Year: 2011

ECA, Encana update.

Hamilton

First the big picture, on the left my June 20, 2011 blog and , on the right today’s chart;

ECA ECA oct 2011

At the time I argued that the stock was not down enough to complete a logical pattern and that it was probable tracing out a triangle that needed one more up move. In retrospect it did not need much of a move before starting the anticipated downward trek. It was a buy above $35 and below $23. Well, we got to $19 and here the stock would have been a buy, but;

eca s oct 2011 eca ss oct 2011

First of all the triangles apex is still at least half a year out, often that coincides with the low but it certainly does not have to. More importantly there is still a 5th wave missing, in fact, quite obviously. Considering that the p/e is at 20 according to one provider and 40 according to another, it is clear that this is not cheap even if it is down 80% from the top. It actually pays a dividend of around 3.75% which helps. For the long term this is clearly a relatively good buy, but a lot more so with a 5th wave.

PD, Precission Drilling

Hamilton

July 22 we commented that this stock was ripe as a rotting apple and should drop any moment;

PD july 2011 pd oct 13 2011

On the left then and on the right now. The stock rapidly lost 60% or more of its value as predicted Unfortunately I was not looking at it when it hit $8. The ideal target (short-term!) is $7. If it gets there soon it would be a buy at that price

CAT. Update.

Hamilton

CAT b oct 13 2011 Cat lb oct 13 2011

Just a little refresher on CAT, there are a few previous blogs as well.

We prefer the B-wave idea as it is more in accordance with the rest of the markets, but it really does not make a lot of difference for the next move as both lead to new lows ultimately. The B-wave has the advantage that it provides a very well defined first initial target, namely the level of the B-wave within the larger B-wave, about $53 or so. That also coincides with a 62% retracement of the rally from the lows of March 2009. Given the speed of the drop so far, we could be at those lows in about 4/5 months. Here is the detail;

cat s oct 13 2011

Given the proportions of the waves from $115 , I am pretty certain that we have done a wave 1,2 and 3 and are now in 4. (This could be wrong and the whole first wave is already complete, see blue alternative). Given that 3 in this count is about twice the size of 1 it is essentially a more elegant count. Assuming this is correct than we would expect alternation between 2 and 4, as 2 is a zig-zag 4 should be a sideways move, either a flat or a triangle. So you should get at least a,b and c and perhaps (if a triangle) d and e. Consequently it may be worth waiting a little to see that you do get a, b and c as the stock will not change much in value and you avoid the risk of it going higher. The 4th wave is at around $94, and this is also where overlap would occur, negating this count in favor of the alternative. Once the flat or triangle is complete wave 5 should take the stock close to the target of $53 to complete wave 1. That is where you could get the $30-$40 rebound before the bear market resumes.

If, and I do not think so, the alternate is correct, that is wave 1 is already complete than wave 2 would retrace about 1/2 to 2/3  so $95 to $105 is possible Waves 2 are usually zig-zags so this should happen fairly fast.

JPM, JPMorgan Chase

Hamilton

jpm b 2011 jpm s 2011

JP Morgan, the virtual central banker of the US before there was one, earned something like 4 bln. on revenues of 24 bln. That is approximately what all the Canadian banks combined do, but from what I heard it was a lukewarm result, whatever. For some reason I have not had JPM on a blog before but looking at it again today, I struck me that this bank has moved almost precisely the way RY has.See below.

RY 0ct13 2011 RYs oct 13 2011

Both are very confusing.. All the tops are so close that one needs a looking glass to figure out which is which. This could be an almost 2 year  a-b-c if you want to get bullish but that does not fit the (my) big picture well. An alternative, just thinking out loud, is that we completed wave 3 Wave 4 cannot trade above $35 or there would be overlap, un less of course , we are forming a huge wedge, the only structure where that would be possible. We will keep an eye on it as this leg down just seems to be too long for a first (single) wave.