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Beware the Slippery Ways of Crude Oil

Here's what happened after "crude optimism" surged to 90%

by Bob Stokes
Updated: April 16, 2019

The price trend of crude oil tends to get slippery just when most observers believe prices are on solid footing and headed higher.

Think back to the summer of 2018.

This is representative of crude oil headlines from around that time (July 6, Bloomberg):

There Are Fears About an Oil Spike Above $150

However, our August 2018 Elliott Wave Financial Forecast took a different stance. Here's a chart along with the commentary:

CrudeOptimism

Oil carried to $75.27 on July 3, coincident with a rise in trader optimism to 89% (trade-futures.com). Oil then traced out five waves down to $67.03 on July 17, providing the initial indication of a trend change. A three-day bounce retraced half of the prior decline, and then prices moved net sideways until this past Monday. Observe on the bottom graph on the chart that while oil moved sideways, traders become more optimistic.... Optimism surged to 90%, higher than the level attending the July 3 high....a classic trait for [this] wave.

Lower oil prices are highly probable.

It took a few weeks, but prices soon trended sharply lower -- 45% lower, as this updated chart from the April 2019 Elliott Wave Financial Forecast shows [wave labels available to subscribers]. Here's the commentary:

oils

Our August issue noted a high level of trader optimism and said that the next opportunity for a trend reversal was at hand. Crude oil carried to a high at $76.90 on October 3 and then tumbled 45% to $42.36 in late-December. [Following] the bounce since then... a strong consensus is that crude prices are headed much higher.

And, once again, various news sources agree:

  • California Gas Prices Expected to Spike (KQED, March 26)
  • Gas Prices Expected to Keep Climbing (The Enquirer-Journal, April 1)
  • Banks Lift Oil Price Forecasts for 2019 (The Wall Street Journal, April 2)

Keep in mind that sentiment is only one piece of the puzzle. Seeing the market's Elliott wave picture can help you pinpoint the turn with greater precision. The current, April issue of our Elliott Wave Financial Forecast shows you oil's Elliott wave setup -- and spells out what's likely next.

Learn what our Elliott wave experts have to say through a 30-day, risk-free trial. Look below for details.

Do More Ways to Invest Make for Better Investing?

Yes, investors from a few generations ago would be astonished.

Let's just look at mutual funds and exchange traded funds: In 2017, there were 9,356 mutual funds in the U.S. alone, according to Statista. Plus, the number of exchange traded funds in the world reached 4,535.

Having all these choices may seem like a good thing to some investors.

But, EWI has a different take: Our analysts see this explosion of investment options as a sign of financial optimism on steroids.

Learn what our analysts expect next for stocks, bonds, gold, silver, the U.S. dollar and more. Keep reading to find out how you can tap into their insights …


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