Year: 2015

OIL update

Hamilton

oil feb 3 2015

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

Hamilton

su feb 3 2015 bsu feb 3 2015 s

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?

COS, Canadian Oil Sands, update

Hamilton

The usual then – Dec. 4 , 2014 – and now charts. (do look at that blog!)

cos dec 4 2014 scos feb 2 2015

We expected this stock to drop to about $7 at the end of wave 3. We were wrong by a dollar, it got to $6 on Jan. 30, 2015. That was more or less based on the gap-in-the-middle concept for wave 3. Now that every prognosticator has hedged his bets by stating that they would not be surprised if oil dropped to $20 or whatever, you knew things were about to turn around ( see also RDS.A that got to within $2or $3 of our target of $59). COS will be taken up to a level that should at the very least close the gap, that is >$13. This is wave 4 in the large C wave down, so enjoy the ride – it should take the form of an a-b-c – and get out in time as wave 5 should take it down again to a level of only a few dollars.

ACQ, Auto Canada Inc.

Hamilton

acq jan 31 2015

A little less than a year ago this stock looked like a sell. It had a nice 5 wave sequence, the RSI was already overbought and the stock had gone vertical. Not very good advice as the stock managed another $30 from there. However, on the positive side we are now almost $30 below that point. This is a momentum stock which operates exclusively on the assumption that there will always be a greater fool to take the stock off your hands in the future. This works fabulously un till it does not, here that point is at about $90 where you sold.

These people sell cars and trucks in the province of Alberta in the Calgary area. Low gas prices are good for car and especially truck sales, but not in this province. It has now become a barometer of the wellbeing of the economy there.

The drop . so far, appears to be an a-b-c (rather than 5 waves). That could of course be all there is, the entire correction, but we suspect it is only half of it. In that scenario oil should stabilize or even go up $10 or so per barrel and things will look up a little (relatively speaking). Then the process could start all over again as the second a-b-c forms to complete the “double zig-zag”.