Our previous comments were somewhat confusing. This is the count we will go for for the moment. The first real resistance is at $4. How fast it will get there is anyone’s guess but it will be fast judging by previous moves. Drillers are, in a sense, a derivative of the oil producers. When they make money they hire the drillers, when they don’t make money they do not even know their name, the swings can be huge.

For various reasons we did not expect this stock to double-top at around $20, hence this particular count that is not 5-waves from the bottom, the last leg to $18 is a B-wave. All that is essentially academic as in both cases a 5 wave down sequence should follow, the top as shown is the”orthodox” top of the retracement. It looks like there was a series of 1-2s at the start and therefore we would expect the same at the bottom. Things can happen quickly as, so far at least,  the drop has only lasted 3 months. It is possible that we complete the first 4-5 in the next month or so and take the stock to $9 or below. For the big picture see chart in previous blog repeated below;

Ultimately the target could be the wave 4 low in 2002/3 which on this semi-log chart is a little difficult to guess but is around $1.

Back on December the 7th we pointed out that we were not particularly keen on the prospects of this stock, but did concede that it had the potential of going to $16.50 or so just to complete the counter-trend rally. It has done exactly that so there are no excuses to hold on to this stock. See previous blogs.

Looking at the longer term Yahoo chart, there is little doubt that the drop from the highs of about $20 is a wave A , followed by a B that is quite symmetrical. Ergo we should  be getting in the C now. C’s are always 5-wave structures so the drop from $17.50 to $9.50, about 50%, must be a wave one and we are presently in the process of completing wave 2 that looks to be a zig-zag. If the c within the zig-zag equals the a, it has the potential to take us to $16.5 where it would have retraced $7 out of $8 or 87%. If, in fact, it stops right here, that would be 6 out of 8 or 75%, very close to a Fibo 76%.

The RSI is moving into overbought territory already. Also this one most definitely does not pass the most elementary test of good investing, i.e.  buy low,sell high. A superficial glance at the long term chart would suggest that you are buying high for starters, so you will have to find that proverbial “greater fool” later on, which is always far more difficult. This is a sell.