Is It The Calm Before the Storm?

This month has several particular elements that make it a rather boring month:

• It's August.  Europe is on vacation, and much of the interesting geopolitical and market news is currently taking place in Europe.
• There is a global distraction in the form of the Olympics, though this one is nearing its end.
• There is a national, and arguably global, distraction in the form of the 2012 presidential election, 87 days away.
• Nothing, positive or negative, will be coming from the Federal Reserve until at least Jackson Hole at the end of the month.
• Germany will not decide whether the "Draghi put" (European Stability Mechanism) capitalization is valid until September 12.

Things are, in other words, quiet - almost too quiet.

I decided to take a look at the Brent and WTI crude oil charts for the past 2 years and put counts on them.  We have what appears to be a reasonably clear A-B-C correction at a reasonably large scale (here, Intermediate, but it could be Primary-degree) and a first impulse wave up.

This could either be A of D (or something along those lines), or the first wave up of a full 5-wave move to test and possibly exceed the all-time high in oil... which would not be particularly good for the global economy.  A near-term pullback in oil is likely - I would expect WTI to retest its 50-day MA from the upside at around $86-87/barrel and Brent to retest the green line at about $101/barrel.

Brent crude is still in slight backwardation (WTI futures are about equal with WTI spot), which suggests some sort of correction in the oil markets.  This would likely be associated with at least a correction, if not more, in the equity markets.  But again, oil is a tricky beast.  Still, that's a lovely stochastics and RSI divergence WTI is putting in.