XOM has been working on it’s own wedge for at least the past two years. At one point it looked complete at around $87 or so but just kept going (see earlier blog). This time, at about $95, only $3 higher, it will “double-top” AND complete the wedge. A sell soon.
Then, Nov 9, 2012 and now;
At first we expected the stock to go to the bottom trend line of the channel. It did not get much lower than the midpoint, give or take. That brings the target for an a-b-c correction a little higher to about $400. That corresponds to about a 50% drop of the last complete up leg that starts a little under $100. The break of this channel is significant from a technical standpoint even if it is hard to immediately fathom why this stock should drop that far. The stock trades at a modest p/e of about 10, has $137 bln. in it’s war chest and reported earnings were pretty well as expected and quite respectable. Just not as outrageously good as usual? XOM is almost the biggest again.
We repeat the fractal shown in a blog back in Oct. 2012;
The accompanying calculation was that the stock would trade in the $7 range if it were to drop a proportionate amount and I compared it to buying Apple at $6, a second opportunity so to speak to step to the plate. Now that we have reached $18 where does it go? The Nov. 22nd blog, shown below in both frames, is probable the most accurate in describing the trajectory, so far at least;
If this prediction continues to work, we should soon get a breakdown in a wave B or wave 2, the latter obviously fits the new bull scenario the best. This should take the stock back to about $12/10 ( After that the stock could rise to about $30 which is where the first bump in the chart is on the way down (a 4th wave of sorts). If any of this will actually happen remains to be seen. What definitely supports this scenario are the shorts. Apparently there are now more shorts than at the lows. Canadian exchanges cannot figure out how big the short position is, or prefer to keep us in the dark. However, in the US the shorts are now reported to be at about 137 mln. shares, which at the average daily turnover for the last 200 days of 28 mln. shares, would take 5 full days of trading. This should keep a pretty healthy bid under the stock. An updated chart is shown below.
Maybe just flogging a dead horse but here is the Dow’s wedge once again, and also a similar wedge for the NYA. We are intrigued by the NYSE index because, as is clear to see particularly if you enlarge the picture, wave 1 travels a greater distance than wave 3. Now wave 3 can never be the shortest. Ergo wave 5 must be shorter than 3 which implies that the index cannot go more than about 150 points higher. As throw-overs go, it is already ridiculous.