RDS.B, Shell update

Then, Jan. 22 and now charts;

RDS.b jan 22 2016rds.b mar 8 2016

We reached $48 from $36, which is a cool 33% in seven weeks. Our expectation was that we could go higher, but at this point we are not at all confident about that. So, when in doubt, get out. This is the most important trading rule and one that is seldom followed.

See also COP, Conoco Phillips or HSE, Husky, where it is also not clear where we are in the sequence.

RDS.B a buy and CVX

rds.b jan 10 2016 bRDS.b jan 22 2016

We repeat the old chart from Jan 10, 2016.  At the time, roughly 10 days ago, we stated that we would prefer to see the stock drop below the low of the A wave. It got to $35.95 yesterday so that does the trick for now. One can never know for sure but even if one more move down were to occur, the rebound minimum target would still be at about $56 or so. Therefore this is a low risk entry point. CVX, Chevron already has a first wave up which has recently corrected about half way. The next leg up, regardless of whether or not it is in a correction , should take it much higher, closer to $110.

The count for CVX is probably different from RDS.B’s but the immediate buy opportunity is similar;

cvx jan 22 2016

The big question now is the spurt up today due to yesterday’s roll-over of the future contract from Feb. to March , or Mario Draghi’s ramblings about there being no limits to what they can do and similar talk in Davos, or neither, just the waves.

Oil and RDS.B

The usual then, August 8, 2015, and now charts;

OIL aug 6 2015oil jan 10 2016 b


Since August oil has dropped from, roughly, $45 to $33 or about another $12. As you can see, now the A and C legs are vector equal as today’s low is on the circle that we had drawn back then. Despite that we are not at all certain that this is the bottom as there still appears to be a wave down missing. Theoretically we could solve that problem by assuming that there was a triangle B wave to begin with. It looks absolutely awful so we do not give it much weight, but still it remains a possibility that we will still get the missing waves 4 and 5 and therefore it could drop even lower to $11,23. But that is something we would not bet on at this stage.

We can show the missing waves 4 and 5 perhaps more clearly using futures;

crude oil fut jan 10 2016

So all though we have the requisite 9 waves to make a full sequence for wave C down, the count looks weird, particularly the second wave 2 which takes two full years to unfold. It might be possible that we will still get a very elongated wave 4 followed by a slightly lower low years from now.

Royal Dutch tells us the same story. We are as low as we need to go, but could still go a little lower;

rds.b jan 10 2016 brds.b jan 10 2016 s

Again we are not sure which top is THE top but our preference is the first as this fits better with the rest of the world. In that event the recent wave C down should unfold in 5 waves. It is possible that we have that but a further drop to about $34 would be reasonable should de stock want to retrace 61%. With a yield of 9.5%, which no doubt will be reduced, this stock is now definitely in the buy, not sell category.

RDS.B and IGM, so amazing!


I have combined two of the last few blogs to make a point. The point being that Elliot Wave is not another branch of witchcraft; instead it is what we all have done most of our life, that is copying others which is why certain patterns develop and do so in a fairly predictable sequence. We are particularly prone to be contaminated by the mood swings of those surrounding us and consequently that manifests itself in collective highs and lows.

     If you have ever wondered why it is that floor traders operating in such intense environments as the future pits (those that still exist) think nothing of walking from the coconut oil section to the long bond section, than you can stop wondering. They know nothing of either of these commodities and essentially could not care less. What they do care about is the order flow as that is all they need to get a sense of the market.

    As mentioned we have both Royal Dutch a.k.a Shell and IGM, an investment dealer and mutual fund manager, in the chart above. They have absolutely nothing in common. One is huge, the other relatively small. One is in oil and transportation, the other in financial services. One has enormous infrastructural and capital investments, the other hardly anything at all. One is Dutch/English and operates around the world the other Canadian, primarily in Ontario. One deals primarily in US dollars (but also Sterling) and the other in Canadian dollars.  Given all that, it is just fascinating to see that the charts that cover the time period from 1997 to today, almost twenty years, are for all intents and purposes identical. The reason is that the world is now global and getting more global with Facebook, Twitter, the internet etc.etc. with the predictable result that we all stop thinking critically and tend to be in a similar mood.

     The charts above are embellished with green, blue, red or purple and grey lines. The green ones run vertically and denote a certain point in time. The blue and red ones are vectors, they have the same direction and magnitude on both parts of the chart. All that helps to show how identical the charts in fact are.

     The moral of the story is that you should not knock EW, and if in the past you were a stock picker, stop and try to become a pattern picker, there are only 13 of them.  Merry X-mas, or is that Holidays?