Elliott Wave 5.0 "Reboot"

Friday, January 1, 2016

January, 1, 2016 Crude Oil 1980-2015 Elliott Wave Count Review.

 I posted several charts with a  Cycle degree for the 1980 peak, but I reviewed the big wave count  again looking at it from a different perspective. 

Long term readers know that I have had serious issues with how the consensus wave counters were counting the entire market in oil, especially the common WXY waves in the 1990s, I know because I was in the same trap, as this is what bull markets in Elliott Wave are supposed to look like. Wrong! This is what the waves want you to think, so they can trap as many analysts, traders and investors as possible all the time. 

Many wave counting analysts are forcing their wave counts to fit what they see not what is supposed to happen in an idealized wave count. 

I view the markets and associated waves, as they should have some reference to each other in physical size and that the impulse should not be broken for any reason. One reason is the small 2005-2006 correction compared to the huge wave 1-2 from 1998-2001. They don't match in size, as wave 3-4 in Primary degree is far too small. Compared to what they labelled Primary degree waves in the 90s the so called 2005-2006 Primary degree is a midget. This is not acceptable from my wave counting perspective.  I have other examples as well where no respect is given to physical size comparing the same degree wave count. The SP500 rally from the 1932 bottom to the 1937 peak is another fine example how small they have made 5 waves in Primary degree. 

The next big area of debate or contention in crude oil is that the 2008 low pushed into an old wave 1-2 killing any idea that the 2008 bottom was a type of 4th wave bottom. In other words I can argue about lots of places that do not fit into a great impulse. 

Below I have kept the Cycle degree wave 3 at the 1980 peak, but everything following that peak had to be reworked.  I even tried the old, "don't have a clue trick",  by using WXYXZ waves, but this puts our present bottom at a "Z" wave already. 

I will try and get into and maintain a good habit of drawing my trend lines with two parallel lines and will occasionally add a third down the center.  My bottom line now matches the top line and it would be a great time for crude oil to start a reversal. Not a chance, as they say oil is still going to $20 or lower, well they may be right, but the more bears that are out the more bullish I will become. 

When the majority are jumping on the bearish bandwagon, (wagon pulled by bears downhill) they will sooner or later beat the bears to death.  After the oil bear is beaten to death or run over, only the oil bulls will start to dominate. Path of least resistance will then be up! 
The crude oil bull died way back with the 2008 peak as bears always attack from the top.

Technically, I am counting this out as a triangle inside the "B" wave of a single Primary degree flat, and I can explain what we would need to confirm some more of this wave count.  First, it would have to be another 3 wave bull market, but it does not have to reach the top trend line again, but matching the 2008 peak would be nice. Price wise crude oil will go well above $115 again, ending on a potential "E" wave top in Intermediate degree, but it would also terminate on a "B" wave in Primary degree. 

What should follow is a set of 5 waves down in Intermediate degree, and it should match the double bottoms of around $10 or so. A Little lower would also be helpful. Don't get me wrong as I do not mean $10 oil this time around.  

The extreme bearish mood in oil has not been seen since I have been watching it and calculating the gold/oil ratio. My last extreme reading with the gold/oil ratio worked out to about 31:1.

Recent bullish consensus has also seen only 9% bulls present. 9% is a very extreme reading,  and checking back two months I have not seen a lower bullish reading in any part of my weekly report.  This report will run out by the end of January 2016.