Saturday, March 8, 2014

Steve, Your triangle of Doom may be complete

Steve Ludlum has morphed his terrific Triangle of Doom model for energy and finance and Your Life into a trapezoid for now.

A symmetric triangle is considered a continuation pattern, a pause and midpoint between the start of a larger trend and more of it later.

Steve is drawing a trapezoid because I think his topline is too high.  If we move it a little lower ... Houston, we have got a problem.

/CL Triangle of Doom

This boundary for the triangle suggests that we have already completed it, had an initial breakout above it, and returned to test it one more time (a "kissback").  Now it's "support".

Expect much higher oil prices.  And blame Steve.

6 comments:

Bryan Franco said...

Can we reconcile higher oil with one more deflationary shock? Maybe we get the oil spike first, then demand destruction just like in the summer of 2008.

christiangustafson said...

Yes. Oil peaked after /ES in the last cycle down.

Trading Sunset said...

Well, if Oil >147, then..I could just about be on the 'oh noes..here comes a real problem' train.

As it is, demand is kinda flat...the issue is supply.

Oil bulls need a geo-political issue to spike the market.

Trading Sunset said...

Equities RISE when rates rise.

The market only peaked in late 2007, as the Fed started to reduce rates.

Soon as rates start rising, there is potential for hyper-wave.

Alexander Ac said...

Christian,

why higher, why not lower prices? (debt deflation?)

christiangustafson said...

Hi Alex.

I'm just reading the tea leaves in that chart of oil futures prices and telling you what I see.

We have a sharp rise from the lows, a symmetric triangle that counts in 5-waves ABCDE, a breakout from the triangle, and a return back to test it for support from above. More rally is expected.

Oil can still peak after the equities markets, like it did in 2008. It probably won't make it back to $148, but $120-$130 oil will be just as devastating to what remains of our economy.

Don't fret -- serious debt deflation is on its way.