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Yes, for sure, but when?
Why it is that round figures loom large? I am not sure why US$100 is so important and $US105.72 is not. Why $US105.77?
Well it is the third Wave Five in the 30-week Elliot Profit Source chart I have selected. I like using short-term periods as it gives a near-term perspective. I am not sure it is useful to look 300 weeks out, which is the standard time frame used. That is almost six years away!
But take a look at my chart:
click chart for more detail
The third Wave Five is $US105.72 but I am never really too swayed by the third Wave Five. It may happen, but it would be in a future stage of the market move for oil. So let’s focus on the first and second Wave Five.
From practical experience I have a high level of confidence in the first Wave Five projections, and unless that market is trending very strongly I will look to take profit around those levels. I generally don’t want to risk a market pullback. Sorry to mention the ‘p’ word, but I do not wait for price to hit the exact point before taking action! Contrary to many traders intent on precision I am happy to take profits and make money as being exactly right is not so important to me.
Wave two is $US92 a barrel. Sure it may happen but this far out I would not hold a strong view about that level.
Not that the fundamentals concern me in my personal investing, but many others may want to contemplate: what are the sort of factors that may trigger a second Wave Five?
This really is crystal ball stuff as there are so many unpredictables, but we do know that over time the big moves in oil have been a consequence of ‘X’ factors such as Hurricane Katrina in 2005 and the September 11 attacks and we have no way of anticipating these sorts of events. I can’t tell you what the next one might be, and it does not really matter, but we do know that it will come without warning.
Before oil heads to a new high we may also see a retreat. That is the way markets are.
So we might curse the pump but you can’t help but like this volatility.
Enjoy the ride!
Tom Scollon
Chief Analyst
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