Three years ago, almost to the day and at about $60, there were good reasons to assume that a top was in. Not so as we were only halfway. We cannot now label this stock chart in any credible way and therefore just leave you with the picture. After all a picture is worth a thousand words.
Looks like we may reach the target of $8 Canadian or $6 US. If we do the stock will have dropped something like 90% in US terms and actually a little less in Canadian terms. I like the large chart as it demonstrates what a C wave will ultimately look like. We will have quite a number of them.
In the big picture this stock appears to have completed a large A-B(orX)-C down. Appears is the operative word here. No new low was ever made, it fell short by $0.53, but that does not necessarily disqualify the count. From that low it doubles very rapidly in what we assume is a first wave up. It then retraces most of that, as it should, in a second wave. Next is wave 3, or at worst c, that should try to close the gap. A drop now would negate this count but leave open the simple a-b-c correction with roughly similar targets.
This Yahoo chart, which is a few days old, appears to be very accurate and quite long. The two main possibilities for labelling this chart are that a. the first top is THE top – it actually is by all of $0.24 – from which we have have an A down, a B back up to roughly the starting level and we are now somewhere, halfway?, in C which should unfold in 5 waves. All this is a large “flat” shown in purple. and b. The top is the second top,that failed by $0.24 and from there we are doing an entire correction in the form of a zig-zag a-b-c. This should take the form of a 3-3-5 structure. All this is in blue. In both cases we should get a pretty solid bounce right about here, either as a wave 2 of C or as a wave b in an a-b-c.
RDS.B gained about $5 last week on bad profits but with that a cut of 6500 employees. Chevron and Exxon fared a lot worse. Profits were reduced beyond expectations and there were no mitigating factors. Neither of these two integrated big oil companies were as far down as RDS.B was to begin with.
Oil itself is , of course, at a low that is roughly at the same level as earlier in the year. It remains to be seen if this is a 5th wave, a b wave, or the start of a new leg down. Right now the only thing that we know for sure is that the large, integrated oils ultimately will go lower. In the case of RDS.B $40 is a minimum target.
We prefer the large “flat” interpretation but by comparison to XOM or CVX it is hard to conclude that one is clearly superior to the other.