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Crude Oil Bears Enjoy 15% Gain In May. $2.99 Gas Prices Ahead?
See the tricks of the trade that helped EWI’s Energy Specialty Service stay one step ahead of crude’s latest turns
By Nico Isaac
Wed, 30 May 2012 16:45:00 ET
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Oh, what a difference a month can make.

At the very start of May 2012, the crude oil bullhorn blared with "$150 Per Barrel Dead Ahead" and "High Oil Prices Here to Stay" rallying cries. Now, 30 days later, crude oil prices are 15% BELOW their May 2 peak after experiencing their longest downturn since the year 2010.
 
It goes without saying the steep selloff took much of the mainstream world by surprise. Guess what -- it caught us at EWI off guard, too! Check it: On May 2, both the non-Elliott wave experts AND Elliott-wave ones at EWI's Energy Specialty Service were near-term bullish on crude oil.
 
Herein, however, lies the difference.
 
The "fundamentals" camp summarized its bullish case with this May 2 news story: “Crude oil futures start May by bouncing to a five-week high as US manufacturing growth in April hit the highest in 10 months, boosting the demand outlook for oil.”
 
This is classic mainstream analysis for you: Traders are baited with a specific fundamental "hook." And once snared, they are forced to go wherever the reel draws them in, powerless to resist. There is no wiggle room to prepare for an alternate (i.e. bearish) outcome.
 
This would be fine IF market analysis was about 100% certainties.
 
But, as Elliott analysts know, forecasting is about probabilities. The Elliott Wave Principle is founded on a number of key rules and guidelines that enable you to adjust your Elliott wave counts as price action demands. With this solid framework in place, on that same day -- May 2 -- EWI’s Energy Specialty Service revealed how its “preferred” bullish Elliott wave count for crude oil hinged on this crucial action:
 
“Crude needs to continue higher to support the idea that the next leg of the advance is underway. At this point, trade below 101.82 won’t bode well for the idea that the decline from the early March peak is done… and an even longer decline would seem likely.”
 
The very next day, May 3, crude oil prices broke below the 101.82 price level. The May 3 Energy Specialty Service 1:56 pm intraday update confirmed the bearish event and wrote:
 
“The market’s failure to extend the advance argues for the alternate count… A much deeper decline should lie ahead.
 
Crude oil's steep selloff to its lowest level in 8 months since then speaks for itself.
 
So, the question now is: is the "Era of High Energy" finally giving way to a "Fill, Baby Fill" (your entire tank of gas!) renaissance?
 
Well, on May 30, our Energy Specialty Service's intraday analysis of crude oil reveals how the shape of the May decline fits the profile of one kind of wave structure.
 
This new Elliott wave labeling fortifies Energy Specialty Service's view that one -- and only one kind of trend -- is "here to stay" in crude oil (at least for a while). Get the full story today via the premier, trader-focused Energy Specialty Service -- which also includes daily analysis of NYMEX unleaded gas and natural gas. 
 
How Can You Tap into Energy Market Volatility?
 
 
Let EWI's most specialized forecasting service for global energy markets alert you to opportunities happening right now in crude oil, natural gas and other major energy markets. Subscribe today and get instant access to comprehensive intraday and daily forecasts that can help you make smarter trading decisions.
 

 

Tags: crude oil, Elliott wave, Elliott Wave Principle, Elliott Wave trading, fundamental analysis, natural gas
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