Year: 2011

GMP , GMP Capital Inc.

Hamilton

This is another one of Canada’s independent investment-dealer boutiques. It has about 400 employees and a market cap. of about 1/2 bln. These companies are extremely inventive and creative but there have been times in the past that that just was not enough. Without the big bank umbrellas and their nickel and diming one’s existence can become quite binary in very short order. Here are the charts;

gmp b gmp s

As always, click on the chart to enlarge. From a high around $38 in 2006 it started its fall rapidly and then moved sideways for a while only to join the rest of the world by diving to about $4, for a total of about 90%. The rebound from that point followed the , more or less, standard pattern  except that GMP was significantly weaker! It did not make to the , roughly, $20/21 level that one might have hoped for. This is normally a warning that things could deteriorate faster than usual. Two EW counts are possible but both are immediately bearish. The stock has now dropped below the B level of the rise from the Dec. 2008 lows and appears to have gapped recently. If the gap is in the middle, as is often the case, $2 is not out of the question, and that would be a loss of again almost 90%.

GM

Hamilton

gm

Ford looked like it might be a buy, so perhaps GM is as well.  From the euphoria of the IPO, about $40 this stock has lost nearly 50%. More importantly it did it in a recognizable Elliott wave pattern, the ubiquitous A-B-C correction or 5-3-5 move. It did it a little faster than the arrow would suggest so there is still a serious possibility that this count is not complete and that we are only in wave 4 of C which would then target about $19 as shown by the (vector equal) red arrow. This also jives better with the market as a whole. In conclusion, this is a buy sometime in the next month between $21/$19 for a bounce of about $10 perhaps. Do use a stop!

I understand the stock is already trading at less than the cash on hand, an interesting but otherwise pretty meaningless metric.

NYA , New York SE Index.

Hamilton

We have used the NY stock exchange from time to time as it seems to provide a better “picture” than either the Dow or the S&P. Back in April we got real vocal about the market as this is what it looked like at the time;

NYA apr 2011

We marked the ideal target with a little green circle and “green spot”. The reason, obviously, is that the NYA appeared to be tracing out an absolutely perfect B-wave A-B-C where the A and C were going to be vector equal and the B a text-book example of an expanding triangle. Today it looks like this;

NYA aug 2011 b

and in more detail;

nya aug 2011 s

This would be essentially the same for the DOW, S&P, Russell 2000 and many others, not however for the Nasdaq that made its top in July and not April. But regardless of the detailed count it is absolutely normal for the price to retrace to the level of the B-wave on the way up, in this case 6400.

For comparison purposes I have added the TSX and the DAX below. You can click on the charts to enlarge them and move them around. Notice that there is no point in diversification, if there ever was. All three, the NYA, TSX and DAX (and many others) have all done the same thing. They more or less doubled in a nice B-wave and now they will all drop back to the level of the B in that A-B-C. (The Dax has a contracting triangle instead of an expanding one, just take the lowest point).

TSX 26 aug 2011 DAX Aug 26 2011

Just as the Dax was a little ahead on the way up, it is now ahead on the way down. Remember that B-waves are corrective, that is to say they are counter-trend therefore it follows that in the not too distant future we should be trading below the March 2009 lows. The drop down shown, once complete, is just wave 1 !

Error ; in the chart r=A=B should read r=A=C

FAZ , Direxion Financial Bear 3x

Hamilton

FAZ aug b 2011 FAZ aug 2011

By special request. This is for pros only, or at least those that are not faint of heart. This one has come down from such highs that the recent lows are almost certainly a low, implying that the next big move is up(this is the inverse of the financials!). Overlap in EW is not acceptable, but this thing is leveraged 3x and consequently the swings are much wider. With that caveat this, IMO, is the proper count. Given that wave 5 down was a wedge, it should be retraced completely. That would take you to 95 for wave 1. Short-term we are in 4th wave, that seems to be complete already but could develop into a triangle as well. This would take more time but should not lead to a lower low than the most recent one.