This stock is dirt cheap compared to where it was in 2001, $75, but today it is trading at a p/e above 16 and just double topped. All sorts of counts can be applied but the usual refrain is that at double top levels you exit, plain and simple.
Year: 2011
Copper, HMU and HMD , USD, US $ index.
Copper is approaching the B-wave level at $2.75. The wave count as shown may or may not be correct but this is the first “logical” level for a retracement. The gap in the middle (of wave 3) calls for about the same level for the end of 3. If it gets there or not remains to be seen but yesterday Teck-Cominco was up 8% and even if that is not the end such large moves occur close to the (intermediate) end. This action should be reflected and amplified in the Hor.Beta Pro HMU (up) and HMD (down) leveraged base metals ETF-s;
The pair should, very roughly cancel each out as when one goes up the other goes down. If you own both, have a chat with your broker because, as is all to often the case, he is the only sure winner. Again the counts are not perfectly clear but it would seem that we may have a period of weeks during which this oversold and overbought condition needs to dissipate. If you owned TCK, Inmet, Lundin, Kinross , even the oils this HMD is an excellent hedge, or would have been at up about 3x. Now might be the time to buy the HMU, the potential to $15 is certainly there which would be a 78% gain from yesterdays close of $8.40. Even if a little early, and assuming some slippage, it would still be a nice trade.
The US$ Index is within a point of hitting something big. In this macro-economic risk on risk-off world we now seem to live in, a dollar that goes sideways or , perhaps, down soon is a perfect backdrop to the base metals going up and with the world concentrated on Europe the bad news, it there is any, from China will not be heard.
TSX update.
Two weeks or so ago we did this for the DAX, and came up with the number 5100. It went through there once or twice by a hundred points or so and went above it by 500 points but as we speak that was a pretty accurate call. Doing the same for the TSE we would suggest 10700 as the number. We have no idea what the count is but there are 9 legs down from the second top. It looks a lot like the DOW or S&P during the tech crash, a cascading waterfall. See chart below;
10700 is pretty well the base of the B-wave on the way up (stylized). It is also the point where the 61.85 Fibonacci retracement of the rally from the lows occurs. The RSI is already non-conforming by moving up. Add to this that the HXD just hit an upper trend-line;
As you know, this has been my “top pick” for some time now and certainly from the $8 level where it was the exact inverse of the HXU. You may want to step aside for a moment, then again maybe not, depends on how nimble you are. This one is up 56% from the lows and has proven to be a good trading instrument or hedge.
We are nowhere near the ultimate lows but we may just get a little pause for a month or two and this might be tradeable even if you run the risk of missing the boat.
RY, again
Extrapolating the above, that is applying the same logic,it would seem that the Royal has not yet completed its first leg down;
The problems with this one have been discussed in some 5/10 different blogs before. First and foremost there are three tops that are within a fraction of each other. If you use the US$ denominated chart the highest one is clearly the second one the second one. That leaves questions for what happened from Sept. 2010 to Mar. 2011. That would have to be a wedge that would strongly suggest that the 5th wave, already miniscule, failed and that the real top should be top3. The very clear channel that follows seems to agree with that interpretation. This , of course, rhymes best with the preponderance of the evidence above, in the previous blog.
Assume, for the sake of the argument that this is correct, then there are now a total of 8 individually recognizable legs within the channel. 8 is not a logical number , it has to be 9 in order to make a 5 wave move! If that happens it should again be a buy, for a larger trade.