Month: September 2014

XOM, Exxon Mobil Corp.

Hamilton

xom sept 1 2014

This is another diagonal or wedge. It has all the attributes. This is a 5th wave and not particularly robust, evidenced well by the continuous decline in volume. Each leg, up or down is an a-b-c, waves 4 and 2 overlap and often there is a throw-over at the end. There is alternation between waves 2 and 4. Wave 3 does not have to be the longest, it just cannot be the shortest (which means that any new high, if it occurs, cannot be  more than about $5 above the present high of $104,76

With all that the future course of this stock is well defined. It should drop back to, at least, the base of the diagonal (about $55) without making a new high. It should do this fairly rapidly, roughly in 1/3 of the time it took to go up, say a year and a half. All of this is a relatively sure thing! A Jan. 2016 80 option is trading at about $2.50 – $2.70 potentially giving a 10 to 1 trade, but we do not give trading advice! Talk to your broker.

CVX, Chevron

Hamilton

cvx sept 1 2014cvx sept 1

Markets just love symmetry. I have no idea what it means in the case of Chevron but I just point out that the stock has moved up in two, vector equal, and identical legs since the beginning of ‘03. As it is possible to make a case that the stock has made a complete 5-wave sequence from the low of about $7 in 1982 (see also previous blogs) we would step aside.

SMI, Swiss Market Index

Hamilton

smi sept 1 2014

Once again we are confronted with a situation where the stock moves over the past 16 or so years can be interpreted in different ways. The, to me, most acceptable labelling would have the top in 2007- primarily because the move into that top looks like 5 waves – which would make the rise from the lows of 2009 a wave B. B waves can retrace the entire preceding down move, they can exceed that or they can fall short of reaching the “double top” level. Presently we got to within 500 points or so of double topping so that does not add any further insight.

Alternatively (in light red) the top has yet to be made. The wave 4 would have started in ‘98 and ended in ‘09. The present leg up would either be a normal 5 wave affaire (needs a 4 and 5) or a wedge (essentially complete).

Interestingly the implications of both interpretations are essentially the same and therefore the distinction is, other than for EW purist, immaterial. Either way the next big move should be down.

P.S. The Head and Shoulder people must be salivating just looking at this chart,see below;

smi h&s