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(Written Wednesday November 30.)
The trend for BHP appears to be to the downside. I cannot find any Elliott outlook to suggest that BHP can rise from here. Of course, it will rise from the ashes eventually but I cannot say when that might be.
So let’s look at how you could make money by shorting BHP.
The daily Elliott Wave outlook is as follows:
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The important aspect to note here is that the Wave Three is not yet complete as we can see from the ‘greyed’ three wave. BHP could just keep sliding lower without rising much further.
However, if it was to rise to $36 or so, that would complete a Wave Four and this is the time to look for a strong up day with low volume and get on board in anticipation of a reversal. In any case, volume has been slipping over the last few months:
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So it won’t take much to send my old employer down to new lows, as there are no longer many buyers for the stock.
A weekly Elliott suggests the prospect of BHP at $30, or even lower:
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And this is confirmed by the monthly Elliott:
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The ‘ABC’ sideways pattern means there is little prospect of a move higher from here. BHP has also made a number of attempts to push beyond $45 but has failed each time. Poor old BHP is exhausted.
And the fundamentals are co-incident – global malaise, risks of GFC2 and the impact that will have on China's factories and demand for Australia’s raw materials.
Yes, the whole world is going to take a breather.
Sharpen up your shorting skills as that is the way to profit right now.
Enjoy the ride
Tom Scollon
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