A lot of oil related ETFs like USO have been bought the last few months. The notion that you will invariable double your money in the next year or two is firmly embraced by most. That may well be the correct prognosis but the real question is not where oil will be two years from now, instead the question should be “Will you still own it if it first goes to $30-35 before that happens?”.
Simon just pulled the plug on their $96 takeover bid for this company. They gradually started their approach back in November of last year. So the stock got to that price and it was rejected as it underestimated the value of the company. We saw something similar here when the takeover of Potash was blocked by the premier of Sak. and the company itself. That was political, this is economic all though their might be some anti trust issues.
Farmers sew in order to reap, and they do so when the sun shines. Investors never buy with an eye to selling later, not even when it concerns a purely cyclical stock. Also they never recognize that the sun is shining, here you can tell by the c=a in the large B-wave and by the double-top situation (within $4 or so). Ron Mock, the CEO of Teachers was on BNN the other day and it was advertised that their biggest position was in this company which, in part, explains their excellent performance and their “totally funded” status. I do hope they have a few farmers or E-wavers to provide some counter-weight to their overly scientific and intellectual approach. PHDs are good but nothing trumps common sense.
Hong Kong is far away and completely outside my “ken” so to speak. Some might say that is true for everything. Anyway for superstitious or plain dumb reason I have always thought that if anything goes seriously wrong with the World economy, there is a good chance that it starts here in China with HK the most free part.
Notice that the index has NOT made new highs and I find this rather curious as this is not where the Lehman problems were and growth has continued here at a torrid pace. Initially, paradoxically, this index lost more (almost 70%) than the US DOW or S&P.(at about 50%). However, the really interesting thing is the absolute textbook contracting diagonal, the wedge! It needs just one more 1/2 leg up to complete which should target something just above 26000. This is where the “intermission” was on the way down. To get there could take a while or take hardly any time at all. Furthermore I am not sure how much this index is in synch with the rest of the World. But the message is pretty clear and that is that it is time to get out.
We were lucky not to have bought this stock back yet, so we missed the 21% drop. This could, however, still be that b-wave in a more complex upward bounce, but we are leaning towards the possibility of this being a large A-B-C down correction which would normally call for a drop to where C=A around $25. This corresponds roughly with where the lower channel line is running . In this scenario we are presently in wave 3 of 5 of C.