Elliot Wave Count - Oil

As a geologist and former investment advisor as well as corporate finance associate for a Canadian investment house that financed resource exploration I have a big interest and fascination with the commodities market. In a few previous posts I have discussed the Elliott Wave count for oil, here (my count) and here (someone elses count). It appears I have the count wrong or that the retracement of Wave 2 is larger and it re-traces 0.618 of the Wave 1 rally.

Here is my new chart. If correct we are close to completing Wave C of the correction with in Wave 2 of the main trend. Or I am just complete wrong.

www.cme.com

Crude Oil - Where is the Bottom?

I had expected the bottom to be in the $41-42 range as stated here, here, here and here and the next few days will determine if I am wrong or lucky. However, I want to post a chart from a newsletter I read that was posted back in January that has appeared to be quite accurate so far. His target is $38.43 back and a bottom in late August. To his credit he also had the bottom in February at around $30 and a peak in June at about $50.

Market Oracle

Now compare that with the actual chart.

www.stockcharts.com

So if the January forecast continues to be correct, a bottom in the high $30's will form over the next few weeks and a rally into the $60s with a peak in November.

If that is the case we are close to a bottom. Only time will tell. 

Where Our Energy Comes From

Natural gas has over taken coal as the number one source of electrical generation. In the Q3/16 newsletter an allocation towards natural gas was added. This was more of a play on the potential for strong demand should a strong La Nina follow the strong El Nino. The last time this happened was the late 1990's and gas had a 500% rally. It is unlikely to be able to rally in such a manner this time as there is more potential supply than the late 1990's but gas could rally 150%.

US Global Funds

Data Continues to Surprise on the Upside

For all the doom and gloom out there economic reports have come in better than expected. In my quarterly newsletter we have been long US stocks indices for over a year as money is flowing away from Europe and the "battlefields" of Asia and Africa to America. I think that the fear of Trump will cause money to flow from the US to Canada and that was the reason for adding Canadian Stocks and this chart in a previous post to the most recent asset allocation in the quarter 3 Newsletter (which will be available on the web shortly) and open to subscribers when the new website is finished.

US Global Funds

Canada Should not Import this Much Refined Product

Maybe Canada should build a refinery as part of Trudeau's infrastructure plan?

Scotiabank May 6, 2016

Current Oil Rally Fibonacci Levels

If I have the rally correct in my oil price forecast and my current oil price chart then oil should bounce off the 61.8% retracement level.

www.stockcharts.com

Brexit and UK Stocks

The Leuthold Group compared Brexit vs. the exit from the Exchange Rate Mechanism (when Soros famously shorted the Pound for a billion in profits) and so far the results are similar, however, UK stocks started froma lower base in 1992. Will it be the same?

Leuthold Group

Reflation

I believe reflation is closer than deflation. I used a line in my oil price forecast along line of "Generals fight the last war, economists the last depression" and that is why deflation is the ingrained into the minds of Central Banks as an end of the world scenario. The below chart by Dana Lyons of J. Lyons Fund Management on his Tumblr page gives me more confidence I am facing the right direction.

You can read his excellent article on whether reflation is real here.

Barbell Portfolio

Paul Brodsky of Macro-Allocation Investments put together this excellent chart in a free edition, I dont have the research budget at the moment to subscribe to everything I want to but it is high on my list, of his MAI Views Newsletter, where he discusses "Owning the Tails".

Macro Allocation Investments

I think I can simplify the idea using a simple barbell portfolio where you still own the tails.

Canadian Exports

This map shows what the largest export good is for each nation in the world. Most people think of Canada as a resource nation, but it's actually autoparts that is the largest export.

Business Insider

Crude Oil Vix vs Crude Oil Prices

In my oil price forecast I suggest oil will head to $42 before ending the year around $65, but first we need to see the crude oil VIX spike. I expect that to take place around the first week of August. 

St. Louis Fed

Oil Price Forecast

I recently published a response to an excellent and well thought out presentation (I just happen to disagree) by Prerequisite Capital Management (found here) on discussing their views on oil going to $25.

Let me know what you think?

Oil Price Forecast

Oil Price Chart

The chart was originally created by Matthew Frailey of Break Point Trades in his commodity chart newsletter. I added a little to it as it seemed to match with the projections I made based on Elliott Wave Theory, seaonsonal and fundmental analysis (not all discussed or explained) in my Oil Price Forecast.

Breakpoint Trades

Canadian Stocks

I think the TSX is ready is going to outperform over the next year.

www.stockcharts.com

Position of Each Commodity in the Fundamental Cycle

Macquarie Research

Could 2017 be a Great Year for Oil?

US Global Funds

Buy UK Stocks and Short German Stocks

Back on June 29, 2016 I wrote a post suggesting Brexit = Y2K suggesting it was a non-event and stated:

"BUY THE POUND AFTER THE TROUGH. 

England may rid itself of Scotland and Northern Ireland (areas that receive more government revenue than they contribute) making England stronger. London, like Zurich, are both outside the EU. Both are the European money centres. Will finance go to Frankfurt? No. London will get stronger. England with out the UK (Scotland and Northern Ireland) will be the new Switzerland. Let the Pound decline, but get ready to buy English/London stocks."

The Pound has now rallied for 4 days. Business Insider in its normal hyperbole has used the word "surging". Maybe a little strong, as the cable is still down from the $1.48 region, but the rally is here and should continue (probably not all the way to $1.48 but $1.40 is possible).

Business Insider

The second part of my thoughts was being ready to buy UK stocks, but a lower risk trade in my mind is to buy UK stocks and short German stocks. I think the trade has more room to run.

www.stockcharts.com

Is the Fed Trying to Fall Behind the Curve?

In the June Absolute Return Partners Letter they ask whether the FED is behind the curve and display the following charts. I suggest we take the question further, is the FED trying to fall behind the curve? 

Absolute Return Partners

Absolute Return Partners

Absolute Return Partners

To quote from my recent Oil Forecast Report, which will be available to non-subscribers on this site and at www.whytecliffcorp.com shortly,

"The recent dot plot chart left some scratching their heads until James Bullard explained his new regime theory and how the FED should become reactionary (with a lag) and not anticipatory. Bullard wants the FED to fall behind the curve. Paul Krugman once suggested the way Japan would end its deflation is if people lost their “awe” of central bankers. Bullards regime theory is designed to do that."

Confluence Investment Management

I think the answer is yes. This could work well or end badly.