SU, Suncor and CNQ, Canadian National Resources, updates

su feb 25 2013cnq feb 25 2013

According to Barron’s, both these stocks are undervalued by about 30%. Conveniently they are both at about $30 so, if correct, these stocks should really be worth $40, roughly. Maybe, or maybe not. From the perspective of the ratio for either of these stocks it would seem more appropriate to assume that they are fairly valued and overvalued respectively.

From an EW point of view, for whatever that is worth, both stocks show clear 5-wave up sequences followed by a single down leg and then a B-wave. Clear as daylight. Short of a big triangle forming, these stocks should fall further as the C wave completes. Time will tell what will actually happen but in the meantime you may wish to play it safe. Put your stop-loss order in at the level of the line connecting the lows, or just below. If that breaks things could get nasty rapidly.