does not suddenly turn a bear market into a bull market, even if it looks like it.

This rally will only get confirmed as a bearish rally once this entire intraday bullish phase is completely retraced. Even the December crude oil contract is still lower in price than the June contract, by $2.75 a barrel.  This does not bode well for a huge bull market in oil to keep going. As I post crude oil has broken the $65 price level by a small margin, but still a far cry away from breaking to new record highs.

Add to the fact that most commercial traders are net short crude oil with a 20.58:1 Gold/Oil ratio, I will remain bearish until such a time when a big correction has taken place or is completing.

As fast as this rally charged up, it can crash just as fast, so hang on to your britches folks, as this could get rather violent swinging into the opposite direction.

Longer term we could be heading back to a world oil glut and they will start to store oil in very large crude oil tankers.  As soon as all the experts realize that an oil glut is here, then it will be over and the price of crude will soar again.

Crude oil has a huge inverse Megaphone (Wedge) pattern which is a very bullish indicator and can produce amazing bull markets. Again, this is a bit early to describe a big bull market in oil if the oil charts presently contain an inverse zigzag!

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Crude Oil Intraday Update: Resuming Its Trend

So far the crude oil down trend has had a good start, but it is still a bit early to tell. I might have to drop my degree level down by one degree in the future, but right now I can keep the same wave count that I started with. If the bigger bearish phase is real then the small double to you see could be the record high for oil in 2018.

On this June contract $66.20 seems to be the record to beat.

In order to confirm a potential Intermediate degree 4th wave top we need 5 waves down in Minor degree or even a single zigzag type move also in Minor degree.

What we just finished looks like a 4th wave top because immediately after, diagonal patterns started to emerge. Diagonals have a nasty habit of showing up in 5th wave declines, so instantly diagonal wave counting has to be used.  Any wild spike early next week could still take out the top trend line, but we should always expect wild counter rallies after a steep decline.

The Gold/Oil ratio is now 21.36:1 and this ratio should keep on expanding as crude oil declines.  I would also like to see all the COT reports in oil start to show that the commercials are becoming net long. At this time we are a far cry away from that happening.

This year it looks like the June and December months are the two busiest months, which is great. The December contract is running about $2 US dollars lower, so this does not support the oil bull market to keep going.

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Quick Crude Oil Intraday Update

As I post crude oil is still heading higher but I think it will run out of steam again if the bigger bearish picture is real.  The Gold/Oil ratio is above 21:1 already and we should see this ratio expanded if this bearish phase keeps going.  Sure, it’s nice to start counting a 5 wave sequence heading down, but we will still get very violent counter rallies.  It still may take some time for the patterns to smooth out a bit, but I think the bigger trend is down. The December 2018 crude oil contract is about $2.47 US lower per barrel than this June 2018 contract,  which is kicking the stuffing out of the bull market.

Even most of the commercial traders are against the continuation of the oil bull market. With the present day gold price and a potential 30:1 Gold/Oil ratio, it could bring oil down to the $44 price level. That is a purely speculative oil price as the $40 price level can work as natural support, even if it may only be on a short term basis.

The big impressive wedge in oil prices I have talked about and drawn out, gives us a heads up already that a huge bullish phase can explode once the wedge sees bottom trend line contact.

The wave 4 top in Intermediate degree is telling readers that my oil wave count has already passed a Cycle degree peak back in early 2008. Since that top crude oil has been in a bear market that hasn’t finished and might end up lasting 13 years before another major reversal in oil will happen.

The trade war seems to be picking up again so fear will always be dominate in the oil market.

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Crude Oil Still Double Topping

This double top is so close to call that I switched back to a potential zigzag bullish phase that can work in a diagonal 5th wave. Gasoline is far from reaching any potential double top,  so we have a good divergence between the two types of commodities. There is not much we can add to the short term picture except that oil can head south right along with the stock market. The commercial traders don’t instill any great urgency to pile into this extended bullish push, as they have been net short for some time already. $65.50 is the price to beat with this very busy June contract. Once mid June rolls around, I will then switch to the December contract which is just as busy as this June contract is.

The December contract is also much lower in price by about $4. It would be far more bullish, if the December contract is higher in price!

The Gold/Oil ratio has not made any real dramatic moves as it has been averaging around the 20.5:1 ratio. This ratio must keep compressing otherwise it has a high probability of starting to spread. A spreading Gold/Oil ratio would then show us that oil is getting cheaper when we use the Troy gold ounce as a measuring tool.

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March, 7, 2018 Crude Oil Intraday Crash Update

I have made a few changes with the oil wave positions. I added the 4th wave in Intermediate degree at the January top.  This is not chiseled in stone, but I have to use it to eliminate it.  This next set of 5 waves must crash below $58 as that alone will help to confirm that this wave 2 rally in Minute degree was just a bearish trend counter rally.  Usually with any zigzag crash the “A” wave can be very steep, with the “C5” wave meandering more obviously.

This is not what is happening so the wave two rally has a good chance of holding.   Just by adding one higher degree of the 4th wave in Intermediate degree makes the 2008 peak a Cycle degree top.  The major rally from the 2008 $34 bottom to about the 2011 top ($115)  was confirmed as a bear market rally, when oil crash to about $28 in late 2015.  If oil keeps progressing south, then by the end of 2018 we would be finishing a 10 year bear market. A 13 year bear market would get us very close to the 2021 time period, just in time for solar cycle #25 to take off.

I have mentioned it several times that oil could fall to $12 if the rally that started in early 2016 was a fake. It sure was frustrating enough to count out. Some fundamentals are very positive, but they are still years away from kicking in. Oil fields get pumped out which slows worldwide oil production.   I look up or down with the wave counts, but 2-3 years is still a long time where anything can happen.

Many presidents in the past have added duties on countries and it all sound like a trade war as well.  Most of it is just jawboning rhetoric and it will never happen, so don’t get too wrapped up in the “Tariff Wars” that the mainstream media loves.

The commercial traders are net short WTI oil by a ratio of 2:1 while the speculators are still net long by a ratio of 6.9:1. This is a huge bull trap that the speculators are in. These numbers should eventually reverse and when that happens, then another set up for an oil bull market should happen.  The Gold/Oil ratio has not really changed that much and is still sitting at a bit over 21:1, which seems to be a double and even triple top. This ratio should expand when oil gets cheaper,  and then compress when it becomes more expensive.

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Crude Oil Intraday Crash Review

Since the mid February bottom, crude oil charged up producing a wild pattern that just will not work as a simple impulse wave structure. Rallies this choppy usually retraces the entire move, but we need oil to dip much further to help confirm my suspicions. As I post, a small rally is taking place, so anything can still happen. Inventory levels are being drained, and many large oil fields will be losing their production capabilities in the next few years. Crude oil inventory levels mean little if the stock market is going to enter into a recession.

In the 2008 crash even gold and oil plunged with the markets, so any event that has happened in the past can happen again. Commercial traders are net short crude oil but not with any real screaming bearish numbers. A quick calculation puts the net short ratio at about 1.35:1 which is not an extreme position.

If this bullish run is over then the $58 price level would be the next main price target to get hit. I’m looking for the big move to look like a correction has completed, but at this point I still can’t jump on the crude oil bullish bandwagon.

The Gold/Oil ratio hit 21.17:1 today, which has been pretty normal in the last month or so. Any fast move which compresses the Gold/Oil ratio very quickly can mean, a much bigger decline is just around the corner.

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Crude Oil Intraday Rally Review

Crude oil soared after what looks like a double bottom. There is a strong probability that crude oil is completing a 4th wave rally due to its choppy rally.  There is a chance that crude oil can still break higher, but then we would also be getting very close to the bottom of my wave one in Minute degree.  We may have to wait out all of February for this move to clear up, but otherwise it could turn into a wave 2 in Minor degree.

I have nothing better at this time, but oil could still see downward pressure along with the general stock markets. Oil certainly rallied also with stocks, but stocks may still have upside left in the next few days.  The Gold/Oil ratio is hovering around 21.63:1 but this should expand if crude oil resumes its southerly direction.

I’m not going to turn bullish except for short term bullish runs. Until I see that a clear cut correction of sufficient physical size has completed, I can’t turn bullish for the longer term.

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Crude Oil Explosive Rally Update!

 

I was expecting a 4th wave rally and the markets did not disappoint us. There was a strong small counter rally that may put a crimp into this wave count, but eventually the crude oil should resume it’s southerly path to what could be a new wave 1 but in Minor degree.

So far the Gold/Oil ratio of 22:1 has been improving, but it will be a slow process. I constantly look at the daily and weekly oil charts, but switching  from a daily chart to a weekly chart will dramatically change the wave counts. Until all the oil bears have come out of their caves and sliced every oil bull in the process will we be in a position when oil can start another huge leg up. Maybe crude oil can turn back into a glut when the US government sells off its reserves.

Fundamentals are lagging indicators so if the experts see that an oil glut has arrived, chances are good the glut is over and a new bullish phase will start.  The markets will always do the opposite of what fundamental reasoning suggests, as the biggest gluts produced the biggest oil bull markets.

Until I see a great looking corrective oil crash playing out, I can’t turn bullish for the longer term.

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Crude Oil Crash Update

This is the April 2018 contract month, but it’s a bit too far ahead in time. It’s not a big deal as we still have to figure out what the potential wave count is.   We do have a double top kind of a pattern which I’m working as a diagonal set of 5 waves down. On Friday we ended with a sharp spike to the downside which can produce another rally push crude oil right back up to the $60 price level.

Even now this crude oil slump has not gone deep enough for the bearish phase to be called finished, so this impending rally could be another fake as well.  I’m looking for a possible zigzag correction in Minor degree which I can’t call completed at this time.

The Gold/Oil ratio has improved somewhat, but not by any great leaps and bounds. At 22.34:1 it is now back to where the ratio was in early December of 2017.  The ratio may not be any help to us at this time, unless it shifts dramatically in a very short period of time.

In the short term I may have to shift my degree levels a bit, but I might do that after this rally completely fails to materialize.

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Crude Oil, Still In The Bullish Game?

 

Oil has not made the decline, like I hoped it would, but chances are good that a bigger correction still has to play out.  The bullish phase that started in June 2017 from the $44 price level, has a stubborn streak to it as it refuses to correct. This stunning rally could still see a 61% correction, which would bring oil back down to the previous 4th wave of one lesser degree.  One previous gully sits at the $50 price level so a 61% net retracement could end down at the second gully.

The Gold/Oil ratio isn’t exactly screaming cheap as it has been hanging around this 20.77:1 ratio for far too long.  Back in 2014 this ratio spiked to 17:1 before crude oil started to implode, so a 20:1 ratio is not all that far away from doing the same thing.

I wish I had a much better, wave count than what I see, but converting from winter fuels to summer fuels will change the crude oil dynamics somewhat. Of course the 2018 hurricane season could also have a huge impact, so oil could crash and then turn around and soar.

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Crude Oil Intraday Record High Running Out Of Gas?

Crude Oil seems to be running out of gas and has started another move that could fall much lower or deeper than what the majority think will happen. When I think it is important, I will post multiple wave counts.Since I dropped the degree level down by one degree, but used the bottom of Minscule degree.  I will no longer post any wave count that is smaller than the official list of 15 degrees. By using only 15 degree levels, it helps to better gauge the end of a run across most intraday charts.

Simply put, “once we run out of degree levels, the bigger trend is also coming to an end. The size of the 4th waves get smaller and smaller, as we get near the end of a run. I have gone back to using the fixed degree list for some time already, which most readers will never notice the change.

Yes, I may still be a bit early, but we have to be a bit early so more readers can adjust their thinking.  If we go back to the daily chart, we can see a major bottom on June, 22, 2017 of $44. This would be a very bearish downside price target, which is hard to imagine, but I would consider a decline like that as pretty normal.

We are dealing with wildly leveraged commodities contracts, that have a very bad reputation for making crazy moves that are very hard to catch before they happen.

It will remain to be seen if we have more upside left, but I sure like the idea of a triangle in a 4th wave which was followed by a “thrust” to the upside. The triangle forces a degree change as well, and most of the time it can be a difference of two or more degree levels.

At $60,  oil has run into resistance and struggled as it touched $64 so far. There is also a huge H&S pattern with the daily charts, and we know these patterns can also produce violent reactions.

The Oil volatility index OVX also had a bottom at $22.98 and has now started to climb again in recent days. Technically speaking the OVX will rise much more if this bearish oil correction starts to take shape.

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