Murphy Oil has performed in a stellar fashion abiding by most EW rules and guidelines (See also COP which has done much the same and has been the subject of our blog before). We assume, repeat assume, that this wave up started in 1982 and lasted to 2008. We have no idea whether this is a third wave of a much larger 5 wave sequence, or a 5th wave to end such a sequence. In the former case the present drop from just above $80 would be a 4th wave (to be followed by one more wave up to new all time highs). If so, overlap is not allowed and the stock should not drop below an earlier top at about $13. In the latter case this drop from above $80 is correcting a completed 5-wave sequence and consequently must be a wave 2. It can drop all the way to zero but not beyond that.
The drop from the top in 2008 can be viewed as either a flat, albeit a rather skewed one, or a zig-zag. These structures have a 3-3-5, or a 5-3-5 breakdown. The intervening B-wave follows that same recipe and has done a clear flat, a 3-3-5, in which the c equals a. The retracement is usually about 61.8% as it is here. The larger A and C waves often tend towards equality as vectors. On that basis we would predict a low around $18 or $17, or so.
Presently it is too late to sell short, and too early to buy. But the time is perfect to keep an eye on it.
Below we have added COP, Conoco . As you can see the chart is much the same except that the B-wave is skewed upward, that is in the opposite direction from MUR, which leaves a little more guesswork.
