Year: 2011

NIKKEI (update )

Hamilton

Nikkei jan 2011

This has been a pattern for the Nikkei that I have been looking at for the past year or two. You can find it in my blog in at least 3 different places. This pattern is an expanding diagonal triangle in Elliotte Wave lingo; in English it is an expanding wedge. A recent example where this occurred was with Ford when it dived to about $1.

As far as I know no other EW practitioner has had this possibility in mind, so it is pretty unique. Today (the chart is not updated) we are at about 8900. The low does not have to occur on the trend-line as often the low is reached well before that point is reached. It seldom exceeds that point. Even so a meaningful second down leg should be about 5000 points from the 10k level of the B-wave of wave 5. Lets hope I am dead wrong. Below is another chart from about a year ago.

Nikkei 225, jan 2010

CCO Cameco

Hamilton

cco mar 2011 2 cco mar 2011

Cameco is, I think , is the worlds largest producer of fuel for nuclear plants. It has had a few flooding problems of its own at the Cigar Lake mine etc.etc. but apart from that it is still the big boy in the sand box. They are like Potash Corp., they even hail from the same province and are neighbours in a manner of speaking.

The Japan tragedy has caused a knee-jerk reaction against nuclear power. Mirroring that the market is now rather fond of solar gadget producers like FSLR. Both are probable misplaced! Nuclear power contributes somewhere between 15% at the low end to 70+% at the high end (France) of the worlds needs for electricity. As it stands there is no known alternative, even if they may one day change to a less belligerent  fuel (thorium as opposed to uranium ?). Solar on the other hand has a bright future but probable not in the next 3/5 years. Our Canadian government, as so many others, has agreed to feed-in-rates that are sometimes a tenfold of the actual costs. Rather than confess their sins they prefer to stall the system by way of administrative delays, hurdles etc.etc. There are untold numbers of farmers etc. that have installed a small fortune on their roofs only to find out it may take 10 years for the connection to the grid! Most of the producers are inefficient but free markets have not prevailed and some of these companies are going to be decimated.

My guess is that CCO is a buy at about $23. By the way, UEX, UUU,and DML (Denison) all have similar chart patterns.

CAC40 Paris

Hamilton

One can always count on the French to add a little elegance to a situation. This is the CAC forty and as European stock exchanges go, it is somewhere in the middle of the lot, well above Amsterdam but well below Frankfurt. Here is the chart;

CAC2011

This is almost as nice as listening to Edith Piaff sing “Non, je ne regrette rien”. Except, that with the benefit of hindsight, I certainly do regret getting the timing wrong on this retracement, not just the CAC but all of them. Notice that the drop into the lows of March took about a year. Given that it was reasonable to expect a retracement that would last about half as long or , at the worst, equally long (this is normal for counter-trends). Instead it took exactly twice as long, mostly courtesy the US Fed with QE2. But despite this meddling EW still seems to apply very gracefully, with the notable exception of the, somewhat awkward ,“megaphone” in the middle . Note that the recent high is a near perfect 62%. Note that C=B=A as vectors and that C travels about 61% as far as A. In addition both the RSI and MACD are dropping for quite some time.

   Still life has not been all that rosy for either bulls or bears. After the first 6/7 months of retracement this market, as of today, is pretty well where it was 17 months ago giving new meaning to the old adage timing is everything. Now might just be the right time to try the short side again.