There aren't any chilly warnings of Oil heading to $200, like many in OPEC believe. Does OPEC really know? The axiom linked with $40 plus Oil, as harbinger of recession has been long trashed and now not only we are waiting for recession but also for $200 Oil. It all seems a bit strange.

Oil moved up three times from the $40 mark and DOW is still at 13,000, just 7 per cent lower than historical top. So, either the other best indicator for recession that is S&P500 and DOW Jones have stopped working or econostats have blinded us.

For a start, there are some common sense rules, which say rockets come down to earth and satellites remain in the sky. The way Oil is behaving makes it either a rocket potentially getting ready to become a satellite. This all is an illusion. Oil can never become a satellite, no asset can. And, the almost ninety degree inclination to new highs is destined to collapse. And, what will collapse along with this is the dream of Oil riches.

It is how you look at it. Bloomberg Markets looked at it as the End of Oil era and a few Wall Street brokers looked at it as a great time to solicit mass mailing lists for Oil Call options. Well, we don't subscribe to the Oil end era yet, but if the best broker suggests buying Calls with such confidence, we definitely don't know something he knows or something everybody knows. But that is good, if we don't know, what everybody knows. Because if everybody knows something it is already discounted and the truth is already out there that Oil is topping.

Of course the reason of the fall when it happens will be like this, winters were cold so Oil rose and summers are hotter so Oil is falling. When Oil falls in winters, which it did from 2000 to 2002 and later in 2006 to 2007, the winters were warm. For us, Oil is more of than a climate barometer. It is like all other assets, which are connected with 0.5, 4, 11, 30, and 90 year cycles. And all these time cycles can explain cycles of inflation, deflation, disinflation, food, gold, equity, recurring geopolitical crisis, interest rates and also how you should handle your portfolio within the year. It also tells you about what is going to happen to Oil in 2012.

At this stage, what can be seen is a sentiment euphoria, which is hard to sustain. The five legged fractal structure both starting 1999 till 2008 and the smaller five legged sub structure starting in 2007 seems complete. And, holding one's impulses to ride on this rocket seems reasonable. FIB and CHANNEL targets lie at current levels. We don't see Oil above $125 at this stage and our research impulse (we are humans too) shows more of a Put than a Call.

What will happen can also be explained with another magical previous 4 rule. Price impulse moves in a five wave structure. And, you can label them like a school exercise of counting 1 up, 2 down, 3 up, 4 down and 5 up. Now this exercise can be done on a large (multi year) time frame and a multi day time frame. This is what we keep mentioning as mass psychology fractals impulsing again and again at all degrees. It is the magic human nature plays with precision.

After every impulse the markets take a pause and fall in three wave structure (a down – b up – c down) and then the impulse starts again in an unending process. That is why we say that world may never come to end, it is just that some time the volatility of relentless market action just becomes too much for a society looking one way. This always happens, like the sub prime mess and the credit crisis. We all look up to Oil now and not Natural Gas, which is the next multi year outperformer. We love to see rockets and ride them, other thing don't excite us.

So, whenever an impulse (five legs) takes a pause they fall to the previous 4 wave. This is a much witnessed event in fractals. Previous 4 wave supports are also mentioned as the last supports standing. Prices should not fall below the previous 4 wave or rise above the previous 4 if the trend has to continue. Of course this is a guideline, but this appears more time than coincidence.

This is seen everywhere, BSE Oil, BSE CG, BSE Bank, BSE Auto, Sensex, Nifty and CNX IT. They are all full of previous 4 wave retests. Oil, when it turns down, could fall to first a previous 4 wave support at $90. And if it indeed breaks that, we can be in for sub $70 levels. And this we are talking about the next few months, of course we can be wrong. But, not like the poor chicken, an anecdote quoted by the late A J Frost, market guru.

The chicken used to run at the presence of the man, but man's appearance on the scene was linked with corn. This happened 999 times, till the chicken went to thank the man and had his neck sliced. Though anatomy proves that we are sheep and herd, we indeed might be chickens when it comes to cause and event linkage. We are miserable here and believe summers and winters drive the Oil rocket. Indeed a poetic tragedy.

The author is CEO, Orpheus Capitals, a global alternative research firm