RDS.a, Royal Dutch Shell

Again a B-wave, here are then and now charts;

 

rds.a march 2011

This was from April 26th (see previous blogs). Among other things it told you oil was going to go down, not up which was then the “consensus”. Here is what we have done since;

rds.a july 2011

The stock went two dollars higher at the time to just under $78, then promptly dropped to $70, a little over 10%. If the original analysis was correct, and I still suspect it is, the stock should fall a lot further. It is presently retracing the first leg down but does not have that far to go before wave 3 (or, at best C) starts. At the very least we should get to $59, but if my 9altered) count is correct  $47 is very plausible.

RDS.a , Royal Dutch Shell, repeat!

rds.a march 2011 RDS.a june 2011

The left is an old chart from late April. It was one out of a number of charts that was loud and clear about the impending drop in oil prices. I repeat it here with the updated chart on the right to show , once again, what kind of a pounding oil could potentially take. Remember that the stuff dropped from $147.55 to $33 in less than a year, just two years ago., almost as if someone had indeed found a way to burn water.

Looking at Shell it there are to very distinct patterns, neither of which promise much good for the future. First , the move into the recent highs appears , quite clearly, to be a diagonal or wedge. These patterns are ending patterns and are invariable retraced to their base level, in this case under $60. Secondly,and this is equally clear in the Bigchart on the right, the move up from the March 2009 lows is, almost beyond a doubt, a B-wave (note the stylized blue arrows) in which the a and c components are about equal in time and magnitude. Consider further that , shy of $10 or so, the stock double-topped, all of which is the signature of a “flat”. This promises a drop in the C wave to a level below the start of A, in this case $33 or whatever it was. Should this happen energy stocks are going to have a pretty rough time to say the least.

    There are a number of highly unlikely alternative scenarios that would prove this assessment wrong; we could be forming a huge triangle (still down to $50); we are in wave 4 of c and will move up to above $90 (after all we are running out of the stuff as in “peak oil”): this is just the first leg of a more complex correction up that will stop at about $50 and then continue back up, etc.etc. None of these are attractive alternatives so, in my view, it is best to have a low exposure to conventional energy companies. Perhaps superfluously , I should point out that I do not think Cameco (CCO) fits into this category.

RDS.a Royal Dutch Shell

Last November we looked at Royal Dutch to see what could be inferred from that for oil and the energy sector as a whole. So many companies displayed B-waves so it was only logical to assume that Shell was doing something similar. At the time that made our (incorrect)assumption that oil would peak around $104/5 rather plausible. Here is that chart;

rds nov 2010 2

The chart calls for a peak at about $75 for Shell. In the meantime ( about 6 months ) that is precisely where we are.

rds.a march 2011

Here we are at $75/76 with a nice wedge (green) to finish it off. This completes C and with that presumable the entire correction from march 2009.

RDS.a , Royal Dutch Shell , update.

rds2011 rds20112

Just a quick update on Royal Dutch. Nothing has changed except that the A-B-C retracement probable completed a few weeks or so ago. The sheer geometric precision is a little marvel in itself but the possible implications are even more intriguing as they run completely contrary to the present wisdom in the street that seems to have it that oil will go up.

For whatever reasons, this stock seems destined for $34 or lower!