RY, Royal Bank update #52

ry july 21 2014 b

If you predict, do it often!

The Royal started in 1856 but only took on its present name in 1901. It is from Halifax. In 2007 this bank was 106 years old and assuming it started at ground level had a stock valued roughly at $60 higher or about $0.57 per year. The low in 2009 we correctly pinpointed in advance (see old blogs) as $26. From there it has gained roughly $54 over 5 1/2 years which works out to $9.82 per year. This, of course, in the aftermath of the great recession which really wasn’t in Canada.

The count is not clear and differs for the 5 big banks in the country. So we just look for what normally would happen. The stock would trade within a , usually well, defined channel.  Here in blue. Having passed $70 or so we are above it. Then there is the possibility of a large wave 4 triangle, very compressed but a triangle nevertheless. None of the others have this. The triangle typically targets a level that can be found by connecting a previous top through the top of the b-leg. That works out to about $77 and we broke that. Measuring the “mouth” of the triangle gives about $35 and added to the low of e of $45 comes to about $80 or perhaps a little higher. Basically we are there! If we use the B-wave concept and , as always, look for equality we would find that at $81 give or take. There is only one line left, connecting the tops, in turquoise, that might point to a higher level around $92. But, looking at a detailed picture;

ry july 21 2014 s

We see that wave 3 is smaller than wave 1, therefore in order that wave 3 does not become the shortest wave, wave 5 logically has to be shorter than 3. In this case that works out to less than $82.50. On top of that, the RSI which for this particular stock has had very good predictive powers, is at its most overbought for the past three years or more. This is a sell and I hope that call will be as correct as the $26 buy in 2009. Good luck.

Below is that blog of Jan. 22nd 2009 , still done by hand. Notice that that chart is pretty well the mirror of the Bigchart above albeit on a different scale;

ry 22 jan 2009

It called for a rise to at least $38. Today I would change the count to an A-B-C instead of a 5-wave sequence. The C is a diagonal and normally is retraced entirely which would have given an initial target around $52. By the way $26 was a 50% correction of the entire value and a 61% correction of wave 3 from ‘89.