BCS, Barclay’s Bank

March 8, 2016March 9, 2016 Hamilton

Barclay’s Bank is not doing all that well to put it mildly.

I try not to get personal in this blog having already been charged with a defamation suit by a credit union, but here it is hard not to. I admire very few bankers, Matthew Barrett and Walter Wriston (FNCB), with whom I actually once had lunch in NY, are the exceptions. Mr. Barrett I know absolutely nothing about, other than that he has this charisma and aristocratic appearance of David Niven/Rhett Butler. After failing to merge BMO with RBC – something many BMO employees are still grateful for – he decided to retire at 55 only to be asked to head Barclay’s. From the chart it is clear that he did a stellar job or was lucky to be there during most of the 5th wave. Soon after leaving the stock is decimated.

The big question now is what is in store for this stock? Since the lows of 2009 it has been tracing out some pattern that certainly looks like a triangle. This is a continuation pattern, that is to say that you will continue in the same direction coming out of the pattern as when going into it. That is down. But how much lower than $2.99 will it have to go? The triangle’s size suggests that the stock could go below zero, which, even in these times, is not possible. Also the first leg up, a, looks like it is a 5-wave affair which cannot be in a triangle. We would therefore go with the wave1, wave 2 a-b-c idea as shown in blue. If correct, the stock should be a buy around $4.50 or so.

Maybe that other Canadian, Mark Carney will be available in a few years to run this bank.

For the record, below is a chart of the BMO, same size for better comparison. It is the waves that count.

RDS.B, Shell update

March 8, 2016March 8, 2016 Hamilton

Then, Jan. 22 and now charts;

We reached $48 from $36, which is a cool 33% in seven weeks. Our expectation was that we could go higher, but at this point we are not at all confident about that. So, when in doubt, get out. This is the most important trading rule and one that is seldom followed.

See also COP, Conoco Phillips or HSE, Husky, where it is also not clear where we are in the sequence.

Oil , the stuff, again.

March 7, 2016 Hamilton

Just for greater clarity it might be useful to point out that oil could still go lower, albeit after perhaps a year of sideways to higher prices (see earlier blogs!).

There are two ways you can count oil. Both are essentially the standard A-B-C corrections. The first possibility has the B in that pattern as a triangle. It is a very compact one and a little distorted but a triangle nevertheless. That triangle then absorbs all the ups and downs between 2009 and 2014. The wave C, that must itself have 5 subdivisions, drops down like a stone in much the same way as it did during the great recession. The entire A-B-C pattern was complete early this year and from here on we are in the new bull market.

The second possibility is that the above is all wishful thinking. The C wave started much earlier in 2011 and does an initial 1-2 into 2013. From there wave 3 down takes us to the recent low of $26 or so depending what contract or spot price you are talking about. The roaring bull market the last few weeks is the start of wave 4 that could take as long as a year or more to complete. Then wave 5 takes oil down to about $10. I prefer this count.

The chart, long-term would look like this;

What it means, if it is correct, that you have a whole year to profitable play with oil stocks, just do not get married to them.

OTC, Opentext update

March 7, 2016 Hamilton

The rebound has gone a little beyond our guess of $65 and has taken longer than what one would normally expect at seven months. Nevertheless the outlook remains the same. Any moment now we should dive down again by about $30 but probable a lot more than that. So you have $5 to the upside and $30 to the downside and both the RSI and MACD have turned decidedly bearish. A short perhaps?

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