Oil is in a very large accumulation area. There was a three wave down, spring low, major bottom on 2/11/16. I did several posts, leading up to that bottom, regarding my concerns about crude, this is chronicled here….
From January 2015, “Oil is not remotely close in time nor in price to any major bottom.. I will emphatically state that oil has much further to fall – $35/barrel minimum. And this will drag on for years..There is almost 0% chance of a huge rally in oil any time soon. We have to have a massive selling climax FIRST and that is no where close. A $35 minimum low for oil and a shot at $20 later on and the ramifications from this will drag on for many years.”
….until December 2015/January of 2016, when I started discussing my bullish views –
….”At the same time, the analysts who were bullish at $100 are now looking for $20 or even $5 per barrel. So oil is beginning a bottoming process…Also, to disagree with the consensus out there regarding deflation. I have been waiting patiently to go against the consensus about deflation and that time is almost here.”
Accumulation areas in major markets, or individual sectors and stocks, are what set up the next beautiful uptrends. Oil is no exception.
As I said 3 years ago, this will drag on for years. Well, it’s been over 3 years since then, oil is doing a wonderful job of strengthening itself, the selling waves are part of reaccumulation now. Why? Because we are on the “upside of the accumulation curve”. Crude came back up to its top level accum zone resistance, it broke out of its first accum phase, a retest of that would be the next great opportunity within the “upside”, the oil stocks are lagging tremendously. I have an area there in XLE which to me would be the next high probability area.
Markets are about trade setups and probabilities. PERIOD. Not guessing, predicting, babbling. But we have extremely highly paid babblers who continue to suck off of markets, this has gone on “forever”.
There is always a big competition between who are the most incompetent people on Wall Street – the “economists” or the “analysts”. Real tough call actually. Why they even have jobs is unknown, at least to me. In my floor trader days, we would see these clowns around here and there. And yes in my early days, I was as incompetent as one could be, but no one paid me to be incompetent. (It took a long time to become competent, should have become an analysts I guess.) Many of these incompetent analysts we see all the time have 7 figure incomes. Un-fracking-believable.
Louise Yamada is treated like royalty. She is absolutely comical, but she is a CHARTIST, so she can see into the future, as opposed to the rest of us who know squat about using charts. We are not CHARTISTS.
In this idiotic interview on CNBC, the Queen said “if, maybe, possibly“, at least 10 times. Her best one liner –
“If this doesn’t break $58 and instead you see the price move up through $63.64, that would abort the trade.”
Henny Youngman would be proud.
That’s why she gets the big bucks.
Oil could soon see the mid-$50s again, based on Louise Yamada’s chart
CNBC.com
Wall Street technician Louise Yamada sees a pullback scenario unfolding for oil, which has rallied briskly this year.
She drew her conclusion based on a chart showing West Texas Intermediate (WTI) crude‘s trading patterns since September 2016.
“Over the past couple of months, you have what’s created a descending triangle with lower highs on the rallies, and $58 [a barrel] comes in as a support level for this little triangle. So, on a short-term basis if $58 is broken on the downside, you could see the price slip,” Yamada said Thursday on CNBC’s “Futures Now.”
In that situation, she sees levels that could fall to where the two moving averages are interacting on the chart — at $55 a barrel.
“If it were to go further, then the next support would be close to the uptrend, around the 2016 uptrend around $53,” said Yamada, who runs Louise Yamada Technical Research Advisors.
Yamada points out the momentum indicators are negative, so odds are in the favor of a very short-term downturn before going back into rally mode. Since Feb.13 the commodity has been hugging the low $60s level.
It’s not her first short-term bearish oil call on “Futures Now.” Late last May, Yamada predicted a dip and it materialized. Three weeks later, WTI crude was down by about 15 percent before rallying again.
This time around, Yamada sees only one factor that could prevent an oil price drop to the $50s.
“If this doesn’t break $58 and instead you see the price move up through $63.64, that would abort the trade.” Yamada said.
Hi Scott, sorry my question is unrelated to your oil article.
I have been reading up on the Wyckoff Method and considering signing up for one of their courses. As I look his method over, buying on breakouts from accumulation areas, it appears to me to be primarily suited for swing trades and longer term positions, it that correct? I do see how you apply many of his principles to day trading on momentum, but his full approach is more long term based, right?
Yes, they are focused on a couple weeks to years. And that is great, a lot of people it will fit their style and circumstances better. But the great thing about the stuff I share is that it can be transferred to all time-frames, and move it around within the technical conditions of whatever the time-frame is that you’re focused on. I’m not saying this is at all easy, but it is a great way to approach markets and trying to recognize trade setups. Of course the trade setup thing is where we need to be.
So then to point something out. You know how much I respect Mr. Wyckoff and the whole organization. The problem is this. I have been around several, about six, true Wyckoff “masters”, truly. But only two of them were outstanding traders, the other guys, no offense to them, sat around and analyzed WAY too much. Good guys, but they just couldn’t seem to get the academic perspective out of their mindset. The Wyckoff course, to me, is too much “book learnin”, it is too much to take in at once. I got bogged down with it, and didn’t really get the point of all of this until it hit me about this is just probabilities. It’s not about analyzing, the analysis “sets up” the setup so to speak. So that is why we are analyzing. Too many people stop at the analyzing, and they don’t take the next step, and that step is the whole point of this. The analysis is not the setup. Mr. Wyckoff does get at that somewhat, but I think the Wyckoff guys for some reason don’t get that part. The bottom line is that I learned WAY more about analyzing via actually trading, and going over thousands+ of charts – the winning setups.
Perfect, thanks for that Scott. As I looked over the Wyckoff course outline today I had that exact same feeling, the material is so detailed I could get lost in it. I’ve done the same thing, thinking more analysis will make me safe, while in reality it just obscured what’s really going on real time. Thank you so much!