Elliott Wave 5.0 "Reboot"

Monday, March 21, 2016

WTI Crude Oil Price And The Next Recession!

I was looking at other crude oil wave counts and came upon charts that show the crude oil price and  economic recessions connections.  This helps to confirm that price forecasts also have fundamentals attached to them. Peter Schiff  has been on a rampage as of late, warning of the end of the world as world economies and the monetary systems are going to implode.  

Maybe so, but what is going to happen after that, is far more important. We have had nothing but doom and gloom reports come out, but nobody talks about the boom cycles that are sure to follow. 
I am sure when all are pessimistic and depressed thinking is setting in, all those smart contrarians will be bullish and positive as they know that a bull market will return. 

Gold could be on a run right along with oil and when that becomes more obvious to the mass media, then I would expect the shrill from Peter Schiff to increase as well. 

When oil has soared it seems to peak out at recessions, and then as the economy picks up the price of oil crashes.  We are going to get a recession, but the speed that we get there could be a whole different ball game. 

I created this chart, but it is a hack from another chart. You can find this information with any Google chart search.  So if we are to believe that oil will rally past $115 again, then there is an extremely good chance that another recession will happen.  I would even bet that the severity of the next recession will be tied to how high the price of oil actually goes. 

Don't bet on this rising oil price as being good for the economy as it will eventually have the opposite effect. 
It would also be a safe guess that once the experts call this oil move a secular bull market, then the so called secular bull market will also be coming to an end.  The majority, or the herd will never turn fast enough as fundamentals are lagging indicators at best. 

All the bearish fundamentals came out in full force last year which was about 6-7 years after the major price top in 2008.  It took about 8 months in late 2008 for the mass media to "see" all the bearish fundamentals as another glut appeared out of thin air.   
From a Peak Oil shortage to a world glut all within a year and the experts missed it all. 

I thought I would add the intraday price action as well  with this May contract. 

I may be a bit early, but I will work this as a Minute degree impulse and in order for it to fit into the bigger picture I will need some great looking extensions in the 5th waves.  Looking for support somewhere at the previous gully before oil would crank up again. Of course an extension can happen at any time, so we must always be on the lookout for that. 

Every "ABC"crash we get in a bull market is a  "falling knife "  so only experienced traders will ever take advantage of it.  In conventional terms it would be called buying on the dips and not too many traders even practice that effectively.