Month: February 2011

OIL (WTIC), SU and JE

Hamilton

WTIC2011feb

Today Nomura Securities came with a report that suggests oil should go to $220 or so. Just recently I put a maximum likely price at about $104 (see previous blog), the reason being that that would be a 61.85 retracement from the lows of the drop from $147. There are futures, there is spot and there is West Texas and Brent, you can slice this in a million ways so the $104 target has no pretense of being perfect. Above you have a stylized depiction of an A-B-C retracement, which, now that the wedge seems to be incorrect (or had a big throw-over) suggest a further rise to $100/$110.

SU has this same A-B-C pattern and could climb up to about $50. (62% and C=A).

SU2011feb

We kept the chart clean in order to make the pattern more noticeable. Also shown , below is JE, this is a great company run by Rebecca  McDonald who hails from Sarajevo. This company was formerly known  as Energy Savings and its principle business is marketing natural gas. It grows rapidly and pays a very high dividend and could be considered recession proof as nobody likes sitting in the cold. However it is not clear why the company should benefit from higher prices per se. Here is the stock;

JE 2011

What is interesting about this stock is that it came down in what could be an expanding diagonal. If so chance are very good that it will double top, but to be safe we would use a stop at around $13.

FVI, Fortuna.

Hamilton

 

fvi2011

This stock is fascinating in so much that it lost 1/4 of its value right on target, but then it came right back and actually exceeded its previous high of about $4.75. This, I think, is an irregular b-wave; irregular in that it went a little higher but is still classified as part of a bearish structure. The wedge leading the stock into its top has a truncated (5) wave within the wedge which, combined with the irregular b-wave promises a fairly violent downturn from here.Notice that both the RSI and MACD are turning down for quite some time now.

Silver itself is also displaying some clear signs of fatigue, this at a level that is rather precisely 61.8% of the highs ($55) during the Hunt brothers failed market cornering operation back in 1981.See chart of SLV below;

slv2011

SBUX, Starbucks (a sell).

Hamilton

sbux2011feb

This one was recommended very close to the low of $5. It is one of those stocks that one would normally not touch with a ten foot pole. Recently we suggested selling bits and pieces around $30. Today we would call it an outright sell.

There is no logic to this, just the desire to buy low and sell high. If we are in a bear market (in purple) the stock could still double top at $40 but after that it would drop like a rock. In the bullish case, (blue) , a wave 1 is complete,or nearly so and a wave 2 should follow soon. These typically retrace a substantial portion of wave 1 (we do not for a single moment believe this is what is actually happening!). Average the two scenarios  and the risk /reward is clearly against you.

S, Sherritt Int. Corp.

Hamilton

s2011feb

First recommended at about $2,40 in March of 2009, sold after a solid double but still maintaining a likely target of $8. It met that target quite nicely and then started treading water for about a year. Then we got the second up leg. Today all three waves, A,B and C are pretty well vector equal. C is a little short so it may yet continue its climb and may add a dollar or so over the next month. You can hope and wait for that or simple exit the position .