BP, British Petroleum a buy ?

Now that the company seems to be making progress in shutting down their well in the gulf (Obama’s Katrina as Bush’s Karl Rove observed), is this possible a buy. The answer is YES.

BP march 27 2010 2 BP March 27 2010

The long term chart suggest that the top in 2006 was the real or “orthodox” top that was followed by a very nice a-b-c down precisely to the 62% level as is so often the case. After that the upleg could be 1. all of a counter-trend, 2. part (a) of a counter-trend, or 3. a brand new bull market. If 1 we would expect a move of about $10 up for wave  2 of c, if 2 a move to at least $61 or up about $16+ should be expected. If 3 the sky is the limit.

So, if in all three cases, it is reasonable to anticipate at least $10 or about 25% up it follows that this is a buy. Interestingly the rising costs of insuring this kind of activity will, in the future, only be doable for companies like BP, Shell, Exxon and the like, all other smaller players will be cut out of deep water drilling!  Paradoxically BP may have strengthened  its position by causing this mess.

Always use stops on these commodity plays!