PD, Precision Drilling

January 11, 2015January 11, 2015 Hamilton

We have all three charts here, big, medium and small. The top of a cycle is assumed to be in 2006. From there we have an absolutely classic correction in the form of a perfectly formed A-B-C that wipes out almost all the progress over the previous ten years or so. It hits bottom in synch with the rest of the market in early 2009. The low is around $3.38 exactly where both legs of the zig-zag are equal. This is the point where a stock either goes bust or starts a new upward cycle. We assume that wave 1 up of the new cycle occurs from 2009 to 2011. Next we have the inevitable correction of wave 1, wave 2. Wave 2 appears to be doing a very symmetrical a-b-c down and in the process takes back nearly all of wave 1, as is normal. The c of 2 does not look as if it is complete as 1. it is not yet equal to a, and 2. it has not completed a 5-wave sequence as all c waves should. You need a very sharp pencil to figure this out but nevertheless the target would seem to be around $4.75 or so, not far from where we are today. Furthermore, assuming our interpretation is correct, the stock should not trade below $3.38. The next move should be wave 3 up which at the very least should exceed wave 1 in size, that is >$16. So roughly speaking you could lose 30% or gain 300%. When did your broker present you with such a proposition? For free!

We have no fundamental view on what might make this happen. One possibility is that the famous Belgian dentists of the past mistake this company for some sort of association of dental practitioners in the forefront of that science and are all over it to get a piece of the action. Investors’ memories are, after all, very short.

TSX showing all the possibilities

January 9, 2015 Hamilton

Using the TSX , here are the possibilities discussed earlier. First is a series of 1-2’s of different degrees( in purple). This is in line with a very bearish outlook as the bottom is very far down. Then there is the rather awkward possibility of this being a wave 4 (in black), one more high would be needed around 16000 or so this summer and only then will the real bear start. To me, with oil already in the dumps and the banks obviously overbought it is not entirely clear what would bring this about. Then the third possibility is that this is a triangle B-wave (in red). The problem with that is that the downside would be limited to about 11000. Time will tell.

HXU update, could it be telling us the TSX might yet go up??

January 8, 2015January 8, 2015 Hamilton

I left RBCDS involuntarily on Nov. 6 ,2008. It is hard to believe that 6 whole years have gone by. Just before I left I had put buy orders in for the HXU in fairly large numbers and for relatively large amounts, basically anyone who would listen. Those orders were no doubt cancelled before they could be filled as there was nobody left to deal with such an esoteric product as the Hor. BetaPro leveraged 2x TSX up, which is , of course, the opposite to the HXD (U=up, D=down). The objective was the usual 62% retracement in the form of an a-b-c. We got precisely that all though in fairness we would probable have bailed at $18, not having the patience to wait two years.

After reaching the 62% mark it dutifully drops 62% to about $14. It should have continued to almost zero as Europe fell apart but the powers that be saved the day with oceans of money and other goodies. Three more years pass and the goodies just keep coming and as a result the markets experienced one of the longest rallies ever without major interruptions, that is un till Q4 of 2014. Today we are essentially where we were 4 years ago! So where do we go from here?? This may come as a shock but despite my beliefs to the contrary, it would seem that we should at least entertain the possibility of being wrong! Here are the charts;

Just as with the inverse head-and-shoulder possibility on the NYA (two blogs ago) there is the equally alarming possibility that the HXU might go up. The main cause for concern is a triangle formation that seems to be forming over the past four months or so. In such a triangle all 5 legs must develop as a-b-c’s which does not seem to be the case but it is very hard to tell. Otherwise the triangle is well formed needing only c of d and all of e. This could be complete, if it happens at all, in one month or three months so the apex can shift both to the right or left. In fact the whole thing could already be complete! The triangle, as it must be, is clearly in a 4th wave position. It measures about $8 so a reasonable target once the “thrust” is done would be between $34 and $38, which would allow the HXU to double top. Time will tell!

For the record, I do not have an open mind and I cannot conceive of the TSX improving much further with what is happening to oil and the banks. So I will stick to the HXD on which I have already lost a lot, but I am aware that what should happen, does not necessarily happen which I understand is the main reason why people lose money.

The bears should keep in mind and console themselves with the thought that some triangles, at tops, are actually a series of 1-2’s which is very bearish.

SLB, HAL and RDS.b

January 7, 2015 Hamilton

Here we have Schlumberger, Halliburton and our favourite Royal Dutch. The first two have very distinct B waves whereas Royal Dutch appears to have a 5th wave. It does not matter much for the next big move, all three should move close to the bottom of the chart. This, by the way, also applies to CVX, XOM and a few others. So how is this going to happen? Here is Royal Dutch in greater detail;

We anticipated large moves, both up and down but were surprised that they actually happened. As a result we are “stretching” our wave count so that it can reach our initial target at around $58 (see previous blogs), and then later drop much further. The recent move smell like the start of a triangle which suggests it is a 4th wave (it could also be a B-wave, but that does not fit as well but if it is then our original thought might still prove to be correct. This triangle would start one leg later and when finished the stock would climb to about $75). The thing to remember is that the drop is not over for any one of these stocks!

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