Tag Archives: WTI

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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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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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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Crude Oil: A look at the August Contract Bear Rally.

Fundamentals will “always” tell you the wrong things at the extremes. Was the 2008 peak extreme enough for you? This was also a mania oil peak and part of the 30 year cycle as well. Gold stocks peaked out 3 years later and have been in a bear market ever since. Oil is not on some rocket ride to the moon, as high oil prices kills any real profit growth.  Does this “wedge” look like a promosing trend, because if it does you better learn what a rising wedge can do to a long portfolio. Then add a few death crosses to the mix, and we have about the most skewed oil trade in history, that has only one way to go and that is down. Please do not whine about fundamentals as in the traders world, they are called “Funny-Mentals”. Markets will always travel in the direction that will do the most harm to the complacent investor.

This oil COT report is so skewed that there is no chance any big bullish move is still ahead of us. The top part is all the spectulators and hedge fund positions, that are all extremely leveraged to the upside. Well, when things don’t go their way they will panic and run at a moments notice.

Over the years I  have developped my own in house indicators using a dozen or more gold ratios, which I used to call the 2008 crash. This is when the Gold/oil ratio was about 9:1. We are at about 18:1 right now and in 2014 this ratio hit 17:1 before the oil price imploded. No extreme ratio exists in the Market Vane report yet so that will change by the end of this year. My Market Vane subscription will run out and I don’t plan on renewing it, as I have enough in house indicators to track.

Oil is going to suffer a huge price crash that will be part of a the “deflationary market crash”, not experienced by anyone still alive today. Stock markets and all commodities had Cycle degree wave 3 bubble peaks and their corrections are still far from over.

If you are a trader then I suggest  to always have an emergency phone number  that you can all and they will execute to your insructions. The reason I say that is because our local power went dead in the middle of posting this oil chart.

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September Crude Oil Daily Chart: Record High Again.

I show that oil peaked at just below the $73 price level in the September contract, the August contract has just crashed so there are always differences in prices.  The December contract paints an entirely different picture as the December contract is at least $5 per barrel, this is well on the road to an extreme spread and it tells me that oil’s bull run will not last.

The gold bugs need higher oil prices to support their bullish claims, because you sure will not see the gold price soar as oil implodes. Sorry folks but that ain’t going to happen. Gold and oil are linked by an unbreakable elastic band, which can streach and contract by extreme ratios. The ratio is still around 17:1 which is also at an extreme, so this will change dramatically as we hit the Gold/Oil ratio brick wall! Hurricane season can have psychological reasons why oil is high, but summer driving will also end so the future of the WTI oil price does not look bullish from my perspective. COT reports also show commercials net long in oil, so the bearish indicators are still there and getting worse.

To think that the stock market is going to deflate but oil and gold inflate, then you should check all your premisses as one of them is sure to be wrong. When the oil bulls all start to sound alike, then I know it’s time to short the oil price. I use USO for that as I’m short 100 shares on USO. Sure, any trade will go against you but feathering into any  postion is the key. I can handle alot of Draw Down red, which freaks my friend “JP” when I show him my red positions. My entire short sell group is turning into my best performers so I have no intention of getting out. I trade small positions with ETFs but try and stay in for a 5 wave run. When you ride those bear runs down, then you pat your bear and tell him that he has done a good job. Yes there are buckaroo cowboys that can only ride the bulls, but up here in Canada we also ride the bears! It’s not a fricken horse race folks. It’s a bear and bull ride and to see who can last the longest before being thrown off!

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Crude Oil Intraday Wild Ride Update

The trading in the June contract started to come to a halt and it never had enough trades in it to push it as high as the December contract.  When they roll over into the July contract then the July contract pushed much higher. It’s not good to stay late in a contract month, so I took the December contract. There was a 3 wave crash that took oil to a new low, but that lasted all of a few minutes before it retraced that entire “D” wave drop. I could count out the “E” wave a bit different.

When I see a triangle I also have to be prepared to jump one degree.  If I don’t know what higher degree I would get, then I need to scramble to make sure I get one by the time we get there. I’m a big fan of always trying to find a “better fitting” wave count, and not just change wave positions for the sake of having to do it.  The herd of bulls are  looking for higher oil prices as they think that fundamentals somehow dictate higher oil prices.  They freak out about every little move in inventory levels when reports come out that are above or below expectations.  At this rate the oil price will never crash if they can execute a balancing act in inventory levels.  So if the price of oil keeps crashing, does that mean all the tanks are going to be full all the time?  The last thing they want is their tanks full with high price oil, with no room to store cheaper oil in.

Oil storage is big business and smart oil traders have private tanks that go deep in the ground, where  inventory levels cannot be seen. All Trump has to do is announce a sale from government reserves and the price of oil would crash.  Having the faith that somehow OPEC doesn’t cheat with their production numbers is rather naive as well.

A recession is coming folks, and we know painfully well how fast the oil price did crash during the last recession. The oil bulls think that a trade war will have no impact on the price of oil. Commercials have an extreme short position in WTI crude, while the speculators are all geared to the long side. Both groups can’t be right, so something has to break this summer.

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Crude Oil Intraday Crash Update.

Since the peak last month nothing that has happened indicates a correction has taken place except for small counter rallies.  (Mini bear market rallies)  We have to understand any bear market rally is they will determine if we should hold a bullish position or get the hell out. There is nothing more horrifying than think about a bull market that some say is going to $300, but it turns and crashes to $40 or even lower. Bear market rallies in any degree always retrace themselves, so there is no sense in staying, as bear market rallies make for excelent short bets.  The trick is spotting a bear market rally before all others do and I will keep trying to do that as we all need that information early.

Most of the oil bulls do not understand the concept of a bear market rally as they treat anything that goes up as a real bull market. In commodaties and oil specifically is in a big Cycle degree wave 4 bear market, with most of them being giant zigzags. It may take the rest of the summer to play out so expect some wild counter rallies like we just had.

I switched mywave count to another wave 1-2 in Minute degree but ultimatley we need 5 waves down in Minor degree or one zigzag in Minor degree. Any zigzag could form where the “B”wave looks just like another 4th wave rally. These types of rallies would be very hard to spot if we’re not looking for them.  All this trade war rhetoric is just to much for the oil bulls to handle. Maybe $50 billion worth of duties, the markets could handle, but $200 billion, was just too much.

Fear drives the commodities, not some logical fundamental explanation why oil is going up or down.  Sure I can see another world oil glut coming up, but we know that oil gluts are very bullish for the price of oil. The last record oil bear market low was about $28, which technically should be breached again, if the 4th wave peak is on its true location.

My wave counts may make little sense to some, but my oil wave count starts with the 2008 peak. This makes the oil bear market about 10 years old so far. Thinking in 4-5-month steps, we could see September/October with another new record low.  I may be very bearish on oil, but I assure you I will turn very bullish after this 5th wave plays out.

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Crude Oil Intraday Topping Pattern Review

This morning crude oil created another higher high. There can always be another spike higher but this rally sure looks like it is fighting the bigger trend. Over lapping wave structures is the first clue, and a wedge is another. You usually don’t get one without the other as most bear market rallies can turn into wedges. The “C” wave part is all diagonal as it started near the bottom.  The only way we can see these small zigzags is with a 30 minute scale chart.  Anything bigger and you would not see many of these small zigzags.

The wedge looks impressive but we can dream up wedges just about anywhere if we are very biased. I believe there is more downside to come this summer so jumping on the oil bandwagon could overload it at a time, when the wheels are ready to fall of.

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Crude Oil Intraday Bullish Update

Crude oil has been in a rally but this rally is so choppy that oil looks like it still is in a counter trend rally.  We may still have more upside but this rally should end and then resume its bigger bearish phase.  The December contract is still $1.21 lower than the June contract and over time I would expect that to change which could still take many months to switch.  The December contract is also very busy so I may switch to the December contract soon.

Panics happen when a small group sees the same thing at the same time, and any unexpected inventory number can do that.  Markets will always do the opposite of what ever trend the majority have established, as the majority can never win at this game. The majority never practice buying low and then selling high becuase they only love it when things go up. If not enough bulls keep buying then sooner or later this crude oil bullish phase will have a hardtime in staying with this northerly direction.

Those traders that can play both ways care little about fundamentals as they only care of what their TA is telling them. On a short scale we could also be facing an inverted wedge which is also very bearish.  Overall I remain bearish until a correction completes that will push oil into a new bull market phase.  So far this idea is pretty remote but by the fall the bearish phase will show itself to more participants.

I see the $40-$45 price level as a good resting spot but if any rally is still choppy, then even the $40 price level will not hold.

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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 Just Keeps on Crashing!

I have about a week or so before the June contracts expires, after which I will move to the next busiest month. I made a small degree change as the last thing I want is a degree that is to big early in the game. As I post oil is in a bit of a rally, and it to should come to an end.

In the long run, the big question is, “if oil was in a big bear market rally?”  Very few investors and analysts know the difference because any asset class that goes up by more than 20% is a bull market from their perspective.

In commodities a conventional 20% move is just a little bee sting. From an Elliott Wave perspective this is not the case as we can have 70-80% bear market rallies, that completely retrace their entire bull market moves.  Oil has done this once already, but that late 2015 low may still be a fake bottom. We may hear about the $45 price level become support, but I always ask, “Support for what?”  Support for the start of a brand new bull market, or just temporary support before the final leg down?  They used the excuse that inventory levels are too high, but that has happened many times already.  Storage and large crude oil carrier loading and off loading terminals as being built and expanded on, around the world. The last thing that any oil traders wants is to store high priced oil. Storing low price oil, they can make money on. They will pull out all the stops and even lease large crude oil carriers to store oil in. A month or so ago they declared the oil glut is officially dead, but that is a bad omen and not a good sign at all. The markets always do the opposite of what the majority think will happen, as “all” oil gluts of the past have produce major oil price bullish phases.

From a major oil glut in early 2016, it took fundamentals over 2 years to catch-up to the oil price. I’m pretty sure we are going to see another oil glut before we ever see another real oil shortage.

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Crude Oil Trade War Update.

Crude oil is on the verge of crashing through short term price support. The gloves are coming off, in the war on trade as they all try and fight back. All this trade war talk does it make you want to jump out and buy commodities?  My bearish stance on oil has not changed one bit even though there are many experts out that are still beating the bullish “oil drums”.  All the price forecasting in the world will not come true, if we don’t know the difference between a real bull market and a big bear market rally.

Recently they got worried that inventory levels have decreased , and then no sooner did they post the news, another report comes out saying the exact opposite.  I’m not concerned about any crude oil inventory levels as the big crude oil traders will buy, build or rent more storage space that prying eyes cannot see.  Traders don’t make money storing high priced oil, they make money storing low priced oil waiting for a price rebound. In South Africa there is a big crude oil depot that has huge storage capacity by going  deep below ground. More daily oil flows around South Africa than what travels through the Suez Canal so Cape Town is a prime location for a major world storage hub.

Another oil storage trick is to rent large crude carriers and just float them until prices improve. Some of these VLCC (Very Large Crude Carriers ) can hold 2 million barrels. (About 2000 contracts)  I’m sure that floating storage will come into play again in the next few years, and when it does it will be all over the oil news blogs. When all the oil storage is used up then the price of oil will rally.  There is no real shortage in oil to justify lofty expert price claims, as they have failed every time. In 2008 they were calling for $200 oil but oil then crashed to $34! We may get a brief halt in the crashing oil price, but that may not happen until crude oil gets close to the $40-$45 price level.

When commodities crash they can do so, with amazing speed, and that famous excuse, “It’s Different this time” will not stop an oil crash.

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Crude Oil Intraday Rally Update

In the last 3-4 days crude oil has been in a small rally which sure has the pattern of a triangle. We are just finishing what looks like another zigzag “E” wave so anoterleg down should happen, followed by a bigger rally retracing any 5th wave we may get.  A triangle forces a degree change as well which could end up at a wave 1 in Minor degree.

All bullish oil news in a bear market will never turn a bear market into a bull market, as bear market rallies are all starts to a fake bull market. Many still believe that oil is going to $100 or even $300 as one biased expert claims.  Crazy bullish forecasts always get mentioned at the tips of bullish phases, after which the market crashes. It’s not any different this time, as the only thing that has changed, is we are in a different time period, after all were not in early 2008.  Any unexpected bearish move will force “all” bullish players to reconsider their positions.  They can do this by moving up their protective sell stops,  just below my wave 3 in Minute degree. Very few traders have the account to maintain a bullish position, besides the smart traders saw this oil crash coming.

The $66 price level will be a set-up for a downside breakout, with the potential for a diagonal 5th wave to develop. We have a long way to go, and it may take the rest of the year to play out.  All my commodity Cycle degree 4th waves are zigzags with a few triangles thrown in to keep us on our toes.

Figuring out where we are in this Cycle degree 4th wave is different between many commodities, and we are still far away for the “A” wave in Primary degree to arrive.

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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 Weekly: Impending Oil Crash Review!

                      “Is This the Most Bullish Oil Market of All Time?”

The longs to shorts ratio in the six major petroleum contracts rose to record highs last week—a sign that hedge funds and other portfolio managers are certain that the direction for oil prices in the coming weeks is up.
In addition, over the past two weeks, options traders have boosted their bets on Brent rising to 80 U.S. dollars a barrel, and calls on Brent at 80 is the most crowded options trade on the ICE Futures Europe exchange, followed by call options on Brent at 70 a distant second.
Options traders hold nearly 137 million barrels worth of 80 Brent call options, a 37-percent jump from two weeks ago, Bloomberg reports.
In the six most important petroleum contracts, money managers held long to short positions in a ratio of nearly 14:1 last week, compared to a 12:1 ratio at January 23, [2018,] when portfolio managers held the record net long position in oil — 1.484 billion barrels, according to regulators and exchanges data compiled by Reuters market analyst John Kemp.
For the week to April 20, [2018,] money managers held a net long position of 1.411 billion barrels of Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil, and European gasoil—close to the record net long position from January.
In Brent and WTI only, money managers held last week the most lopsided position ever, with 15 longs for every short.
Hedge funds’ ratio of long to short positions in Brent and WTI jumped to 15:1 from 13.2:1 the prior week, Kemp has calculated using exchanges and regulators data.
–Tsvetana Paraskova, “Is This the Most Bullish Oil Market of All Time?”, OilPrice.com, April 24, 2018.

The above research is priceless as it has nothing to do with ordinary crude oil fundamentals that the majority constantly use. Forecasting with fundamentals didn’t work at the peak in 2008 and it sure will not work at the peak in 2018! Sounds like a 10 year cycle between peaks to me.

Usually when the majority are all thinking the same then chances are good they are also wrong.

Oil has had a great run and right now all the experts/investors/traders are bullish. From the 2016 bottom crude oil started to rally, but it was in a very choppy pattern which is a clue that the rally is going against a bigger trend of at least one degree higher. I show a falling wedge with the two starting points starting from Primary degree points.  The bottom trend line does not need a degree in rocket science to see, as any kid with a ruler can connect them together, if they have the minimum skills of conventional technical analysis.

Fundamentals will always give us the wrong information at the extremes, and oil is a prime example of this. My wave count shows a 4th wave rally very close to completing, or already completed, on Friday.  The correction in this zigzag run was an expanded running flat which is a pretty popular pattern. No triangle   happened in this correction, but zigzags can contain triangles in the last “B” wave before the end.

In 2015 as oil was crashing the Gold/Oil ratio peaked at 17:1. We are presently hitting 19.41:1 which is one of 4 readings under 20:1 since the start of 2018!

The Gold/Oil ratio has been going nowhere fast, as it seems to have hit a ratio price brick wall. When crude oil starts to crash, this Gold/Oil ratio will start to spread again. When it hits the bearish, Gold/Oil Ratio brick wall, then that will be an early signal that crude oil may have bottomed.

How long do you think an oil decline will last without the Gold/Oil ratio getting all bent out of shape? Gold soaring and oil crashing is going to put a huge strain on the ratio. If we use the Fridays expensive ratio of 20:1 then the price of gold should be closer to $1600 with an $80 crude oil forecast.

Only time will tell what is going to happen next, but I will remain bearish until all these oil bulls stop spreading their bullshit everywhere they go. A good surprise bear attack will force the oil bulls to finally think twice, but by that time it’s too late already.

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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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Quick Look At The Crude Oil Intraday Crash.

When we look at the Intraday oil chart, we can see violent moves in both directions.  If fundamentals make oil go up and down, then we should know exactly what news story created which move. The fact it’s next to impossible to forecast the price of oil with fundamental analysis. Even the experts couldn’t see an oil crash coming back in 2008 and they all used fundamentals to justify any price move. It is also very rare that you will find any oil bulls scream “sell” at a major top!  When markets are down, analysts give us a reason why it went down, and when this market goes up, they post all the good news about oil.

In a bearish trend any bullish news will have little impact on the overall bearish move, until one day bearish news keeps oil from going deeper, then we know that a reversal will be coming.  In 2015 massive news about the world oil glut, no longer had impact, after which oil turned and soared again.

Bull traps and bear traps happen all the time, but if we’re not looking for these traps, we will step in the trap ourselves. Raw human emotions drive the markets and leverage compounds our emotions.

So far,  this short term bearish move has not completed like what I would like to see, as oil is in a bit of a rally. If the bigger trend is real then oil has much further to fall if the 4th wave scenario holds true.

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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 Bearish Review

Yesterday, crude oil peaked with a small double top after which oil immediately reversed its trend and now looks like a new trend is forming.  Since my top could be a 4th wave top in intermediate degree. I know that my largest degree of this decline must only be Minor degree, so I sure do not want to start with a a degree far too high.  One 5 wave sequence in Micro degree has already started with two lower degrees also visible. I have used Miniscule degree which is the bottom from my list of 15 degree levels. I will adjust my degree levels once this decline starts to show its true colors.

It is also a good idea to look for bear traps at the earliest moments but that might happen when all the patterns start to get super choppy. We need more evidence that this move is part of a bigger bearish run, and until then we have to be aware that we can always be wrong.  The longer it takes for any new highs  to be reached again, the better I like.

The oil bullish peak came within 45 cents of the $70 price forecast, but that forecast is an easy call if we were at $65 already. As I post, this chart has already dipped much lower, but in the end only time will help how this progresses.

The Gold/Oil ratio has compressed a bit more which means crude is still hitting the ratio brick wall. The Gold/Oil ratio is at 19.71:1, but it’s supposed to go the other way. In relation to the last 3 month Gold/Oil ratio average this makes oil more expensive.

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Crude Oil Intraday Crash Update

 

This chart is in a 5 minute setting and it is switched to a line type setting. The bar chart version was so choppy and it created erroneous spike, I couldn’t tell where to start the countdown from. The secondary peak was the real top of this run, which also produced a triple top along with a wicked H&S pattern. This is also a prime example of what a H&S pattern can do at the peak of a bullish run and the end a rising wedge.  Crude oil also had a little sideways move, that from my perspective is a perfectly formed triangle. This Elliott Wave Triangle gave me a warning that I can’t use a 1-2, 1-2  wave count.

Early this morning crude oil soared one more time, but now has already started to back off. I can take another zigzag rally as we could have finished another inverted 1-2 wave set.  Worst case scenario is that crude oil keeps soaring because we missed an expanded top. If the big trend has reversed, then we should see crude oil take out our present $66.13 price level. Oil may still pop to a new rally high, but only time can confirm that.

As I post oil is soaring once again so this wave count could be trashed by the end of the day.

 

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Crude Oil Intraday Bullish move Update.

Since early March oil has been on a real bullish roll that could be coming to an end shortly. Many of the fundamental news releases tell us how bullish analysts still are. How can oil crash with inventory levels fluctuating constantly? The same thing happen just before the 2008 peak in oil, when every expert in the world was proclaiming that new record highs are on their way, but yet the oil market tanked and in just 8 months, the world was in another oil  glut!  Oil not only crashed once, but it crashed again when experts were claiming that oil would never go below $100. How long did that expert opinion last?  The next thing we know another world glut has arrived at the $28 price level, before it charged back up to the +$65 price range.

I had mentioned it many  times that the $60 price level could give oil some serious price resistance, with a present price of $67. Since the April 6th bottom crude oil executed a wild run that sure seems like it is starting to fizzle out. In the last 2-3 days oil has been forming what looks like a rising wedge, which can and do produce amazing reversals once they get close to completing.  In this case the wedge is a Micro degree wedge which in this case we can call an ending diagonal. Diagonals can take up the entire 5th wave, so any diagonal in any 5th wave forecasts a reversal. Any 5th wave peak must also be capped with a one degree higher wave count. We should “never” see 5th wave peaks left empty anywhere on the Internet.

At a minimum I always like to confirm a move with two lesser degrees and sometimes even three depending on physical size. To confirm a 5th wave decline in Intermediate degree, I “must” see Minor and Minute degree subdivisions and occasionally a third degree will help.

Many are calling for $70 oil, but where were they when oil tanked to $28 at the 2016 bottom?

The Gold/Oil ratio has bounced from an extreme ratio of 44:1 and in the last three months it has been sitting at an average of 21:1. This morning oil dropped to the 19.92:1 range, which was a small, fast dip that have preceded reversals before. When the ratio is hitting a brick wall so to speak, this means that something is up as that is what also happened with all my stock index ratios. This Gold/Oil ratio should start to spread again as oil declines, and until those numbers change dramatically, I will remain bearish on oil. Crashes in commodities can happen extremely fast, as oil clearly has demonstrated in the past many times.

Crude oil also has a huge Cycle degree wedge in progress which could usher in a big Primary degree move in the future. Five waves up in Primary degree would work for me. 🙄  I have incorporated solar cycle wave analysis into EW5 and at this time crude oil prices should still be attracted to the start of solar cycle #25. Oil did exactly that with the late 2008 crash and the start of solar cycle #24.

As I post crude oil is heading down, so that’s a good thing!

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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 Intraday Gyrations Review

Last week, crude oil created a double top with the secondary peak being a bit lower. I show a starting 1-2, 1-2 count and a third 1-2 wave count might become visible due to the fact they are very small waves.  I show a “C” wave bullish move which I counted as a diagonal “C” wave. The Gold/Oil ratio has not changed that much, but this ratio at about 21:1 is running into a brick wall as it has been stuck around this ratio for some time.

There is a very good chance that crude oil will dip along with stocks, and when that becomes more obvious, then the Gold/Oil ratio should expand or get cheaper.

Commercials are net short WTI crude oil, but they are also net short the Europe Oil ICE futures. The speculators are in the exact opposite positions as they are the trend chasers and always get themselves in a trap. In this case speculators are caught in a bull trap. Until some of these numbers change I can’t see any extreme bullish oil scenario at this time.

The commercial traders deal much closer to the oil industry than any speculators do, so they carry a lot less risk than the speculators. Commercial traders are not going to store high price oil, because they make no money, but when the oil price crashes it is very profitable to store oil. They will pull out all the stops to make this happen when the price of oil crashes again. In one world oil glut, (2008) they had 25 tankers floating around the Mideast gulf region at that time. Low and behold all those tankers eventually disappeared. The same thing happened at the 2016 low, as they were stacking up oil carriers to deliver oil to China.

Not until I see that a huge corrective pattern has taken place can I turn bullish on WTI oil again.

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