The Oil Algorithm

On one side we have computer algorithms, which are blamed for Dow 1000 point move, all the panic in volatility and the 10 dollar move on oil etc. On the other side we have the hands on Elliott approach, which does not need high number crunching computers. Orpheus has been covering Oil for since early 2005.

In May 2008 (oil made a high of 133) we wrote “The Oil Rocket”. We said “Nothing can rise exponentially, even if it’s OIL. The asset’s exponential rise is more an indication of an ending trend and not vice versa. The OIL rocket can never become a satellite, no asset can. And the almost ninety degree inclination to new highs is destined to collapse. Few Wall Street brokers looked at this as a great time to solicit mass mailing lists for OIL CALL options. Well we don’t subscribe to the OIL end era yet, but if the best broker suggests buying CALLS with such confidence, we definitely don’t know something he knows or something everybody knows. At this stage what we can see is a sentiment euphoria which is hard to sustain. The five legged fractal structure both starting 1999 till 2008 and the smaller five legged sub structure starting in 2007 seems complete. We don’t see OIL above $ 125 and it’s time for PUT and not a CALL. Oil should push to sub dollar 70 levels.”

While we talked about 70 dollars Oil while it was at all time highs, we also mentioned that after the fall the move up to 300 should begin. In the feature “Oil 2012” carried on 15 Aug 2008 we said. “Oil is headed to 300 and higher till 2015.”

Oil fell to sub 40 in Dec 2008. In our 18 Dec feature on WTM vs. Brent we said “Above 40 reversal on OIL does give us a good turn around case. And we continue to look higher on OIL.” 26 Jan 2009, in “Oil ready to reverse” we said “50 is a psychological level and a push back up to 50 is an intermediate reversal. A move up on OIL could push OIL up in higher territory near 70.” Oil move up till Jun 2009. In Aug 2009 “Gasoline Futures” we said, “Oil is completing a flat and after a dip down should push up to new highs”. Successive reports on Oil on 28 Oct, 20 Oct mentioned “Prices should continue to push higher till 90”. Dips around 75 levels were pointed out as corrections. 16 Nov 2009 we said “ The sub minor correction should end soon and push higher to 85-90 levels”.

On 23 Nov 2009 update we mentioned that a termination pattern ending diagonal was in. On 14 Dec we said “another attempt at 80-90 prices before turning lower or is the top already in.” 10 Jan 2010 we talked about potential oil topping with targets back to 60. 9 Feb, “Chevron tops at 80” was released. 17 Mar 2010 we said “Oil was completing wave B up after which the C wave down should begin” 14 Apr “Oil remains topping”. 28 Apr “Intermediate reversal is here”. 02 May Oil topped at 86 in our anticipated resistance zone 85-90 and pushed lower in one week 10 dollars lower to 75.

The current ongoing move on Oil should move to anticipated targets till 60. As ending diagonal formations generally retrace completely. This should be our last and best opportunity to buy Oil for a move up till 2015. Oil 300 remains our preferred view. What this means for economics? What this means for society? What this means for inflation is again not too hard to understand. You really don’t need an algorithm for this.

For regular updates on Oil and other energy assets subscribe to Orpheus Energy Research. Enjoy the latest WAVES.OIL

Trif Rares, the contibuting columnist for the Waves Energy. Rares got interested in forex trading and followed it up with an early interest in technical analysis. While practicing technicals he covered many other global assets and found similar patterns and formations across global assets. This is when he moved to Elliott Wave analysis. Now he specializes in energy assets. Rares graduated in finance and followed it up with post graduate studies in management.  He combines Elliot Wave with classical technical analysis tools.  He correctly depicted the May 2010 top in Oil and is forecasting a large multi year bottom in natural gas. You can follow up his work on Ticks Global and Orpheus Energy Research reports.

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WAVES.OIL is a perspective product published once a week. The report covers BRENT, WTM, XLE (Energy SPDR), top energy stocks, Natural Gas and related FUTURES. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators. REUTERS RICS: BRT-, WTM-, .XLE , CVX.N, XOM.N, IPNG, NG-P-CAL

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