Wednesday, August 26, 2009

Counting Waves


I will be shifting focus from counting Elliott Waves to counting Atlantic waves this afternoon. Expect my contributions to Analyze This to be minimal over the next few days.
In the meantime, the important feature is the Big Picture; WTI, Rbob, and Heat have either made major tops or are very nearly at a major top.

The WTI and Rbob corrections, have both taken roughly 8 mo.s to to correct the 5 mo. impulse wave down. The Heating Oil reversed that relationship, correcting for 5 mo. vs. the 8 mo. sell off.

Most of these markets are in wedge or triangle formations, mimicking the SP's perhaps (or vice versa). While there may be more permutations ahead, the proximity to .382 retracement targets in both WTI and Rbob limits upside potential, at 76.33 and 2.20 respectively.
Risk to the downside is however significant. Another impulse wave down whether a "C" or 3 can be expected to take out the lows made last year. BUT even if we get a "B" wave back down, a .618 retrace puts WTI at 48.66.

Taking out the rising wedge support lines in these markets can be expected to attract momentum. Not far off in WTI and Rbob. Heating Oil is already breaking down.





Lately I've been thinking a lot about the cause and effect of commodity price movement on the "commodity currencies", USD, and World Equity markets. They probably all reflect the liquidity pump, but perhaps some early than others, and on different days to varying degree kick off the feedback loop.

Off to catch the next wave.

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