Elliott Wave 5.0 "Reboot"

Thursday, January 21, 2016

Crude Oil Intraday Review: Another Record Bear Market Low!

Crude oil action has now moved into the March contract with another historic bear market low hit yesterday at around the $27.60 price level. Does it make you feel good or does it make you feel bad for all those greedy oil companies? Some industries my hurt from lower oil prices, but it is the consumers who pay for it all in the end.  When there is a glut then low oil prices should translate down to the street level, so people can see that supply and demand are working. 

Picking a major bottom has been extremely challenging  but the overall shape of the decline has been filling in much better than it ever has. Depending on where you count from! If you are a short term vision and know nothing of the 2008 Peak Oil fiasco, then you could get wrapped up in this bear market and not think clearly.  As the saying goes, "Fear is the enemy of reason". Yes, we could get more downside, as I have no special goggles that can see so clearly into the futures as all the experts seemed to be able to do, that can see a $20 oil price. 

Maybe some tech guy should mass produce these special goggles so we can all see so clearly these future prices. Over and over we hear the same regurgitated message, how China is to blame, or they are blaming it on the oil glut. Little do they know that fundamentals that they all base their forecasts on are all lagging indicators at best.  

Recently the gold/oil ratio hit the 40:1 ratio, but has already hit a bullish consensus low of 9%. The crude oil crash matches our Canadaina dollar crash very well and it's bullish consensus just smashed the 6% level. Folks, this was one of the lowest readings I have ever seen. 

When something is at an extreme like this then sooner or later it will swing back to the average and then back to a potential extreme in the opposite direction. It has nothing to do with logic or common sense reasoning as emotions rule the financial world. 

When the oil bears really feel the bear trap they will get into a panic and start buying everything in sight. All those oil bears, talking big right now will turn into instant bulls as their stops get hit, or they will panic out if they have no stops. 

Any rally that looks like it starts like an impulse, I have to label it as such, and at very small degree levels the sooner the bullish wave count falls apart the better,  as then we eliminate it.