PHX, update

March 15, 2015March 15, 2015 Hamilton

We remain constructive on this stock. Not only does it have a neat 5-wave initial wave up followed by a 62% correction, but now the Department of Energy has decided to weigh in on the matter by announcing,last Friday, the purchase of 5 mln. barrels to replace the sale of an equivalent amount precisely a year ago, supposedly because the stuff is relatively cheap now. 5 mln. is about 1% of the amount in storage (above ground!) so negligible by any standard but not in the context of market manipulation. The timing is bound to boost the narrative around oil if only for a little while, perhaps soon we can expand the Fed’s mandate to include stable mileage. It has a good ring to it, stable prices, full employment and even mileage. With regard to oil we remain of the opinion that another leg up should occur before oil drops to new lows ( see chart below), as is now also predicted by the Maestro, Alan Greenspan , himself. This should provide support to PHX.

We did not get the triangle wave b, instead we got a clear a-b-c down for b (we think) so c up should get back up to , perhaps, $60.

By the way, if you suspect something nefarious is going on here you are barking up the wrong tree. The US is obliged, so they say, to buy back what was sold previously, within a year! So they are just fulfilling their obligations. How crucial that is becomes obvious when one considers that there are 4.1 BILLION barrels of oil salted away, so a drop of 5 MLN. barrels could easily jeopardize the US’ military and other capabilities.

Elsewhere the strategic reserves are estimated at 727 mlm. barels. Eitherway 5mln. matters little.

RDS.B , HAL updates

March 13, 2015 Hamilton

Then – December 14th , 2014 – and now charts, as usual.

Roughly 3 months ago we anticipated a drop to about $59 and even anticipated the possibility of a triangle forming which would cause some big movements with little net result. We did get that but it remains unclear if there was a triangle. We are at the $59 level now and if the triangle was there it would most likely be a 4th wave triangle as opposed to a B-wave. This is easily accomplished by adjusting the count to start with two 1-2’s. This then completes wave A down with a B and C to follow. This is tradable as the B could easily go as high as $75 and in the meantime you are earning a 6.1% dividend in the , now hard, US$ currency (on the ADR’s).

In the alternative it was a B-wave triangle and the second part of this correction has already started. That could take the stock down to $45 or even lower in a jiffy. For the moment we do not expect that. Using HAL, Halliburton (and SLB, not shown) it would seem that a time to pause is just around the corner;

Note, first of all, that HAL already dropped 36.47%, a lot more than Royal Dutch. Next it did not have the big swings recently and has essentially gone sideways supporting the notion that it was one single 5-wave leg down. The RSI will soon be oversold (it is already with Shell) which also suggest a period of pause for the next little while (defined just like with the Fed. as when I change my mind, but data based!).

Shell is one of the few true blue chips left. It is the go to stock for widows and orphans and has been that for a very long time. At 6% your money doubles in 12 years which is a lot better than what you get on a ten year note, with, arguable, a substantially lower risk.

K, Kinross update

March 12, 2015 Hamilton

See also previous blogs on this stock. Earlier we had suggested that a new low should be expected on this stock. However, on second thought that is not necessary, at least not if you use a semi-log scale chart, the one on the right. What we are looking at is a very simple a-b-c down correction from the peak of Mnt. Everest back in 1995/6 at almost $40. For some inexplicable reason the markets love symmetry and consequently you will often find that in any a-b-c the c is equal to the a, either absolutely or as a vector and sometimes all three legs are equal as vectors. In this case that event would occur where the blue line from inception connecting the lows and the red circle with a radius of a, intersect. Should the stock drop to that exact point you have paradise in EW-land. In detail it looks like this;

You work with what you have and here the bounce from the November lows is an unmistakable and perfectly formed a-b-c correction, implying a new low. The bottom of big wave A down in 2000 was at about $1.86 so if a new low is required despite the above comments $1.85 would do the trick.

From a fundamental point of view these guys have made every mistake in the book, one of colossal proportions (7+ billion and counting) so perhaps good times are ahead. They even pay a dividend of 5.4 %, higher than any of our banks. In our opinion this is what is meant with buying low and selling high. All though you do not know where those points are you at least do know that the low is no more than $2 off. An initial target of $6 is a minimum expectation so that would be a 3x gain. After that $11 is very realistic.

TSX update

March 10, 2015 Hamilton

We are reverting back to our original thought that the drop in October, at least on the TSX, was a 5-wave affair. The steep and deep up and down movements subsequently were somewhat of putting but after all is said and done this is by far the most plausible interpretation. Only in the event of decisive developments to the contrary we will stick to this scenario. What it means in practice is that drops expected in the year Sleeping half-moon s to come could literally decimate the market. Therefore we reiterate our previous recommendation that you only buy stocks that go up! Or follow Mark Twain’s (?) words of wisdom. “There are two times in a man’s live that he should not buy stocks, when he has the money and when he hasn’t”. Today this would apply to both genders.

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