Another view of oil, same conclusion....

I recently modeled a bottom in USO.  It it always possible that I am off by one small wave, possibly even two small waves.  For example, a dip to $19.50 or even $18.50 on USO would be well within the margin of error for this modeled bottom.  But I do believe we are that close and that the next move up will be sudden and vigorous.  Below is the model that justifies this view.

This model indicates two top level possibilities but only one likely near term outcome which is a strong bounce, at least to the $75 level on West Texas Intermediate Crude.  If the current bottom is a 3rd wave then that bounce would be a 4th which should hit the top rail of the parallel and likely fill the gap shown by the pink rectangle.

Importantly, if the coming bounce is a 4th wave then it should be a vee because wave 2 was sideways.  Like gold, oil is not going worthless as long as we have no better energy source (and we don't, not by a long shot).  Now, if the re-start of the LHC with double the energy of before leads us to a cold fusion solution or zero point energy break through then all bets are off.  ;  )  Near-ridiculous long shot bets like that notwithstanding, oil will not stay down forever.

What I like about this bet is that both the long term bullish (red) and long term bearish (blue) models both predict very rapid short term gains.  Being oil drive, the Russian economy is a leveraged play on oil and RUSL is a leveraged play on the Russian economy.  Needless to say, I'm holding RUSL over the weekend with stops at $15.90.  If I get taken out then I'll try to re-enter on the significant dip OR if it breaks back up above $16.

The current RUSL chart shows something I didn't mention in my previous RUSL update which is that the chart bounced below the lower rail of the red falling wedge and then back tested but did not fall to a lower low.  In fact, the pullback since the test looks corrective, not motive. So I suspect it will be a 3nd wave and then a small 3rd will break back up into the channel, hopefully with a gap up to show conviction.  Such a move should happen soon according to this model and the red arrow shows the expect location of the reentry into the channel.  That will be a buy signal for me to add to my current position.  

If that plays out then the next resistance will be the blue line at about the location of the blue arrow.

This much I'm pretty sure about: when crude oil bounces, RUSL is going to take off. 

There is also one more thing I want to mention which is that Russia just raised its interest rates to 17% and this is going to attract capital away from other markets where a meager few percent is all that can be found.  Russia looks serious about trying to avoid hyperinflation (for now) and that means that anyone converting dollars into Rubles right now and then investing in Russian business is betting on getting the double whammy positive of an awesome exchange rate in addition to higher growth rates caused by capital inflows.  The real kicker for early bidders on this outcome would be if Putin can make nice-nice and be more politically correct with the EU and with the US to get those sanctions removed instead of spiraling down into another cold war (or world war).  I don't have high hopes about that but the important thing is that if these tensions ease, Russian stocks will benefit.