Wednesday, January 16, 2019

WTI Update- a 4 Handle Future?

From my last post Dec 28, "Before we get into next year, short term the WTI has a good deal of upside risk to between $48 and $54, with $51.50 being my favorite cluster of resistance/ and a measured target for a 4th wave."

Hourly
click to enlarge
As can be seen, WTI is in the high side of that range and evidencing some recent weakness.
It does have a "look" that could produce a higher high at the top end of the range there, or even somewhat higher.  However the greater risk, short and medium term is to the downside from here. 
It may turn out that a "b" wave chop down is in the cards with a subsequent "c" wave up,  but that kind of move can be deep and retest the lows .
See above Fib retracements, particularly the .618 and .78 


Longer Term Risk For Bulls AND Bears

The Decline
click to enlarge

While the labeling of the subwaves above can be argued,  including whether the wave down is completed yet or not,  the $34 thrust down is probably NOT a completed correction.
At least one more wave down can be looked for, of similar degree, even in a "correction".  Even if this bounce carries as high as say $65.
However.

The Elliott count above is a not quite complete impulse wave down. So longer term likely more to go with lots of 4 handle time.  

Of course in Elliott Wave there is always an ALT possibility. 
Have fun.








Wednesday, January 2, 2019

Will It Hold? Elliott Wave Outlook 2019 and Beyond

Time to examine the likely structure of the SP500 move down and it's long term implications.

10 yr. Weekly 
click to enlarge

 I usually write assuming a pretty passable familiarity with the basics of Elliott Wave Theory on the part of my readers. A summary, including both pros and cons, can be found here.
 A post discussing the entire long term move up, it's structure, and why it had many features of a completed move, can be found in my Sept. 24 post Top of the Pops; Ring Ring for context.

Keeping it simple- the 20% pull back, coupled with that 10 yr. trend line is providing support...for now.  I do believe we are currently in a 3rd wave down, which is where you would expect to be in the count, to take out that trend line.
I have to say that labeling the sub waves down from Dec 12 to 24 is VERY difficult and suggest to me that they are a series of 1, 2 's in there and the -3- of 3 is still in front of us.

2 Yr
click to enlarge

Why It's Not Just a Corrective Pullback

The Christmas Collapse took out the lows for the year, the .382 retrace,  and the .50 retrace of the (5) of 5 of V of the GSC. That deep and powerful move is NOT a correction to the last 2 years' move up; if it were, it should have held at the 2530 mark.  At best it MAY BE a correction to the next larger degree, the 5th wave beginning Mar 2009. 

10yr.
click to enlarge

The 4th wave of the next larger degree (4) carries all the way down to 1800 ALSO coincidentally a 50% retrace of that 5th Wave. 
So A very bullish minor correction would  retrace into the range of the (4) wave at a bare minimum 2000 at the .382 retrace, or down to the 1800 level mentioned previously. 

However it would be remiss, especially under the circumstances, to leave the impression that a pullback to 2000 or 1800 is the high probability outcome suggested by Elliott Wave Theory.

The Beginning of the End

The high of a Grand Super Cycle is thought to be reflecting and accompanying a "civilization peak". The ensuing reversal could be expected to last decades if not longer, and be marked by reversals in civil functioning, societal cohesion, global trade, law and order. In short the reversal of the last  cycles' progress. 

 IS THAT what we are starting to see?



I would argue absolutely yes; in fact in many capitals including our own, the term "globalism" is being used as a pejorative. We are rolling back the previous decades rules and regulations, and dismantling civic agencies and institutions like the State Dept. and EPA. Our President AND his supporters, are attacking our Allies, the FBI , the "deep state", and the Fed. These are the structures that accompanied and supported the ascent of our civilization and our leadership of western democratic capitalism.
These reversals of the progress of the last 50 yr.s are exactly what you would expect to see in a Grand Super Cycle correction.

And so as evidence piles up that we are beginning that multi decade slide downwards, it would be shortsighted to look for a bottom on the SP around 2000 or 1800. While one or both probably will provide short or medium term bounces, the most likely outcome in the end, would be that eventually markets will cease to function as the institutions that support them collapse. 
We probably have some time before that but... collapse is quick.

The last 4th wave of lesser degree (2 lesser), took from 2000 to 2009 and was a .61 Fib retrace at the lows of 666. You will recall that all our major Financial Institutions were collapsing or about to collapse at those lows. I would not hold financial assets, even shorts, until the lows. The 2000 A wave collapse took 2 years, the 2008 C wave collapse had most of the damage done in 1 year. 

A .618 pullback from the highs puts the SP at 1127. 
A .78 pullback targets 649

The 4th wave low of 2 lesser degrees is 666.

 Elliott , fractals, etc are easily misinterpreted and miscounted. The dim past and it's sketchy data are not reliable. Hopefully the Grand Super Cycle is yet to be completed and we'll all be re labeling everything in 2020.