XOM

XOM update

Hamilton

The usual then – Sept. 2, 2014 – and now charts;

xom sept 1 2014xom feb 3 2015

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.

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.

XOM ,RDS.a and CVX, the big integrated oil companies

Hamilton

xom feb 22 2014RDS.a feb 22 2014cvx feb 22 2014crude oil feb 22 2014

All three yield about 3% and have p/es of about 10x to 13x. Royal Dutch is the only one to have a perfectly clear B-wave, but then it also consumes an inordinate amount of time (4 years) doing nothing. Exxon sports a clear wedge (as the c in the B-wave) which is equally bearish. It also does that Mnt. Everest thing by climbing to just over $100  and falling back from exhaustion. Chevron  is the only one of the three that (arguable) has a 5th wave going into the recent top. 5th waves are normally completely retraced (and then some) during the next retracement. What all three have in common, at least using EW rules, is that they are about to lose 1/2 of their value.

Interestingly, only Royal Dutch resembles the actual movements in the value of crude oil. Of course these are integrated oil companies so there is no compelling reason why they would track the stuff all that closely. But other than Fed. policy there is also no compelling reason why the American oil giants should outperform. BP, by the way, is still trading at about 40% below its peak. It resembles RDS.a but at much lower relative values. It yield about 5% and trades at a p/e of 7x. On a relative basis it might actually be a buy. It is the only one that may have completed an A-B-C correction (or a more complex A?) as can be seen on the semi-log scale chart below;

bp feb 22 2014

XOM update

Hamilton

xom jan 27 2013

XOM, see blog of 2 days ago, is on its way to $95. This leg up, like all the others, should unfold as a 3 wave structure, so it may take a little longer as the stock vacillates around this $90 level for a little while before going to $95. After that it should be a sell/short