Bob Prechter's Elliott Wave Perspective on Oil Prices

-- Downstreamer (downstream@bigfoot.com), January 08, 2000

Answers

...and the text...

I can't cut and paste or link in because its a passcoded subscription deal in Adobe but here's the jist of Bob Precter's Elliott Wave analysis on oil. Its his featured commodity perspective in his general financial newsletter because its just completed a classic 5 wave pattern.

Prechter's got a graph of crude prices which does depict a pretty classic 5 wave pattern from a Feb '99 low of $12.81 to a Dec '99 high of $26.85. He's now expecting a 3 wave decline to $19.83 - $21.49 area basis Feb.

The fifth wave of this past bull move forms a diagonal triangle- which is an ending pattern occuring after a substantial move and calling for a sharp swift return to the original pattern. So in addition to a likely decline to $19.83-$21.49, we can also say the drop shold occur by the end of April. Key resistance for this bearish outlook (point for stops) is $26.85-$27.88.

-- Downstreamer (downstream@bigfoot.com), January 08, 2000.

Charts and graphs are fine when used with other info, for example, oil comprised 8% of GDP in 1990,would you care to guess what was in 1998???? I know,but will wait for your guess.

-- I noe (oil@themarket.com), January 08, 2000.

did he factor in the recent problems at several refineries?

-- sarah (sarahlyao@aol.com), January 08, 2000.

GDP has grown so much since '90, while oil consumption has only grown by about 1.5%/annum I'll guess it now makes up 5% of GDP. I assume you mean US and not world.

And yes Sara I am taking refinery sputters into account. They're minor glitches, not the massive Y2k down-for-months on toasted systems RC was predicting. Two of Motiva's (Shell) refineries came back up on Friday. The NYMEX gasoline sold off 1.8 cents a gallon on reduced supply concerns. We can now see the edge of the woods, warm weather forecasts and a big y2k stockpile overhang. The technicals and the fundamentals are both pointing to a price slide. Sorry all you oil sector call option holders.

-- Downstreamer (downstream@bigfoot.com), January 08, 2000.

I have followed Prechter at a distance for over 20 years. My feelings are that his theories are the proverbial "stopped clock". One of these calls will be right. I have seen very little correlation between one of the "final waves" and what the markets actually do.

-- REvans (my2scents@home.com), January 08, 2000.

Hey guys, I read the Oil posts here a lot, and have been thingking about going long oil throughout this whole deal. But I've traded long enought to know the technicals don't lie. No matter what the "world" seems like it's doing.

For the last 3 or 4 months, Oil has looked weaker, and if you were'n't in from about $20.00, there wasn't much upside to trade (in options).

Oil is notorious for doing things against all "knowledge" you think is inside, so really, just play the charts and don't listen to the news - no matter where it comes from.

The Bond Market is the same way.

Just my 2 cents worth.

-- Gregg (g.abbott@starting-point.com), January 09, 2000.