Another important [RUSL] post [USO]

The message of this post as well as the backlink is that commodity deflation has either bottomed or will do so very quickly.   Rising interest rates will accompany rising oil and precious metals prices.  There has to be some way to fuck boomers out of their perceived stored value (i.e. retirement savings) because the actual value is not there.  It has all been stolen from those who were foolish enough to trust someone else to hold their life savings.  Government and wall street conspired to herd the sheeple into government controlled IRAs 401ks and pensions.  The US has been running a global debt Ponzi.  No Ponzi ever had a graceful unwind and no Ponzi ever plateaued.  They peak and then they unavoidably collapse.  No, it won't be different this time.

I don't think the exponentially increasing number of boomers moving into retirement is going to cause stress on the system.  I know damned well that it is.  This is economics 101. When the system gets stressed it will buckle if not collapse completely.  This can come in the form of a depression or, worse yet, of serious inflation or even hyperinflation.  In deflation you have to tell people that their money simply isn't there; that all the government support crap went bankrupt.  In that case, someone has to be held accountable for its disappearance. 

With inflation, the retirees get their money but it's buying power goes into the dirt.  The result is the same: the lifestyle that these poor slobs thought they were saving for is suddenly out of their reach due to price increases in everything.  How is government going to pay these people their benefits once they are no longer making taxable salaries?  Our young people have crappy low paying jobs and the more capable high earners will just move away from high tax regimens.  So the government will do the only thing it can do after interest rates go up making borrowing more difficult: it will turn the printing presses back on.  At that point the world will figure out that government can never push rates higher voluntarily lest the markets disintegrate.  This will reduce confidence in the con men running this show.  The velocity of money will increase and drive up prices on everything that isn't nailed down.

The massive volatility being caused by the distress in our fake global money supply is what is causing the wild swings in oil and gold.  Russia is a commodities play via the RSX ETF and RUSL is the 3x ETF for RSX.

In the backlink I provided my model that says a 4th wave is likely forming in RUSL.  After that 4th wave is done I am currently expecting a lower low than $10.  Of course that will change if new data requires me to adjust the wave count.

But then 5 waves down will have transpired and so we should expect an even bigger bounce and that is what I want to talk about now.  The only way to have any clue about what comes next is to look at the larger scale chart.  So just think of everything below as life after we have a confirmed 5 down in place.  Just to make things visually simpler the chart below uses RSX instead of RUSL.  RSX has no time value in the shares because it is not based on derivatives.

What the model shows is pretty clear.  Back in 2008 we began really printing money like mad.  Russian stocks bottomed in 2009 with other world stocks based on the glut of new fake money and then ran up into 2011 to peak along with gold.  Since then, US stocks have continued to rocket while gold and silver tanked and oil went into a big HT before tanking into wave 5 down.  The commodities deflated while all money ran into the supposed safety of US stocks.  Below is the USO oil price ETF.  It uses derivatives to track the price of oil so I used the log scale in order to show the true picture.  Since the peak $150 oil of 2008, USO has retraced in a clear a-b-c where a and c were separated by a HT b wave.  This is corrective if ever I saw it.  That means everything since 2008 was just a massive correction in a larger oil bull.

Note that In April of 2014 I modeled a big correction in oil to happen in the 37s.  It ended up going up to the 39s for a few more percent above my model but then it came crashing down.

Later on I was modeling this C wave down back in a December of 2014 post.  I did have a failure in that post which was to think that the C wave was going to end sooner that it did.  I really should have just assumed that C was going to be the length of A which is what the EW principle tells us is the common case.  Well, that has now been achieved since, per my proprietary CWT, wedges are 3s or Cs, this could likely be the bottom of C of 2.  But it could also reverse downward one more time to put in 5 of C.$10 would be an interesting price for that to bottom at.
 

 Could it just be 3 of c?  YES.  It could need one more wave down.  But I don't think so at this point because of the speed this has begun to move up at.  We now likely have either 5 waves up OR wave 3 is extending.  Either of these is good evidence that the trend has changed.  However, full confirmation will require a move above $22.  But whether this is 3 of C that just finished or 5 of C, the bottom line is that when C is done we are going to likely see inflation that will shock people.





Now have a look at Russia stocks which are heavily skewed toward commodities.  They slammed into a bottom in 2008 and then the move off of that low was 5 waves and not 3.  That means it was motive, not corrective.  To confirm this we see that in the past 4 years since RSX peaked with gold and silver, Russian stocks did not put in 5 waves down.  No, dear reader, they put in 3 big waves down.  Maybe red C is done, maybe it needs one more wave down (5 of C of 2) but the bottom line is that there is a horizontal triangle between these two wave segments and so this whole move was not motive; it was corrective.  Period.  HTs are always penultimate.  It either has bottomed or soon will and when it does we will see 3 or C take off like a Russian Angara A-5.