BNS Bank of Nova Scotia

bns sept 27 2012

The Bank of NS is a great bank that must have studied EW it conforms so nicely. Look at the big black line, the RSI and the MACD, none of which has anything to do with EW but paints a very negative picture in its own right.

The wave structure is that if a 1-2, 1-2 starting, presumable, wave C down. The two retracements are , roughly , similar in size, give or take 70 % calculated simple by counting the blocks. The only fly in the ointment is the 5th wave in the second, smaller, impulse wave down. I assume it was a failure. There are a good number of alternative interpretations. For instance W2 may not have been complete so the stock could rise to $59 or so and then fall. For the moment we will assume that wave 3 of C is about to start. See below.

bns b sept 26 2012

BNS update

bns june 20

From the recent lows BNS has traced out a near perfect counter-trend rally, three wave affaire, an a – triangle b – c . The c part may not yet be completely done. Wave 4 of 3 of 1 of C (no wonder lots of people are turned off by EW, but it is what it is) is at $53.5 and c=a at $54 and 62% slightly above that. If the stock could manage another dollar up today we would sell. If it doesn’t we would still sell. Next on the menu is the dreaded wave 3 of 3, usually the longest and strongest of the lot. See also previous blogs. Even though the Canadian banks are not trading in lock-step with each other all the time, essentially the same approach should apply to all of them.

By the way, looking at  RY an argument could be made that we are only in wave 4 of 1. Do not think so.Yesterday’s more than $2 rise suggest some degree of exhaustive desperation. We should know in the next month. Here is that chart;

ry june 20

BNS update

The expectation                                                   and the reality.

bns june 5 2012 sbns june 12 2012

The triangle is not the most elegant one but  it will do. Need to complete wave e and then a drop to about $49 should occur. There it might be a buy for $3 or $4, a short-term trade. At $49, if it gets there , wave 1 of 3 of C would be complete. If you do the short–term trade be sure to exit in a timely fashion as the next wave down is probable wave 3 of 3 of C which is when things usually get decidedly nasty.

Other possibilities do exist, for instance this 3 month down move could conceivable be a B-wave, to be followed by a C up, before we go straight down. That would add 4/5 months of agony and is certainly not the preferred scenario. A more likely alternative is that we are forming a B-wave triangle in an a-b-c wave 2, as wave 1 is already complete. The stock could then move up to $54 before dropping, this would only take a couple of weeks. For those interested here is a previous example of the same set of choices, this time with EWG and we chose the wrong option;

The expectation                                                  and the reality.

ewg s jan 2012EWG JUNE 12 2012

In the end the EWG is still going down but an opportunity is missed and a lot of time goes by. CAE is another example, see that blog.

BNS update

bns june 5 2012bns june 5 2012 s

The 4th wave triangle shows up in a multitude of stocks. Here we have the same possibility with Bank of Nova Scotia. Again the degree is not clear, even if it materializes. It is either 4 of 1 of 3 (or C) or 4 of 3 of 1 of 3 (or C). In any event the clear a-b-c rebound virtually guarantees a new absolute low sometime in the not too distant future. For the moment this is the best road map.