We have warned twice that Canada’s largest energy company would surprise a lot of analysts. En bloc they knew that oil could only go up and so, therefore, should all energy companies. Maybe too many people read that book about the world getting smaller, and maybe that will happen but not necessarily today. Today this stock lost about 5% of its value. $30 would be an interesting point but it should not stop there.
We are down almost 2000 points on the TSX. The top was probable in April even if it is hard to tell. From there it looks like a series of 1-2s was made. At least 3 but perhaps 4 if we are now in wave 3. Today’s 460 points was big relative to what we had before and this is an indication that the “point of recognition” may not be that far away. Roughly that occurs somewhere close to the middle, which tentatively targets about 10,000. This is very tentative!!
We have urged people to but this ETF as a hedge if they hold stock. But after the lows in early April (where the HXD was the precise inverse of the HXU) we were a little but more excited about this ETF, even calling it top-pick. From an EW point of view these wiggles are very difficult to discern and count. A wild guess would be a series of 1-2,1-2s . This one could go a long way considering that it was as high as $40+.
This stock was always interesting as it could serve as a barometer for our market, given it’s exposure to the equity markets, interest rates etc. Late last year we still entertained the possibility of at least a $5 rebound from the lows then of about $11. We got the $5 but the stock simple did not do what it should if the market was O.K. Unequivocally we recommended getting out of the stock, and perhaps the market in its entirety on March the 6th (the blog is under “canary” on this website because of the dead bird picture). Here is Manu today;
Often it is more important to observe what a stock does NOT do, than what it does do. The expectation, or at least a probability of the stock doing an A-B-C as shown in red, was reasonable. But in early March the stock just would not above a narrow range, a dead give-away that something was wrong, so we advised to get out. (by the way, if your broker does not keep track of stocks bought for you , perhaps you should get a different one!).
We are now at $14 and would have given back any gains from$11. As mentioned then this could deteriorate rapidly.