Jun 272012
 

There are strong Elliott Wave reasons to think Glencore stock (GLEN:LSE) is all set to continue its dive in the coming weeks. The decision by Qatar Holdinigs to seek improved merger terms sent shock waves up the spines of those who were hoping for some stability in Glencore’s stock price. Let us take a quick look at the chart of Glencore PLC and see what is in store.

ELliott Wave Theory says that any one impulse wave in a five wave sequence is likley to extend. Clearly, Waves 1 and 3 were both of normal proportions for Glencore. Thus, it looks like we should expect the selling to intensify, especially on any close below the 265p level. Why is the 265p level important? At that point, the stock would have reached its equality measure of the first major sell off from 559 to 341.
HOw can one trade this? I think any recovery to around 298 should be used to get out of stale longs. It is doubtful if we will close above 303 in the near term. As a first step, take partial profits below 277 and some more at 266. Once we get a clear break below 265, we should think of finding fresh levels to add to shorts. But for now, although we should be prepared for the worst (which is a 25% loss), let us be content with a 9-10% profit.

  4 Responses to “Prepare for a further 25% loss in Glencore PLC share value”

  1. Ramki, thanks for your analysis as always. Can you make a comment regarding miners and gold miners in general. There is justifiable belief that miners/gold miners are so hammered that now is indeed a good time to buy. Are the likes of glencore or billiton for which you have given Elliott wave analysis typical of the sector as a whole, ie have significant downside yet? Are there other mining stocks which Elliott waves tell us the correction is done, or are the others, the vedantas, barracks etc poised to go down? Lastly, any chance you can give a longer time frame wave analysis of the miners? Once you reach the coming lows, will these lows be below the 2009 lows and will the subsequently rally take out the ultimate highs or will it be capped. Cheers.

    • Hello Wahid, Thank you for your questions. Unfortunately, I don’t have an answer for most of them! I just pick a stock by whim and do my analysis. When I saw the headline news on FT today, I thought OK, lets take a look at this stock. True, BHP has already come down by over 15% from the time I called it down. But once again, I picked that stock because of some POSITIVE news and I was delighted to be able to post a contrairan opinion because thats what Elliott Waves told me. A careful study of any chart takes a long time, and given my other responsibilities, it is well-neigh impossible to keep up with the opportunities that seem to abound…

  2. hi ramki………..i like your analysis very much……u r probably the best elliott wave analyst………..one doubt ramki in the glencore plc chart………..how did u conclude the first wave (form 0 to 1)…………i see it as 3 waves(maybe i got it wrong)……but it must be 5……am i right??????pls can u pls explain that……….thx in advance ramki……..

    • Hi Nick, What you see is a daily chart. I am assuming the hourly charts would have the waves 1 and 2 marked clearly, but my current history doesnt show that.

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