Elliott Wave 5.0 "Reboot"

Tuesday, January 19, 2016

Crude Oil Intraday Review: And The Crash Continues!

In the last couple of days the February crude oil contract has created a 3 wave bullish phase, which always indicates a false start, but they can also be part of a much bigger rally to come. This may not be the case this time as we can blame any new lows on Iran. If it all was not hype then we should see the results of Irans entry back into the oil market by much lower oil prices. 

 This is the fundamental thinking use by the majority of experts today. One report says that the IEA sees the risk of the world drowning in oil! This is not new news and nothing we haven't read about before. Oil has been in a glut for close to a year, but gluts have a bad habit of ending when we least expect them to, because fundamental news changes faster than experts can analyze them. 

Experts also ignore fundamental news that can end a glut because nobody is paying attention. 
In the end it will drive you nuts because each time the fundamental news may have a different impact on prices.  All gluts come to an end as every glut has, since the 1980s. 

After all, Iran is going to buy a whole bunch of gas guzzling jets to burn all this excess oil. 

Even though oil is heading lower the bears are in a bear trap and the only way out of a bear trap is to buy oil! The gold/oil ratio is a free indicator  that anyone with a calculator can create and track, other indicators like the bullish consensus report, you have to pay for. My subscription is running out soon  so I no longer will be able to comment on this great weekly sentiment report.

The gold/oil ratio has just recently hit a bit above 38:1 which is at an extreme in all the time I have been calculating it.

Last week the sentiment report hit a low of 9 4 days in a row, which is also an extreme reading.

This bear market will come to an end, but it is impossible to say if it will end at a $21-$20-$19 price level. It will not fall to a $10 price level as that would prove all those SC and GSC degree wave counters right.

One thing is certain there is no way that price can confirm a wave degree, only pattern can do that. Is the present oil price a Cycle degree low or will $20 be a SC degree low and $10 be a GSC degree low.  If oil stopped dead at say $25 and then roars up past $115 in a few years, what will happen to those great SC and GSC degree wave counts? You end up missing another bull market, which gave you no time to prepare.