Gold, Oil & Middle East Cycles
Gold, Oil & Middle East Cycles;
Enter Intensification Phase in 3Q ’17…
Aug./Sept. ’17 – 1Q ’18 = First Phase.
10/11/17 Weekly Re-Lay Alert – GaME Changer Corroboration:
“The action of Gold, Silver & the Energy complex (as well as recent communiques out of Turkey) is corroborating the potential for an uptick in tensions in the Middle East in the coming months. As described in several issues of INSIIDE Track this year, the GaME (Gold and Middle East) Changer was/is expected to take hold from late-Sept. 2017 into late-Sept. 2018…
Crude Oil, Unleaded Gas & Heating Oil corrected after Crude perfectly fulfilled projections to rally into late-Sept. & to ~53.00/CLZ.
Crude spiked down to its weekly HLS last week, while bottoming precisely at its monthly support & Raw SPS. It has since rebounded but needs a daily close above 51.98/CLZ to turn its intra-month trend up and confirm a multi-week low.
Heating Oil needs a corresponding daily close above 1.8091/HOZ while Unleaded Gas has already turned its intra-month trend up (and was never able to turn its daily trend down). That projects a rally to new highs in Unleaded Gas. That action is corroborating the outlook for 4Q 2017, described throughout 2017.
Looking out over the coming months, it is important to place all of this action (including Unleaded Gas & Heating Oil rallying to new intra-year highs in September) into perspective. The foundation for that perspective can be built from the following analysis from the Sept. 2017 (8/30/17) INSIIDE Track:
Gold, Oil & Middle East II
2 – Synergy is the key. It is the convergence of analysis in other markets and cycles in other arenas, however, that has captivated my attention. Oil & the Middle East are two of those…
For the past 2 – 3 years, the overall outlook for Crude was to set a Major, multi-year bottom in early-2016 and then undergo a 1 – 2 year bottoming process until a secondary low was/is expected – in 2Q/3Q 2017.
As repeated constantly since early-2016, longer-term cycles would not begin to turn bullish until Sept./ Oct. 2017 – the same time that Middle East cycles collide.
The energy complex has adhered to this outlook and Crude is setting the stage for a more sustained advance in the coming months.
Unleaded Gas & Heating Oil are leading the way, turning their weekly trends up in July & confirming a multi-month bottom. They provided a textbook pullback into mid-August and then resumed their advances, adding focus to the expected upturn in diverse cycles projected for Sept./Oct. 2017…
The intriguing aspect of the oil complex is how all three markets – which often have conflicting cycles due to seasonality and cracking – are projecting bullish movement in Aug./Sept. ‘17–Jan. ‘18.
In addition to already-discussed Crude cycles, Heating Oil has a 12-month/360-degree low (Jan. ‘15)–low (Jan. ‘16)–high (Jan. ‘17)–high (Jan. ‘18) Cycle Progression projecting a peak in Jan. 2018.
Meanwhile, Unleaded Gas provided an overlapping 12-month/360-degree high (mid-‘13)–high (mid-‘14)–high (mid-‘15)–high (mid-‘16)–low (mid-‘17) Cycle Progression inverting that cycle just as it timed the late-June 2017 bottom. [**’Mid’ refers to 1 – 2 weeks on either side of June 30/July 1.]
A developing ~7-month low-low-(high?) Cycle Progression could also spur higher prices into January 2018. Price action needs to validate that.
Could Gold, Oil & Middle East cycles all kick into a higher gear in Sept. 2017?” [End of Sept. 2017 (8/30/17) INSIIDE Track excerpt.]
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That overall analysis – for an overall advance from Aug./Sept. 2017 into Jan. 2018 – remains in force and could be reinforced with a new impulse wave higher in the coming weeks.
Heating Oil & Unleaded Gas – with this week’s spike lows – have also perpetuated an 8-week low-low-low Cycle Progression that could spur an 8-week rally into early-Dec (as part of that overall advance). The action of the next 1 – 3 weeks needs to corroborate that.
Natural Gas is also setting the stage for an advance into early-2018 after fulfilling projections for a sell-off into early-Oct. and back down to its low – attacking monthly support and the monthly HLS grouped at 2.975–3.030/NGZ. A low in October would perpetuate a 5 month low (Feb. ’16)–high (July ’16)–high (Dec. ’16)–high (May ’17)–low (Oct. ’17) Cycle Progression.
The latest low remains well above the Feb./Mar. 2017 low around 2.520/NG (continuous contract) – a factor that was/is critical in corroborating the overall outlook leading into 1Q 2018. To review, the following quote is from the March 2017 INSIIDE Track:
“Natural Gas dropped sharply after surging into late-Dec. – 6 months/~180 degrees from the late-June peak. It began the month of February by giving a weekly close below 3.205/NGJ and diminishing the potential for any additional upside until a larger-degree correction had unfolded…
On a longer-term basis, Natural Gas is still expected to set its next multi-year peak in 1Q 2018 – the completion of a ~4-year low (1Q ‘02)–high (Dec. ‘05…1 month shy)–high (1Q ‘10)–high (1Q ‘14)–high (1Q ‘18) Cycle Progression and the culmination of successive ~2-year advances** (1Q ‘12–1Q ‘14 & 1Q ‘16–1Q ‘18).
Those advances are separated by a similar ~2-year decline (1Q ‘14–1Q ‘16) – creating some cyclic symmetry. An intervening low in March ‘17 would create a corroborating ~1-year/~360-degree low (March ’16)–low (Mar. ’17)–high (~March ’18) Cycle Progression projecting the same thing.
[**A ~2-year advance is a very common occurrence in Natural Gas, corroborated by major rallies in 3Q ’06–3Q ’08, 3Q/4Q ’03–3Q/4Q ’05, 1Q ’99–1Q ’01 & Jan. ’95–Dec. ’96…1 month shy of 2 years.]
A peak in 1Q 2018 would also complete a full 17-Year Cycle from the culmination of the first (of 3 successive) 400–600% surges – in 1Q 2001.”
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Natural Gas corroborated that analysis, bottoming in late-Feb./early-March and reversing higher. Since then, it has steadily built a ‘1-2, i-ii’ base, similar to what Gold has done since late-2015 & late-2016.
In early-Aug., it bottomed around 2.750/NG and then traced out an ensuing rally & sell-off leading into early-Oct. As long as that August continuous low remains intact (Natural Gas should not give a weekly close below 2.753/NG), the potential for a 4Q ‘17/1Q ’18 rally would remain in force.
The next multi-month high could be seen in Feb. 2018 (nearly fulfilling the longer-term cycles) – during the next phase of the ~19-week Cycle Progression that most recently timed the Sept. high. For now, Natural Gas needs a daily close above 3.200/NGZ to signal that a multi-week bottom is in place.”
Energy markets fulfill outlook for 2017 and set stage for volatile period in 4Q 2017 – 1Q 2018. See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.