Energy/Equity Connection: Will Bull Markets Culminate in 3Q ‘18?
Energy/Equity Connection: Will Bull Markets Culminate in 3Q ‘18?
08/22/18 Weekly Re-Lay Alert – The Energy/Equity Connection: “Since May 2015, Crude Oil and the overall equity markets have moved in similar trends. This does NOT mean that every rally and decline were in lockstep with each other. And it does not suggest that every multi-month or multi-quarter or multi-year top in one was a corresponding extreme in the other. However, the general trends and cycles have coincided.
Both markets experienced significant drops into Aug. 24, 2015 and then suffered subsequent drops that bottomed in Jan./Feb. 2016. Both have rallied since then.
From early-2016, both Crude and the DJIA rallied for 3 – 4 months and then corrected for 2 months.
Both moved progressively higher into late-Jan. 2018, with the strongest rallies unfolding in July ’17 – Jan. ’18.
Both dropped sharply into early-Feb. ‘18 and have moved higher since then.
Both set intervening highs in late-May – early-June ‘18 but have since exceeded those highs.
Both, on a short-term basis, pulled back into Aug. 15/16 and then projected rallies back to their highs.
To reiterate, the intervening moves were often very different. And, the intervening swings were not in lockstep with each other. However, a cursory glance at both charts reveals a correction from May ’15 into Jan. ’16 and an unfolding uptrend since then.
The point?
The reason for addressing this has more to do with oil than with equities (although there is obviously overlap, particularly in an index like the S+P 500).
The 2017/2018 outlook for energy markets was to see a strong rally into Jan. 2018 and then subsequent highs in May ’18 and [reserved for subscribers]…
Energy markets fulfilled most of that, surging into late-Jan. 2018 and then setting subsequent peaks in the second half of May ’18. Most recently, Crude was forecast to correct into Aug. 13 – 17 – the latest phase of a ~4-week high-low-low-low Cycle Progression – before resuming that advance…
On a multi-year basis, Crude maintains its most critical and decisive resistance at 75.00 – 77.30/CL – a range that includes the yearly lows of 2011 & 2012 (support turned into resistance)…
Crude Oil, Unleaded Gas & Heating Oil are validating the potential for an intermediate low on Aug. 13 – 17 – the latest phase of a ~4-week high-low-low-(low) Cycle Progression.
That was corroborated by corresponding cycles in Unleaded Gas, which set its lowest daily close on Aug. 17. That perpetuated multiple geometric cycles and Cycle Progressions, including a 3-month/~90-degree Cycle Sequence (Aug. 16, ’17 low – Nov. 16, ’17 low – Feb 14 low – May 17 high – Aug. 17 – 20, ‘18 low).
On a shorter-term basis, that also perpetuated a ~1-month/~30-degree high-low-low-low Cycle Progression (May 17/22 high – June 21 low – July 17 low – August 17 – 22 low) and even a shorter-term low (July 17) – low (Aug. 2) – low (Aug. 17/20) Cycle Progression.
Daily closes above 69.25/CLV, 2.0200/RBV & 2.2000/HOV are needed to confirm a multi-week bottom.
Natural Gas has consolidated since fulfilling analysis for a rally into mid-August. It remains positive until a daily close below 2.905/NGV and could still reach key resistance (~3.0500/NG) as part of this advance.”
Crude Oil and the Energy complex remain positive and fulfilled the outlook for an intermediate low in mid-Aug. before a rally that should carry them to new 2018 highs and fulfill the overall outlook for 2018. They need confirming closes to signal that a multi-week bottom is intact and that a new (final?) impulse wave is underway. (Equity markets are providing corresponding analysis that pinpoints a specific period for a sharp sell-off after a peak is set.)
Crude is still expected to set another new high – during 3Q ’18 – to fulfill a myriad of upside objectives and set the stage for a substantial sell-off in the months that follow. A final high would complete its ~12 month up cycle (since Sept./Oct. ’17), as well as a ~16-month low-low-(high) Cycle Progression. This action continues to dovetail with Middle East cycles that signaled a major shift from late-Sept. ’17 into late-Sept. ’18 and were projected to coincide with a ~12-month bull market in Crude.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.