Just 4 working days ago we recommended this stock, but wait for one more new low to play it safe. Bad advice as you would not have gotten in. A day later the stock was upgraded by at least two analysts.  I guess they read this blog and then adjust their fundamentals. Believe it or not there are whole armies of analysts that actually use EW but would never dream of confessing to that. Even august publications like the Bank Credit Analyst are closet E Wavers. If this count was right, but we might actually be in wave 4, (this recent up move being wave a of a triangle), the stock could easily go to $14.05 As it is easier to predict the past I will wait a few days to let you know which it will be.

There are a total of 13 different patterns that are recognized by EW. Some are a bit problematic as it seems that the stock movements can be counted in so many different ways that the whole EW approach appears almost arbitrary and not always testable in real time. True, no doubt, but even so there are some extremely accurate and predictive patterns. The “diagonal triangle” is one of the best. It is easy to recognize due to overlap that does not occur anywhere else. It is always in a 5th wave  (leaving the question 5th of what open) or c wave position. The stock almost always returns to the start of the pattern. ATH had one of these diagonals and here are the then and now charts;

It does precisely what it should do, returning right to the start of the pattern. The trick, as always is to recognize this in advance so that it becomes tradable. Notice that the pattern can also be broken into two parts, a triangle followed by a thrust down; combined “diagonal”is therefore an appropriate name.

In this particular case the diagonal occurred as the 5th wave of 3 (it actually failed by a very small margin). Presently we are in the 5th of this 5 wave sequence so a buying opportunity should present itself soon. This 5th wave may , in fact, already be complete but to be safe we are assuming that we are in wave 4 and have one more push to go to the downside. A buy at any new low!

More than two years ago we suggested that this was a buy.for a move from just under $11 to over $15. It did just that and then some. Now , much later it again looks like a buy;

Energy, and specifically oil sands are not necessarily the best place to be at these times, but this one does show some promise. It now has a triple bottom, completed 5-waves down from $19 and is sporting a gem of a contracting diagonal triangle, read wedge. Invariable these structures are retraced completely which would imply $14. 50% is at $14.50. Not much but still 25% or so with an extremely high probability. Here is more detail;

You couldn’t really ask for more, a big one and a small one, fractals of each other within one structure. Awesome, this should really climb to $14 but it might drop a little further before it does so.

When you combine the tar (bitumen actually) sands, with the China factor (PetroChina –the word’s largest corporation – has a 60% interest in certain projects) and all the machinations that often are associated with IPOs – this being the largest in 10 years!- you get a marvelous cocktail of financial magic, hype and predatory pricing. In this particular case the bloom faded the very first day. The question now is simple this – if ,at the time , investors were willing to plunk down 1.35 bln. dollars at $18 a share would this not be a reasonable buy at $11/$9 ?? Just because the value was cut in half does not necessarily make it attractive but from an EW point of view things are looking decidedly more attractive. The dive can be viewed as one large A-B-C correction  -  the only fly in the ointment being that the recent bounce of the lows does not ( yet ) look very impulsive. Here is the chart;

Raymond James upgraded the stock today, which may or may not be an indication of renewed interest in this company. The RSI and MACD indicators both suggest a bottoming of sorts and perhaps the problems with the Gulf oil spill may help to make this business look (relatively) cleaner and safer. Last , but not least, buying at 1/2 price fits the  “buy low and sell high” mantra that, overtime , must be the single most important investment strategy. Regardless of whether or not the stock first goes to say $9, the target in EW terms, stays at about $15.