Adelaide Unleaded Fuel Cycle

This series of posts demonstrates the use of cyclic theory applied to unleaded fuel in Adelaide, South Australia and is offered as educational material. It has been constructed based on real time emails or notifications sent out to course participants on the dates listed. Read from the bottom up.

If cycles make sense to you and you would like to learn about how to use them in the financial markets, check out these links:

Advanced Cycles Course Outline

Previous Advanced Cycles course trading results

11Aug2016

With average prices recently almost breaking below 90¢/L, I though it was time to revisit my earlier posts.

“As suggested 24Feb2016, this uptrend should last for about 6 to 8 weeks taking us to the period 26Apr to 10May.”

The accompanying chart shows the high was made on 13Jun2016 therefore the larger uptrend in fact lasted for 12 weeks.

With about a 90% probability the cyclic principles suggest we won’t see the 130 levels for at least another 12 months. In fact the largest cycle I track in Crude Oil pobably won’t have its low until late 2017 - early 2018.

Crude Oil has been as high as almost $150 per barrel in 2008 and was about $10 per barrel in 1998. It is currently around $40 per barrel and is in a monthly downtrend.

For those wondering about the other 10% - it is possible the large low already occurred in February 2016. Time will tell.

I often have students expressing concern about “uncertainty”. Trading is about probabilities and being ‘right’ is only one part of being profitable. The other part relates to being HUGELY right and only a little bit wrong in terms of profits and losses. Interestingly, the Advanced Cycles Paper Trading history shows that prrofitable system has a winning percentage of 27% but a Profit Factor of 9.6 (Average Profit divided by Average Loss). These figures generate Mathematical Expectancy of about 1.86 - which means that for every dollar risked the system will ‘probably’ return about $1.86.

The fear of being wrong and the fear of uncertainty and the need to be right certainly all mess with wannabe traders' heads. Knowing what to do, when and why overcomes most psychological issues that get in the way of trading or investing.

 

17May2016

 

On 19April2016 my forecast was for the next low 7May. The low came in on 6May. I filled up on 5May2016 at 103.9¢/L. Missing the low and filling up a few days later could have cost 124¢/L. At 80L this was a possible saving of about $16. But it is NOT about the money. What I have demonstrated real time with all calls ahead of time is EXACTLY the same as I do in the financial markets. Come along to Cycle Analysis and Market Timing at the WEA or do Advanced Cycles (a private non-WEA course) to learn more.

As suggested 24Feb2016, this uptrend should last for about 6 to 8 weeks taking us to the period 26Apr to 10May. It is interesting to note the recent high in the fuel chart did not surpass the previous high. This is suggestive of a possible down trend, but more information is needed before this could be raised to a higher level of probability.

When you know how cycles work then the future is at least semi-predictable and oftentimes scarily accurate. Cyclic knowledge in the financial markets is better than guessing or relying on the opinions of others. My appoach is simple, clear, principle based, provable and repeatable.

Thank you for reading this series. I hope you have enjoyed it and have learned something. Cheers.

 

5May2016

My forecast for the next low was 7May so I have just filled up as at 7pm 5May2016 ACST and paid 103.9¢/L.

 

19Apr2016

On 24Mar16 I said "Cyclic lows tend to come in early in an uptrend and so the average length of this cycle should shorten over the next few cycles." and "This means the forecast low from 15Mar is in 26 days (or less) giving 10Apr (or earlier)".

The low occured on 11April. One day late. Not coming in early suggests the uptrend is not strong. However, the uptrend is confirmed with a further higher high. See the following chart.

 

Here are the cycles so far:

24Jan to 22 Feb = 29 days

22Feb to 15Mar = 22 days (3 cycle moving average = 26 days)

15Mar to 11Apr = 27 days (3 cycle moving average = 26 days)

The next forecast low is 11Apr + 26 days = 7May. (I will be filling up early May!)

As suggested 24Feb2016, this uptrend should last for about 6 to 8 weeks taking us to the period 26Apr to 10May.

 

24Mar2016

On 24Feb2016 I said "If nothing changes we can expect the next Average Unleaded low to be in about 27 days from the 22Feb low. However, Crude Oil is overdue for a 9 month low. When this low occurs Adelaide's Average Unleaded price is likely to have a low that is shorter than 27 days and the down trend will turn into an up trend - perhaps for about 6 to 8 weeks."

Here is what happened:

Well, 27 days from 22Feb = 20Mar and the low came in on 10Mar with the rocket up move stating 15Mar. 22Feb to 10Mar = 17 days and 22Feb to 15Mar = 22days. Either way this cycle was shorter as predicted.

[Aside: Notice the low in the chart below is 22Feb and yet the coresponding low in the above chart is 21Feb.]

Importantly, the Adelaide Unleaded fuel price has ceased its down trend and is now in an uptrend as predicted. An uptrend is defined as higher lows and higher highs. Notice the 10-15Mar low was higher than the 21Feb low AND the 19Mar high was higher than the 25Feb high. As suggested 24Feb2016, this uptrend should last for about 6 to 8 weeks taking us to the period 26Apr to 10May.

Cyclic lows tend to come in early in an uptrend and so the average length of this cycle should shorten over the next few cycles. Here are the cycles so far:

28Dec to 24Jan = 27 days

24Jan to 22 Feb = 29 days (2 cycle moving average = 28 days)

22Feb to 15Mar = 22 days (3 cycle moving average = 26 days)

This means the forecast low from 15Mar is in 26 days (or less) giving 10Apr (or earlier).

 

24Feb2016

You may recall I made a prediction that Adelaide's Average Daily Unleaded fuel price might make its low around 20Feb. The actual low date was 22Feb. Missed by 2 days!

This is the sort of thing I do in the financial markets. It is not hard when you know how the cycles work. Actually, the hard part is wrapping your head around the fact there is always some uncertainty. Living with that is a hell of a lot better than guessing or relying on someone else to take care of your wealth.

Cycles tend to stretch out (lows come late) in down trends - and we have a down trend in Crude Oil and so too Adelaide's Average Unleaded price. A down trend is defined as lower lows and lower highs. If nothing changes we can expect the next Average Unleaded low to be in about 27 days from the 22Feb low. However, Crude Oil is overdue for a 9 month low. When this low occurs Adelaide's Average Unleaded price is likely to have a low that is shorter than 27 days and the down trend will turn into an up trend - perhaps for about 6 to 8 weeks. If my reading of the Crude Oil market is anywhere near right, Crude Oil will then decline again. With ups and downs (smaller cycles) along the way I am not seeing a final low for Crude Oil until around early to mid 2018 and as low as $10 a barrel. It is $31 a barrel now. As time goes by these approximate times and prices will be sured up.

 

16Feb2016

You can save money if you know the Adelaide fuel price cycle. Similarly, you can make money if you know the financial market cycles.

Let's take a brief look at the Adelaide fuel cycle. This is updated irregularly at this address:
http://www.raa.com.au/motoring-and-road-safety/metropolitan-fuel-prices/metro-fuel-price-history

This fuel cycle is a simple cycle because essentially there is one main cycle we can 'trade'. Notice there was a low on 28Dec and another on 24Jan. These are 27 days apart. That gives us a guide to when the next low might be i.e. 24Jan + 27 days = 20Feb. A better guide would be the average of (say) the last 3 cycles. Today is 16Feb so if you are looking to fill up then I would be watching fuel prices on a daily basis over the next few days.

As with the markets, we need a trading plan because cycles have variation (in both time and amplitude). Here is a plan: Fill up on the day the Adelaide Daily Average Price DOES NOT go down.