Month: March 2009

EWN ishares for the Netherlands

Hamilton

Holland has a number of advantages when you study economics there. Much of history has actually happened there, for instance the first company to operate on a shareholder basis was the Oost Indie Compagnie , founded around 1604. Shipping then was highly entrepreneurial as many a ship never returned, but the rewards from the spice trade were very high. There was already in the mid 1600s a well functioning cherry futures market with 36 fungible varieties, privileges , options and the whole works. Nothing under the sun is new

Also the University of Amsterdam , my Alma Mater,happens to be located dead smack in an area known as the “Walletjes”, the same word that is embedded in Wallstreet  (wall = embankment , quayside , shore-line etc.) The area is also known as the Red light district and I have always thought it instructive to see that  two so very different professions can thrive on a similar base. Here is the chart:

EWN march  The Dutch exchange has a disproportionate number of multi-nationals and financial or insurance companies and consequently has recently been behaving as a high beta market. As a result it shows this whole 10 year correction quite well. The low is about 9.75 and the high 33. We are approaching the low again and if and when we do this one has a 10 point rebound built into it. (Note that here too we have a double-top albeit a very sloppy one as the second high is a little higher than the first, B is irregular).

SH S&P short, and leaving something on the table.

Hamilton

sh march 3

In the institutional market where your counter-party invariable is that anonymous “the market” there is a certain protocol or guide-line that says that you should always leave something on the table for the next guy/girl. What is really meant is don’t get too greedy.

Looking at the SH, the inverse of the S&P index, it would seem to me that it is 10 to 12, or high time to “leave something on the table”. The count could be a clean 5 waves up with perhaps a few little waves to go. It is a double top and the RSI is reaching the 70% level. Perhaps the light is not yet on green, but it is amber!

XIU March2

Hamilton

XIU march 2

Many things can go wrong but so far the pattern has followed the script pretty well. We should hit a low (after 5 –waves down) in the next week or so. The minimum has almost already been reached at about 11, but it COULD still go lower to 10 or 9 1/2. Once there it is an almost certainty that we go back to at least 14; even 16 is within a 505 retracement and wave 4. This is a buy by any measure, the only question is how far you are willing to lower your bid without risking missing the boat. The HXU probable will not make it to 6, one may have to settle for 7 or so.

BRK unforced errors

Hamilton

BRK.A March 1

As mentioned on an earlier comment chances are that Berkshire has a little more to go, to more or less the 40000 level where “the fourth wave of previous degree” resides. The companies earnings dropped by a perfect Fibo 62% in the last quarter. An unforced error in tennis lingo essentially means an error that cannot be attributed to any other factor than poor  judgment and execution by the player. Hats of to Buffett for such an introspective mea culpa.

    This all raises the question if we are not , collectively, making a type 2 error by not rejecting a number of economic hypothesis that appear to be on very shaky foundations (and always have) such as the “efficient market theory” , diversification and other silly notions like “dollar-cost averaging” which is simple a tautology if ever there was one. Soon some of these will go the way of the dodo bird.