Month: July 2015

VLO, Valero Energy Corp.

Hamilton

vlo july 14 2015

For the record we got this one wrong about 2 1/2 years ago. this time there are slightly more compelling arguments. Conceivable the required 5 wave sequence to complete this leg from the lows is complete. The double top level is still a bit higher but it may well fall short of that. Presently it is on the channel (5-year) upper boundary. The 5th wave is clear. The RSI may repeat the action of two years ago but the MACD is ringing the bell loud and clear. A sell now and perhaps a short if it manages to get closer to $77.

A long/short play is perhaps not a bad idea either. As an example, see below in blue, the spread between RDS.B and VLO is the widest it has been for years. If you use the ADR for RDS.B the stocks are comparable so you could short one VLO against long one RDS.B ADR and  have an almost sector neutral net position and short Beta  (1.95 against 1.25);

VLO long short

JPM and WFC

Hamilton

We recently looked at JPM and pointed out the two possibilities in the count repeated here;

jpm july 14 2015

Quite clearly there is a triangle here, either as a b in a B-wave or, if drawn much larger (not shown) as a wave 4 in the entire sequence. The “channel” is hard to determine but must run something like shown by the light grey lines. Presently we are outside and above that channel. Also we are beyond the apex in terms of time and both the a and c legs of the B-wave are equal in magnitude if not as vectors. Wells Fargo, now the largest bank in the US is at a similar though different extreme point;

wfc july 14 2015

Both counts could apply to WFC as well, however, as it lacks the triangle right in the middle the B-wave is a little more tentative. The channel, on the other hand , is more pronounced and again we are above it. Both look well done to me and, granted that does not mean that these stocks have to turn on a dime the next few days, they are sells nevertheless.

Banks are reporting again this week and considering we have had 26 such occasions since the lows they usually pass uneventfully. This time could be different. Remember also that both these stocks have added almost as much or more value in the past four years or so than over their entire existence prior to that.

JOY revisited

Hamilton

Then, Dec. 2012, and now charts as usual;

Joy dec 12 2012Joy july 13 2015

The prediction (by EW, not me!) was pretty prescient as the stock kept travelling down. However, the EW argument was dead wrong! At the time (see the blog) I mentioned the clear B-wave as that featured prominently in many other charts and seemed to fit the picture just fine. Looking at it again, that count must be discarded. If this was a C wave from the top of $101 it would have to subdivide in 5 sub waves without overlap. That is equally clearly not the case so the count on the left, in purple, cannot be. Instead I would now put the top of wave 5 where B used to be, so the correction starts in 2011 and not in 2008. Now the complete correction and not just a C wave, can become a double zig-zag that will go down at least to $10. But for the moment it does look as if the a part of the second a-b-c is about complete. For the nimble this may be a buy for a decent bounce of about $15 to $45.

JOY is the world’s largest manufacturer of underground mining equipment, about 60% coal and 20% copper.

HCG , update

Hamilton

Then, 2nd of March, and now charts as usual;

hcg mar 3 2015HCG july 13 2015

A little over four months ago we warned that an initial 5 wave sequence down would be negated if “overlap” were to occur. It did as the a-b-c climbed deep into the territory of wave 1. That changed the outlook to a double zig-zag a-b-c X a-b-c. Assuming for the sake of argument that that is correct, then very often, but not always, the second a-b-c develops in a symmetric way, however mirrored. I have stylized how that would look by placing a mirror, represented by the black line, between the two a-b-c’s. The second a-b-c would take us to $32 which, by the way, brings us close to the lower long-term trend line. We are presently where the little blue arrow is!  We will see if this happens and in this way.

Below is the log-term chart , posted on the 29th last month, for your convenience;

HCG june 29 2015