HXU update and HXD

The usual then – Jan 14, 2015 – and now charts;

HXU jan 14 2015HXU feb 13 2015

We strained to believe it but the triangle was unmistakeable (as it was in so many other places) that it could not be ignored. In case you did heed the advice you could have owned this at about $26. We would sell today for a small profit of about 16% for the month. The very simple reason is that despite the very clear possibility of this ETF going to $34, we recognize that there is a possibility that there never was a triangle. The first leg down, the a leg, always looked more like a 5-wave affair than 3 waves. That is a no no in a triangle. From that low point in October we could have been doing a simple a-b-c (in black) counter trend bounce. This will be negated at around $31.30 , so less than a dollar away, but in the mean time this is a big risk for an investment that goes against the grain in any event.

A look at the counterpart, the HXD makes the above all the more plausible;

HXD feb 13 2015

Essentially this is, of course, the inverse of the HXU. Here we have a similar triangle which is probable a valid interpretation as this ETF actually already has made a new low. The last leg down, moreover, very much resembles a wedge. RSI and MACD are turning so this might be a very good thing to buy now. The extra charming attribute is that the HXD is relatively immune to a further rise in the TSX if that unexpectedly were to occur.

HXD update

hxd SEPT 9 2013 bhxd sept 2013 s

I would prefer not to talk about this particular stock were it not that it appears to provide a great entry point soon. The chart on the left is just to make clear where we are today and the scale of what might still be possible. This particular instrument is, of course, the inverse 2x leveraged  Horizons Betapro  TSX index ETF. It is presently tracing out a very clear and articulate “contracting diagonal triangle” a.k.a. a wedge. All five legs in this structure are sub dividable in threes. There is overlap between 2 and 4. There is alternation between 2 and 4. By the time it is complete it will be less than a single dollar lower than it was about three years ago, typical of the coming end of the drop from >$40. Using a more detailed chart (see below), I make the low $6.95, but remember that the price does not have to go right to the line and may well stop before ever getting there.

HXD sept 9 2013 vs

The RSI typically drops below the oversold 30 level at , or just before, reaching such extremes. The minimum target for this trade is at $12.50 but the ultimate potential is for it to go much higher. On a scale of 1 to 10 in terms of confidence in this trade, I would put it at 9.5. You can enlarge the chart by clicking on it and increasing your own confidence level. Also I have added an example of a similar structure that occurred with BBVA, Banco Bilbao Viscaya, the one in purple . In that case the low was actually made slightly below the lower trendline and there was no alternation (welcome but not required). The stock did double almost immediately, see that blog. There are dozens of other examples, YUM being the most recent one.

bbva june 2012

HXD update

HXD may 30 2013

We were premature in thinking that the HXD was on its way up. It took roughly two more years but here we are again at a very distinct point, the end of a diagonal wedge. If correct a move up should start any moment and be rather dramatic. Keep in mind that this was once at $41. A buy.