I’ll go out on a limb here and call a top on BP. I say “a limb” but actually I think it is an
85% likely call. So it’s a 15% limb
IMO. I base this on a few key things:
- Media gives bold headlines to the “all clear to buy BP” right at the top. Herding 101. NEVER listen to the media. IF they were right about 1/10th the stuff they print, those doing the printing would be billionaires instead of useless idiots.
- Broader markets are breaking down. Missed earnings are no longer forgiven. Instead, the BBYs of the world are taken out back of the wood shed, given a stiff beating, and then shot before they are hung. Years of market cap increases evaporate back into the ether from whence they came. This is a warning for anyone with eyes to see. As Prechter likes to say “it’s all one market”. Any trading firm has many positions and they are all trading on high leverage. When BBY tanked they had to sell something else to pay the margin calls. They have to sell their winners in order to pay margin calls on the losers. The only assets that are safe in that type of environment are those that few of the momentum traders own (like gold, silver and mining shares)
- And then of course, there is the chart which to me is everything. The chart shows a bounce from the lows back up to the 38.2% fib. In addition, we have a 5 wave rail bump into what is likely a sideways (horizontal) triangle. Others would call it a flag formation. I really don’t want to put down in writing what I model the future low on these shares to be. It would only invoke laughter today. Some day it will be the source of many, many tears. BP shares are in real trouble from a technical perspective over the next 3-4 years. Other traders will call it a triple top IMO.
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