From the blogs, Nov 19, 2010, and July 13 ,2010;

Buy it here,…………………………………………………………………..Sell when it gets to about $75

The buy at around $57 was based on the near perfect wedge that had developed. The sell at around $75 was based on the simple fact that these wedges nearly always completely retrace, so that was a minimum expectation. Here is where we are today;

So the stock went a bit above the $75, but more importantly it took a lot longer courtesy the meddling central banks. For almost two years now the stock peaks between $85 and $87 without making any real headway. Here it is in detail;

This thing is a wedge, pennant, diagonal whatever. When, not if, it breaks down we will be back at the bottom and then some. Wave 4 of previous degree is not at $53 but at $30, easily attainable if C becomes 1.62x A. The stock was downgraded yesterday by one of the big European houses (UBS?) but the target was raised to $110, go figure.

Royal Dutch did something similar. Here is the old (Nov. 2010) and today’s chart;

This time the target was dead on but, so far at least, the anticipated drop has not yet happened, but neither has the opposite. If this is a 1-2, 1-2 situation things could get nasty real fast. The target, as with XOM is also around $30.

The Canadian market seems to be able to go only one way, regardless of whatever news there might be that day, so perhaps it is worth looking elsewhere for some clues as to what lies ahead. Energy is a very large component of the Canadian market and Royal Dutch Shell is a very big integrated oil company. The two charts above are old ones that worked out fairly well. Below is today’s picture, long  and short term.

This stock must have read Elliotte’s work as it meticulously follows all the rules perfectly. Every leg of the30+ year bull trend channels  very nicely. Wave 3 is the extended wave. Now looking at the short term chart it is obvious at a glance that the drop from $90 to below $40 is about 61%, and, it is also right at the level of the 4th of previous degree. The drop may, or may not be a 5-wave move but what matters now is the rebound from the low, which, so far at least, is a very clear a-b-c . This may yet change, but until it does so, this is very definitely corrective; the implication is that the bear market from the 2008 highs may not be over yet! After all it seems counter-intuitive to assume that a 30 year uptrend would be corrected in just a year or two.There is some leeway left to the upside before the stock would start it’s down- trek again, perhaps to $75 or so, but this is definitely something to keep an eye on.

A quick glance at XOM, the other big one, confirms that this is very plausible.

Again there is a consistent 30+ year uptrend. However in this case the drop ,that initially took a little more than a year, did NOT retrace the usual 61%, nor did it reach the territory of the 4th wave of previous degree ( about $50 t0 $30 ). furthermore the move back up from the first low, so far at least, looks itself like a little a-b-c to form a B in the larger down-trend. This scenario would allow for a further rise to about $78, then down for the second leg to about $40. If nothing else it is food for thought as unless someone figures out how to make water burn this scenario could really only work if there is some sort of economic down-turn that would , most likely hit all commodities. Not good for the TSE, but for the moment just a possibility worth keeping an eye on.