EXXON AND THE FOOL'S CROWN

We all get it wrong, sometime. But when you say ‘Exxon Mobil: A Great Big Buy’ on JUN 3 when the stock price is at dollar 88 near all time historical high at 93, you must be neck deep in Oil data and rig reports, unaware of everything else. Everything linked with OIL prices, linked with mass psychology extremes, linked with risk management etc. This is not just the Business Week star analyst GENE MARCIAL who said this, but we had many other star analysts there from Lehman, S&P Research (Strong BUY) and even Motley fool, which predicted stunning Q2 earnings for Exxon on July 30. Prices fell 41% from the top.
Well! we repeat, everybody gets it wrong, sometime. But a STRONG BUY crown is hard to throw once you have worn it at an all time top. Readers will remember you. And by the way, we at Orpheus got it right on EXXON, CHEVRON, XLE, BRENT and the OIL complex. We were cautious from dollar 125-135 OIL, but then we rather be cautious than wear the FOOL’s CROWN, which is really scary and tough to avoid sometimes. We are sorry guys, it’s a fool’s game, better luck next time. Try looking at stupid charts, fractals, sentiment, cycles, intermarket and exponential curve in statistics, it might help. THE OIL ROCKET written on MAY 2008 found us alone, thankfully. And we were negative on CHEVRON and EXXON from near dollar 80 levels on both WAVES.GLOBAL and WAVES.OIL. We have carried both the stocks every issue, carrying anticipated and happened cases. On 10 May 2008 we said, “OIL is headed to sub 100 and potentially lower till 70 and our research IMPULSE shows more of a PUT than a CALL”. Look at your mailbox you definitely would have a mail from your broker, giving you NYMEX BRT CALL OPTION premium rates, back then. There were many reasons we could see this coming apart from common rare sense and understanding that rockets are linked with euphoria and crash down. We mentioned above Oil vs. Gold Intermarket relationship, which was highlighting an impending underperformance on OIL compared to Gold (SLIDE 5). This happened.
Now let’s look at some alternative, non conventional research observations. First, the intermarket leadership of equity vs. it’s underlying commodity clearly suggested that XLE, CHV and XOM were not rising up with OIL. The classic extension of CHARLES DOW’s non confirmation rule in the DOW THEORY of 1884. Exxon was stagnant from July 2007 unlike OIL, which was excited. Second. Prices reached previous MINOR 4 waves resistances (SLIDE2) and the impulse was down and the corrective up. Third. Now prices have broken primary channel lows (SLIDE 11) on BRENT and the fall does not seem over yet. We could indeed push till dollar 60 and potentially lower till (4 circle primary at 50 – low probability scenario now). Fourth, We have 0.618 FIB levels met on few components of the OIL complex. This suggests some short term pause on XLE. But sub 45 we continue to look down till 34.
On the last note, NATGAS another key ENERGY component is back to where AMARANTH left it with 6 billion dollars of losses and a bankruptcy. Prices are back at a four year low. This is a place where there is no euphoria, not much news, no strong BUYS, a classic no noise accumulation signal. We will keep you posted when it turns to a BUY.
Enjoy the latest WAVES.OIL
ORPHEUS GLOBAL RESEARCH
WAVES.OIL is a perspective product published once a week. The report covers BRENT, WTM, XLE (Energy SPDR), top energy stocks, Natural Gas and related FUTURES. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.
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