Today is my first post ever on Glencore the UK based multinational commodities conglomerate. I was called to look at the price chart by a recent article talking about the commodities blood bath. What struck me was how after Glencore shares, which trade under US markets with ticker GLNCY, have plummeted from $15.70 down to 2.07 since 2011 the article title says that this is "beginning to look like a crisis".
Beginning??? What a joke. I guess this is what counts as news these days. For those who thought that an investment in Glencore was a conservative, honest thing to do for their retirement, this isn't "beginning" to look like anything. It's in fact a full on in your face "my life is over because now I can never retire" catastrophe.
And these idiots are saying this right as the selling has turned into an all out panic. That, my friends, is what you want to avoid. That is running with the herd, running with the gut feel, running based on water cooler talk by people who don't know jack shit about why stocks move or what they even represent. What happened to all of Glencore's wonderful "fundamentals"? I thought those were what controlled the share price! Has this old fashioned notion been completely debunked yet?
Well, to emotional people who cannot understand the data when it is staring them in the face, no, it hasn't. As soon as the recovery bounce starts they will point to this or that "fundamental" again to account for it. I'm telling you that based on the wave count and without any regard to the "fundamentals", glencore is due for a monster bounce starting within just a couple days tops. This is not gut feel. This information is encoded in the charts.
Below is the weekly chart for Glencore going back to 2011 which was, as we know, the top for commodities, gold, silver, etc. Glencore was trading at $15.70 back then. After a unicorn horn style peak, we got 5 waves down into A, a 5 rail bump horizontal triangle (HT) into blue B and now we are very, very near the bottom of blue C. Note that red 3 is really red W3 and so this chart interpretation is very dependent on CWT.
Still, even if I'm wrong, what is bottoming right now is 3 of 5 and we should get a nice bounce into wave 4, well worth your time to trade since it represents a doubling of your money if timed right. But my primary model is that Glencore was thought to be so strong and healthy that nobody wanted to sell it and they only figured out it was just and vulnerable to supply and demand as anything else late in the game. This is what led to the extended 5th wave. Please note that this is textbook Elliott; Frost and Prechter are clear in their teaching that commodities tend to extend the 5th wave and that is exactly what we are seeing here.
The chart is now heading nearly straight down and so just by that alone we know we are reaching a point of max panic. The unemotional smart money is sitting in the shadows just waiting for the herd to calm down a bit before they buy this back up and leave all those who thought it was going to zero holding a can of whipsaw. Just yesterday it was down 30% in what I suspect was 3 of 5 of C. The waves are moving sharp and tight now so like I said, days not weeks until a vee bottom materializes.The zoom in below uses the non cwt version of red 3 which still leads us to red 4 but only after a telltale HT. I like the fact that I can use two methodologies to achieve the same result here.
Zooming in, here are the top two options for finishing this commodities bust. Note that the peak was $15.70. A momentary dip to $1.57 would be the 90% loss from the peak that I have noted to be a common buy back point for the markets. At this valuation the market feels comfortable that it is clearly buying blood in the streets AKA fleecing the panicking sellers.
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