Air Canada is not quite at our ideal target but the “turbulence” sign is glowing brightly and you have been requested to fasten your seatbelts. Time to jump.
Month: February 2015
XOM update
The usual then – Sept. 2, 2014 – and now charts;
This is all pretty basic Elliott Wave stuff. You have a wedge, so it must be the last wave in a sequence, in this case the 5th wave. That 5th wave is virtually always retraced, certainly if it is a wedge. So the next big target is around $55. So far we moved from the peak at $103 to a low of $86. Without even using a calculator I figure that is about 17%, less than the 20% the talking economic heads regard as a correction.
Now one could argue that this wedge might not be finished. Theoretically, and in this market anything seems possible, the wedge may continue upward and onward for another year or so and make a new high. Relative to wave 3 the proportions of wave 5 would become too large. Furthermore there is substantial overlap, 3 x already which is a bit much even in a wedge. Therefore a very high probability must be attached to this stock going to $55 at the very least.
OIL update
We have absolutely no idea how this should be counted, except that we are pretty certain that there is a triangle at about the $57 level, which is why we did not expect a drop substantially below $50 (this is the April contract so the numbers are not directly comparable). Also there was a clear wedge at the very bottom, a frequent sign that the whole thing is over- for the time being. This is a $56 drop so the first retracement should get us to the 4th wave of previous degree, that is the top of the triangle at about $60. Next a retracement of about 38% which would take it to almost $68. That should complete the rebound.
The shape it should take, in its simplest form, is an a-b-c. However, this will become a 4th wave of the much larger C wave (see earlier blogs, also ACQ), so a very large flat or triangle, with pretty big swings up or down , is a distinct possibility. Time will tell.
SU, Suncor update
Suncor spent 3 years doing nothing. At its peak this was a $70 stock (with oil at $140/barrel). The move from the lows is most certainly corrective, implying a new low below $20 someday in the future. Looking at the short-term chart, it looks like there were 7 waves into the recent low, one too many. (unless, somehow this is a very ugly diagonal wave c, which would then need a brief new high above the high of 3 years ago – the b simple moves to the right by three years). Therefore we expect a turn soon and the most probable point would be where c=a in the latest bounce. This would be around $41 where the 200 day moving average also resides. Note that by that time the RSI would be overbought.
Logic suggest that the stock is too high. If it trades at $70 when oil is at $140 where should it trade when oil is not expected to exceed $75 for the next few years? $35 maybe? What if oil drops to <$40?