Impulsive Decline

The decline from tuesday's high appears to impulsive and nearly over, so a sizeable countertrend bounce may occur tomorrow and last into Monday. As was indicated in the comments this may be wave i of 5 toward new lows, but it may also be wave d of our triangle that is grinding ever so slowly toward that declining upper channel line. I don't think there is anyway to be certain at this point. We also have to be on guard for an unexpected move above tuesday's high which would negate both viewpoints. Unless we get a surprisingly good jobs report in the morning, that doesn't appear likely though.

As Dave pointed out in his comment, we could also have a failed or truncated 5th wave scenario due to the extreme move of wave 3 down, although I think that the amount of the decline since tuesday would make that unlikely. As far as the DUG ETF, I have been extremely dissatisfied with its performance relative to Oil. Part of the problem is that it is tied also to Natural Gas which has been in a countertrend rally while Oil has been going down and from what I can see it tends to respond to Nat Gas more strongly. I have been equally dissatisfied with the SKF as its movements seem to be too exaggerated relative to the underlying. I think the best strategy with the leveraged ETFs is to take profits at set % gains or ATR multiples and accept that we will not be able to capture all of the swing.

As far as the cycle low expectations are concerned the triangle pattern fits the best as the thrust from the triangle typically lasts about one third of the length of the triangle, and if the triangle completes sometime next week, it will put the completion of wave 5 close to the projected cycle low.