Elliott Wave Analysis of the CBOE Oil Index (VIO) by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
Here’s a chart of CBOE Oil, an index of the 15 largest integrated oil companies. It shows how oil stocks have taken off to the upside as a direct result of QE4. A quick check of Crude Oil will show that it is rallying strongly in tandem with oil stocks, as it generally will do. The two are typically highly correlated.
The middle section of the chart (from May 2011 through November 2012) can only be interpreted in two ways in my opinion. Either it is a bearish nested 1-2, or, it has already finished a large triangle, with the upward thrust from the triangle underway now. If the (alternate) triangle count is correct, using Elliott’s triangle measuring technique, the upward target for the thrust is slightly above the 2008 all-time high. In that scenario, price would move above the February 29 2012 high in aggressive fashion, and would continue shooting upward, challenging the all-time high by Q3 2013.
If my main count of the bearish nested 1-2 scenario is correct, price will not move above the 2-29-12 high, and will move aggressively lower in wave 3 fashion, as one would expect in a negative GDP environment. Which scenario unfolds now will depend on whether nature wins out, or the fed’s artifice. Either way, the result is going to be painful to a very large percentage of the population, whether they’re involved with the stock market or not.
It is interesting to note the exact point that QE4 was announced (shown by the red arrow on the chart). The CBOE Oil Index was about to enter the strongest middle portion of wave 3 of 3 to the downside.