Year: 2009

DJI Jan 30

Hamilton

So far I have not looked at the Dow Jones Industrial Index. It is relatively easily manipulated and being the “showcase index” probable massaged more than any other index, so it is not my favorite. Nevertheless it is the bell-weather indicator. Surprise, surprise, it is identical to all the others. See below.

DJI Jan 30

Now simple because all indexes appear to be , more or less , at the same stage or phase in the cycle, does not imply that the analysis is more correct. It is like practice – doing the same thing over and over again – does not make you any better if what you are doing is the wrong  thing in the first place.                                                                                                                                                                                                                                                                                  Today’s Toronto Star, perhaps not the preeminent authority  on matters financial but at least a little more open-minded to concepts that are not rabidly capitalist and politically to the right of Idi Amin and therefore well worth reading,  if only as an antidote, features Bill Carrigan’s  “Getting Technical”. I am not sure exactly what he is saying, but it is about EW and I take it that he believes that we are already in wave 1 up. Fair enough, this is what makes markets.  Also he sees EW as an extension of Dow Theory and EW as  “technical” analysis”. (one could argue both points, but that is not now the point).

He says, I quote verbatim -  “The reality here is that any portfolio manager or investment advisor who does not use technical analysis (presumable EW included) to support investment decisions will not survive in this business”.        Now that is food for thought !

Until recently, it was the other way around, perhaps the tide is turning.

TSE update Jan29

Hamilton

tse jan29

Just a little update.  The triangle. anticipated at least two months ago, is unfolding as expected, which does not guarantee that this will continue as there are alternatives. Anyway, so far so good and should this continue it is plain to see that “something” has to happen before we work ourselves entirely into the corner. There is very little room left. Assuming we are in the e of the a-b-c-d-e triangle sequence and knowing that each individual leg must itself be an a-b-c, my best guess here is that we are in the b of e, allowing one more little rise before the whole edifice starts crumbling. In terms of execution, it should be pointed out that the e-leg is notoriously capricious. Sometimes it goes all the way, in this case 9500. In other cases it stops dead at the line, 9000 more or less, and sometimes it barely registers at all. The next good trade is, and this may seem counter- intuitive, going long by way of the HXUs or some other high octane vehicle. The reason for this is that you only want to do the absolutely sure trades, and  this market is asymmetric in terms of risk/reward the long side is better . No matter how low this market will go, it will return to the apex of the triangle ( see BAC ) as a recent example). So there is a sure trade on the long side, your only risk is waiting too long and missing the boat alltogether.  Also it might not be a bad idea to unload a few long positions just in case.

OTC OpenText triple top???

Hamilton

This stock must be a buy with “momentum” players. Perhaps it is but hitting the roof 3x (actually 7x) does sugest a little caution at least untill such time that you break the line confidently. I would prefer a short by way of an at the money (more or less) put, assuming they exist, of reletively short duration. If it goes through the line you probably will not lose all that much. Should, however, the stock drop, it may do so very rapidly judging  by the “wedge”up all the way from the lows.

otc-jan28-2

otc-jan-28Sorry, there are only six, not seven.

IBM Jan 28

Hamilton

IBM appears to have made a “flat” right under the top and double top. The typical signature of this pattern is an A-B-C with both they A and the B made up of an a-b-c and the C a simple 5-wave structure. Often the C=A at least as a factor, however near the top the C can easily become much larger. Alternatively the second top could be construed as a 5th failed wave. In the big scheme of things either interpretation is bearish even if another $5 up cannot be excluded.

ibm-jan28

ibm-jan-28-2This is a big picture sell.