HIGHER HIGHS COMING: OIL MOVING INTO A CORRECTIVE LOW

higher highs coming

I think I can say with a good bit of confidence that oil has begun moving down into its daily cycle low, and that higher highs are coming.

I would think at least a 38% retracement would be a minimum target, maybe deeper. This is the time where the fundalmentalists and technical traders will start calling for new lows.

That’s not what is going to happen. Once the correction has run its course, oil will turn and make another leg up. It will break through the 200 DMA. Higher highs coming.

Only cycles analysis can warn you of this kind of fakeout move. The technicians and fundamentalists will get it wrong again, so be ready to buy energy again soon.

Like our new Facebook page to stay current on all things Smart Money Tracker

91 thoughts on “HIGHER HIGHS COMING: OIL MOVING INTO A CORRECTIVE LOW

    1. Gary Post author

      I’m holding ERX until I think stocks complete their IC rally. Maybe a top in May.

  1. Jay

    The Oil collapse MAY be over, but, even if that holds true, I still suspect that Gold will revisit the 52 week lows again. This is a traders market, not a buy and hold market.

    1. Gary Post author

      No way gold retests the lows. I’m predictring a very erratic move down into the ICL. It will chew up bulls and bears alike but gold will not retrace further than 50% of the rally.

      1. JP

        Hey Gary,

        on manipulation of the Gold price: Graig Hemke is on the KER report today. You got a BIG proponent there. His assessment is spot on. Gold Market = UTTER manipulation. It’s just insane how this paper market operates and is still allowed to operate on the Comex.

        JP

  2. Stevie

    so wait, being oversold does not translate into a dcl?
    Now you are saying a correction is coming. Great just great!!

    1. Gary Post author

      There is always a DCL and an ICL. Sometimes intervention can stretch them in the stock market but they are pretty regular in oil and gold. Oil is in the timing band for its DCL and it looks like it is moving down into it.

      When sentiment gets a little too bullish price needs to correct to work off that sentiment.

      Did you get a subscription to sentimentrader ?

  3. Joseph

    I believe a Soft April and May and stronger June July…… To many folks saying go away in May…. Like in 2015. Ya were gonna test SnP 2000 or DOW 16400 or so but then test highs and OIL will hit our 50-55 bucks or so….. I sold all my major longs in 2014 when we first hit 2020 and we ran all the way up to 2134…… Played it safe….. Left money on the table but…..I feel the same now, Tough market. !!!

  4. Au79

    Earl will hit the teens before this is over. And after that it will stay fairly low for a lot longer than most people think, same as deflation which will be with us off & on for years.

    1. Gary Post author

      I’ll be willing to bet a burrito we’ve seen the lows in oil. The three year cycle is getting much too long in the tooth for there to be another leg down.

    1. Gary Post author

      Maybe to avoid a dip down into a minor daily cycle low, but once that is finished (and they rarely last more than 5-7 days) stocks are going to retest the all time highs. Look at how close the Dow is already and this is only the first daily cycle.

  5. daniele

    gary, you wrote on the chart “.. at least a 38% retracement would be a minimun target..”, but looking fibonacci’s levels on charts, seems that is a maximum target (32,16$).On inverse count 38% would be 36,13$ (0% at 42,46 and 100% at 25,80).Thanks.

    1. Jasen

      I was wondering this myself. Shouldn’t the 100 and 0 be switched to get the retracement of the move it just made or is this not how fib retrace works?

  6. j

    cmon, Gary, Bashing TA again. Werent you screaming “run away move run away move” , just one day ago? Youre screaming end to the bear market and a run away move because of a short term trendline touch? and a% day oversold RSI? TA would have never let you believe that. Wonder how many people you suckered into that breakout? we’ll know by close today if you were wrong. Im assuming youre still all in since you like to be in early and dont mind weathering any and all drawdowns when your right? Or did you bail? While youre cycles may work for you occasionally, they obviously are easily interpretive, TA actually works for others just as well. Just stick to youre analysis and not attacking others and you may garner more subscribers.

    1. Gary Post author

      I posted yesterday that I made a portfolio change in the SMT portfolio.

      The most bullish thing a market can do is to stay overbought. No one should be buying because of a possible runaway move. We don’t have confirmation yet. And obviously you don’t buy breakouts in a runaway move, you buy once a measured correction occurs.

      I’m still hoping for a normal corrective move down into a DCL but the fact that the market hasn’t been allowed to follow oil down is concerning. It looks like the PPT is determined to force the market to new highs and squash any remaining selling pressure from the aborted 7 YCL.

      1. j

        You do an excellent job with your tools, no question, and you’ve always had a “bigger” pucture of the markets even since way back when you started this blog. Keep doing what you do, it’s working, just don’t let the negative crap at the other sites, (which I’ve never read) get to ya, your way above that.

    2. tulip

      J – its not Gary initiating it.. its ker…
      its usually al with his ‘cracks’ he’s a coward. today its jay t who has been conciliatory before..
      the gilbert guy has ben highly aggressive w Gary….. it is a 2 way road..
      they are envious & very childish. Cory has been a gentleman. The only adult in this situation.

      1. j

        I understand completely, although I’ve never read those sites, sometimes things like that get to everbody. Gary does a great job in his analysis and he’s usually above that crap. Haters gonna hate, lol

    3. Anthonyo

      TA means hell of beans nothing in highly manipulaive markets like staock market; wake up and smell the new century. This ain’t the 70s baby.

  7. Stefan

    Looking at IBB in EW terms the wave structure is not complete.

    A lovely impulsive 5 wave up is complete. Now we are looking at the corrective phase A-B-C, the C is very often 5 waves down.

    A=OK
    B=OK
    C= 1st wave = OK
    C= 2nd wave = OK
    C= 3rd wave = In Progress

    So watch out for an ongoing correction here for another couple of months !

    1. Bill

      I certainly doubt it, the whole wave theory has failed me more times than I can recall, hence the reason I gave up on it….

      1. Stefan

        It’s not a prediction tool, but a scenario tool. A guidiance were to go. Many higly skilled analyst out there are using EW. Maybe it works better with the big waves? I’ts difficult to recognize the main from the sub wave structures. Human beeings is without a doubt acting and behaving in a fractal pattern. Small repetitative steps that looks the same no matter the time scale.

        EW is tool that tries to describe the fractal nature of charts. Of course it’s possible to brake a wave structure at any time.

      2. Gary Post author

        Bill,
        I would have to agree. EW is completely worthless. Give me 10 EW traders and you’ll get 10 different wave counts. I have several that swore up and down that they knew the correct way to count EW and that gold still had a wave 5 down. That was right before gold bottomed and the new bull market began.

        Like I said completely worthless. It’s just an exercise in data mining, nothing more.

        1. Stefan

          Please Gary you are smarter than that. Three totally different analysts from Sweden/Ireland and USA came up with almost the exact EW count for Gold.

          If you believe in Fib you will also believe in EW.

    2. MuffinTop

      IBB is in fact forming a base right now and getting ready for wave 4 β€” all the way back up to Resistance πŸ™‚

      Not that I would normally put much stock into EW.

  8. Bill

    FEDS Evans

    Fed is close to full employment target
    Continued caution is called for due to low inflation
    Sees one hike in the middle of the year and one at the end
    Fed can move at any meeting
    Recent inflation data has been firmer
    Wants to avoid a situation where negative rates are needed

    1. Richard

      Bill, Fed is boxed in a corner. It is a circular feedback loop. If they don’t raise, that foreshadows economic weakness. If they raise, they have an issue with rates in Europe and strong dollar effect.
      Notice how they no longer follow their mandate?
      But they are worried about China, but then also said China was not a problem, even though they are battling capital outflows.

  9. jacob 2

    Oil here comes under my heading of ” more trouble then it’s worth”. Own oil stocks, bio, materials, emerging markets. Confess to no knowledge of cycles but seasonality suggest mid Feb – September strong months for oil. Why try to micro manage this? Like gold and everything else too much trading makes me tired. .. buy and hold. Let the macro trend be your friend.

    1. Gary Post author

      I definitely think one can buy and hold for the next 4-5 years in gold. I suspect oil will rally for another month or two and then enter a long term trading range. Probably more of a traders market.

      1. Enoch

        it will be interesting to see what happens if xbi/ibb breaks above yesterday’s high. we could still be in a larger degree 3-3-3 with yet another leg down. but one of these breakouts will be real

        1. Bill

          I’m sticking with the upside call, as much as it pains the shorts, bio-tech is held by many a pension fund as well as the switch pullers, I say the weak hands have been cleared at this stage. If the short side is strong and one sided ( IE vulchers picking at the bone marrow for scraps ) they will get their asses handed to them in the usual fashion…

  10. Gary Post author

    The dollar should be getting close to it’s final ICL. I knew the calls yesterday for the bottom were early. The dollar needed to break the recent low. But it’s now on day 33. As soon as a swing forms we should have a final intermediate cycle low to be followed by at least a month or two of erratic but higher prices.
    That will drive gold down into it’sown ICL. I also expect that move to be erratic and untradeable. With many counter trend rallies to suck in longs too early.

    After a big move like we just got in metals markets need time to consolidate or correct before going higher. The mistake many traders make is in assuming what just happened will soon repeat. It almost never does.

    The dollar was a perfect example. After that huge rally everyone started calling for 110 or 120. Instead we’ve gotten a year of going sideways.

      1. Gary Post author

        You should wait until stocks deliver a correction into a DCL. Patience is one of the hardest things for any trader to learn.

    1. david

      Gary,

      When USD rises, usually all commodities goes down, even so is your prediction for OIL to go up, is the ICL so strong?…..

      Dave.

  11. Walt

    That dollar index rise over 100 that was thought to be coming was predicated on 4 rate raises this year Gary . Many were wrong footed with the Feds recent dovish change of heart despite low unemployment and improving wage growth .

    1. Richard

      Yes. They missed the forecasted two increases in 2015 and are now a quarter of the way through 2016 with none, yet alone 4. According to the press conference, do you really believe, if you believe in the FED, that things will change much before the end of April or even June for another rate increase?
      Good luck. Fed boxed in a corner. Among other things, cannot have strong dollar.

  12. Dan

    Bought 1% more in June OTM UVXY calls, (2% total cost) and 1% into LABU.

    Enough bullshitting and trolling around, I agree. We’ll see who is right at the end of the second quarter.

  13. dcBear

    Hi Gary,
    I joined yesterday…using a very small portion of a huge gain from LABU (thank you for that)… but I’m wondering, who is Paul Marks, why should I care, and what’s your take on his April outlook? thank you.

    1. Gary Post author

      He’s a big mining ex in Australia. Don’t ay any attention to his calls. He’s been making these same outlandish calls for over a year now. It would require a 10 sigma event for any of his predictions to come true. You can read his comments but do not place any trades based on his work. Several have already ruined their accounts following his pie in the sky predictions.

  14. Gary Post author

    If stocks are going to make a move down into a DCL the most likely spot for the top would be on a gap up tomorrow after the jobs number is released.

  15. pepe le pew

    LABU is on fire this morning… I take it from your earlier comments, Gary, that trying to trade LABU around a DCL in stocks might not be worth it, as it may not follow stocks very closely. Well, if biotech can hang onto these gains today, it’ll be a bit easier to weather a drawdown from a strong hand position if/when a DCL comes.

    1. Gary Post author

      If stocks do give us a recognizable DCL then it will probably pull down biotech as well. But remember DCL’s only last 5-7 days so any pullback would only be temporary. And once biotech breaks out of this bottoming pattern it’s going to run for at least two months. So one can buy into overbought conditions if you miss the breakout.

  16. Gary Post author

    The bears are sweating again today πŸ™‚

    it’s just not worth the effort to sell short. If you think we are about to go down just step aside and then buy the correction if it happens. If not at least you didn’t lose anything.

  17. MuffinTop

    Little birdy told me that Subscribers were advised to ‘Sell’ LABU yesterday Gary my darling, which I would like to point out is a little bit out of Character coming from the same guy who’s repeatedly told all of us on this forum that you didn’t care about a minor ‘drawdown’ and were more interested in the fact that LABU was about to take off like a mothafucka!

    Yes flexibility is important but you gotta be consistent with your approach dude or else you can’t preach haha πŸ™‚

    Don’t worry I still love ya..!

    1. Don

      Gary, is it true that you have advised your subscribers to sell LABU? I hope not given that it’s moving up sharply today.

    2. Stevie

      It always start off minor and then becomes a major drawdown. Again, today Gary could be a bull and tomorrow he could be a bear.

      Dude sells newsletter for a living.

  18. Irwin

    The reason I quit reading Trader Dan and the guy in the Rabbit Hole is that they can’t mention “gold” without adding something about religion, community, herds, and sheople (usually spelled sheeple).

    Just stick to analysis and ignore the various and sundry schittheads.

    “On March 30, Silver Wheaton Corp. announced that it entered into an agreement with a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets, CIBC Capital Markets and Scotiabank, pursuant to which they have agreed to purchase, on a bought deal basis, 30,125,000 common shares of Silver Wheaton at a price of US$16.60 per share, for aggregate gross proceeds to Silver Wheaton of approximately US$500 million.”

    “In addition, Silver Wheaton has agreed to grant to the Underwriters an option to purchase up to an additional 4,518,000 common shares at a price of US$16.60 per share, on the same terms and conditions as the Offering, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering to Silver Wheaton will be approximately US$575 million.”

  19. Herman

    Gary, short and longer term I disagree on oil. EUR/USD has climbed the wall of worry, is breaking through resistance and headed for 1,20. USD depreciation will pull oil short-term higher, despite current fundamentals. This countertrend move will reverse when EUR/USD hits 1,20 and reverses (end of countertrend rally). Then, oil is headed for 10/barrel, later this year, when effects of the supply glut and shrinking storage will greatly be exacerbated by tanking economy, related energy demand, plus (involuntary) debt liquidations.

    1. Bill

      Why would you do something like that? its not like you’ve made any money thus far shorting, your just bouncing around…now LABU I made money today…

  20. pepe le pew

    I just realized that (post split) there are only 6.7 million shares of LABU. If biotech indeed breaks out, expect LABU to perform at a better return than 3x; with so few shares to go around, a premium will certainly be placed on it.

    Don’t go counting your chickens, just yet tho’……..

    1. JaninWales

      And if we get a DCL in stocks and LABU goes down watch people unloading those 6.7 million shares rapidly.

      1. Gary Post author

        That’s what I’m worried about. We got out of LABU at basically breakeven and now I want to see if the jobs number tomorrow will be the trigger to finally get a DCL. If so then I’ll look to buy back LABU and a market index ETF at the bottom of the DCL.

        If not then the runaway move is back on the table and I’ll have to chase.

        I’m not terribly worried though. the size of the bottoming pattern in biotech suggest the rally will last at least 2 months once it really gets going.

  21. MuffinTop

    One more word on LABU for those of you still holding on (including myself). Everyone is expecting the SM to drag LABU down into a DCL and that could very well happen but please bear in mind that LABU hasn’t really been following along and could instead hold steady heady, so for those of you still waiting on the sidelines and/or waiting to get back in, you better be quick on the trigger if and when the opportunity presents itself.. We had record volume on Tuesday and Wednesday and today is catching up pretty quick πŸ™‚

    Big money pilling in…

  22. Enoch

    xbi closed above the 50 day moving average two days now, something that hasnt happen since testing it for the first time early in the month

  23. Joseph

    Gary….. You have a lot of patience bro….
    I don’t post much anywhere but enjoy your feedback and will join your pkg when the time is approiate for me but holy smoke folks, stop busting his balls….. Heck,, evreyone has a differenrt entry point, size of investment, % of portfolio, risk tolerence etc…etc… Heck when I day trade your position can change in a matter of seconds due to many factors….
    So if the guy said take some profit off the top via LABU…..then what’s the pblm……
    Anyhow, DONT PUT ALL YOUR $$$$ IN Market as it is one of the hardest ways to make $$$$
    Buy a small property and Rent to diversify your assets instead of just the Stock Market

    Take Care

    1. MuffinTop

      I think you missed the point that I was trying to make in my message to Gary and I’m not gonna bother to re-iterate.

      I would also like to point out that I’m one of his biggest supporters but will always call bs when I smell bs. The only difference between me and all the other ugly Trolls on this site is that I do it with a certain level of Respect — meaning I don’t go out of my way to trash the guy!

      Let that be a lesson for all of you keyboard warriors out there πŸ™‚

      1. Bill

        Good post Muff, Gary presents and idea you take said idea and use it to your advantage, and that’s what we have done no man or women can predict with 100% certainly which way we are going no one it and idea. Like you inrespect Gary either way, it’s his site his dam rules no one likes it hit the home button and your problems are solved.

        Cheers Muff

Comments are closed.