Surfing Elliot Waves  

Posted by Big Gav

I don't know much about Elliot Waves (although I have done some reading about Krondatieff waves that I find disturbing) - but here's an article about an Elliot Wave guru who thinks oil prices have peaked.

My portfolio today was showing signs of a very strong oil and gas market, so someone is wrong about where oil prices are headed.

The usually bullish New York Institutional Gold Conference took a splash of cold water on its opening day when Elliot Wave guru Robert Prechter said he is monitoring a repeating technical pattern that could prove a downer for commodities. Furthermore he warned that the US economy appears to be rolling over into a deflation he has long warned of.

Speaking on the opening day of the annual New York event, Prechter drew a full house for his keynote presentation which focused on gold, silver, oil and the U.S. dollar.

Prechter was adamant that the rise in commodity prices has not been because of fundamentally higher demand, but rather because all assets have been “captive to the expansion of liquidity since 2001. “There has been a tremendous expansion of liquidity. . . everything inflated. . . now the infusion is slowing and prices are dipping,” he said.

He is especially bearish on oil because of the strong popular consensus that has developed for peak oil accompanied by price targets exceeding $100 a barrel. He likened it to the momentum that spawned a slew of books in the late 1990s with titles alluding to stratospheric general equity prices, such as Dow 100,000.

“If everyone believes [oil is about to run out] then that must already be priced in. So it has a long way to go. . . down,” said Prechter.

Prechter says the turn in prices now being seen presages an economy “rolling over to deflation.” “It will surprise everyone. You’re not safe anywhere . . . not even in gold or silver,” was his gloomy conclusion.

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3 comments

Elliot waves are perfectly fine to fiddle with, everyone needs a hobby.

I just wonder if their model accounts for geology...

The rest of the article was pretty funny. It spent a lot of time showing how Prechter had been wrong about stuff in the past. Patterns in the market and human society are very interesting, but that doesn't mean it's right.

Err - yes - it was a slightly sarcastic post - maybe there is some sense behind Elliot Waves, but most likely they are just voodoo.

I just thought his "peak oil is priced in" comment was so stupid that I had to repeat it - how on earth does oil depletion get priced in and then the price slowly drop over time ?

Even if his deflation / depression scenario is true, the (real) price could be all over the place.

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