BTE and ENB (Baytex and Enbridge)

Hamilton

bte2011 enb2011

Both these energy stocks have out-performed ,by a remarkable margin, most other energy stocks. I would have sold Baytex when it double topped at $36 and Enbridge at $54 (see Sept. 2010 entry). Both calls were wrong, dead wrong in the case of BTE and marginally in the case of Enbridge. Should you have disregarded my take on these two stocks and still hold them, I would again sell.

BTE is trading at a p/e > 40, ENB at half that but still in the upper ranges. In my view oil was going to top out at about $104 max; today it hit $103+ and immediately fell back $3/4/5. Of the two ENB has a clear 5-wave count and is also trading well above trend-line. Both stocks also are suffering from the $5/$10 to $65/$130 phenomenon, illustrated below by BIDU (Baidu) and UNH (united Healthcare).

UNH BIDU

BIDU is, of course an Indian internet stock and has absolutely nothing to do with ENB, except that the chart is perfectly identical except that one is on the $5 to $65 trajectory whereas the other is doing double that i.e. $10 to $130. It’s p/e, by the way, is about double Enbridge’s. Time will tell where they go from here, my guess is down (a lot).

In the case of UNH I thought it was a short at about $25 or so. It doubled from there and then some. We do , however know what the stock did . Below is the chart again, this time to today.

unh 2

UNH lost 76+% of its value dropping to about $15. It has since retraced 62% in a pretty articulate b-wave, probable a sell once again.

OIL (WTIC), SU and JE

Hamilton

WTIC2011feb

Today Nomura Securities came with a report that suggests oil should go to $220 or so. Just recently I put a maximum likely price at about $104 (see previous blog), the reason being that that would be a 61.85 retracement from the lows of the drop from $147. There are futures, there is spot and there is West Texas and Brent, you can slice this in a million ways so the $104 target has no pretense of being perfect. Above you have a stylized depiction of an A-B-C retracement, which, now that the wedge seems to be incorrect (or had a big throw-over) suggest a further rise to $100/$110.

SU has this same A-B-C pattern and could climb up to about $50. (62% and C=A).

SU2011feb

We kept the chart clean in order to make the pattern more noticeable. Also shown , below is JE, this is a great company run by Rebecca  McDonald who hails from Sarajevo. This company was formerly known  as Energy Savings and its principle business is marketing natural gas. It grows rapidly and pays a very high dividend and could be considered recession proof as nobody likes sitting in the cold. However it is not clear why the company should benefit from higher prices per se. Here is the stock;

JE 2011

What is interesting about this stock is that it came down in what could be an expanding diagonal. If so chance are very good that it will double top, but to be safe we would use a stop at around $13.

FVI, Fortuna.

Hamilton

 

fvi2011

This stock is fascinating in so much that it lost 1/4 of its value right on target, but then it came right back and actually exceeded its previous high of about $4.75. This, I think, is an irregular b-wave; irregular in that it went a little higher but is still classified as part of a bearish structure. The wedge leading the stock into its top has a truncated (5) wave within the wedge which, combined with the irregular b-wave promises a fairly violent downturn from here.Notice that both the RSI and MACD are turning down for quite some time now.

Silver itself is also displaying some clear signs of fatigue, this at a level that is rather precisely 61.8% of the highs ($55) during the Hunt brothers failed market cornering operation back in 1981.See chart of SLV below;

slv2011

SBUX, Starbucks (a sell).

Hamilton

sbux2011feb

This one was recommended very close to the low of $5. It is one of those stocks that one would normally not touch with a ten foot pole. Recently we suggested selling bits and pieces around $30. Today we would call it an outright sell.

There is no logic to this, just the desire to buy low and sell high. If we are in a bear market (in purple) the stock could still double top at $40 but after that it would drop like a rock. In the bullish case, (blue) , a wave 1 is complete,or nearly so and a wave 2 should follow soon. These typically retrace a substantial portion of wave 1 (we do not for a single moment believe this is what is actually happening!). Average the two scenarios  and the risk /reward is clearly against you.