Year: 2011

EEM , XEM Emerging markets

Hamilton

From previous blogs (Jan 22, 2011) we had this set of charts. The EEM is an ETF in US$ and the XOM is in Canadian dollars;

eem 2011 xem 2011

 

Today they look like this:

eem aug 2011 xem aug 2011

The EEM topped 3/4 months later than expected but added only 2 or 3 dollars but we are down 24%. The XEM did not go higher but did sort of triple top, it is down slightly less but seems to be doing it more rapidly. If history repeats itself emerging markets could decimate your portfolio, not because they are inferior but because they are less liquid.

CASC , Cascade Corp.

Hamilton

This company does a lot with forklifts and other such equipment. In a sense it provides a fairly decent barometer of what is happening in the world, the stuff must be moved to be sold! Recently it reported a 186% increase in net income. It hardly registered and the stock is still down;

casc

This stock retraced about 62% in a nice B-wave and is now on its way down. Excellent earnings could not change that. What is interesting from this chart is that the stock had been rising gradually for much of the last 20 years and probable beyond. As with so many other stocks, the tangent of the slope changes dramatically exactly at the time of Greenspan’s first liquidity flooding exercise to avoid the catastrophes that were awaiting us in the new century. This stock goes up 8-fold in less years.    The stock is now down 33% from its B-wave high of $55 and if it were to “regress to the mean” it should get to about $18, that is if the pendulum does not swing to the other side, which ,of course, it nearly always does.  So again the Fed.  promises to hold rates at zero for two more years. Do not expect the stock to be propelled upwards this time, the difference is what is called the “liquidity trap” or, in the vernacular of the lay, “pushing on a string”.

CAC40, Paris

Hamilton

The CAC40 has been a model for  doing what is expected of it, and was somewhere in the middle of the lot, above the AEX (Amsterdam) but below the DAX (Frankfurt). We had it in one of our comments first in March 13th of this year (it can be retrieved under CAC40). Here is that chart;

 CAC2011

For color I added some silly comments re Edith Piaff, but the main message then was that this index was going to go down, based ,of course , on the EW patterns. Here is today’s comparable chart;

cac aug 2011

I have tried to duplicate the annotations from the old chart onto today’s , keeping the angle more or less the same. Of course the lower chart shifts about 4 months to the left. They can be aligned perfectly by clicking on them and then moving them around. Anyway, so far we have retraced almost 70% of the post March rally. Also we are on pace to do it at practically the same angle, that is at the same speed as in 2008. Obviously this index is oversold as can be seen from the RSI and MACD. A bounce around here or a little lower should perhaps be anticipated, but this drop cannot be complete. There are at least two 1-2 s at the top of this decline, if not three. Also the last 800 points are straight down, not the usual way for these drops to end. We should get to the bottom of this, perhaps in as little as two or three months!

Nestlé

Hamilton

Nestlé is a blue-chip if ever there was one, it is in the food bizz and Swiss and has been around for ages. Here is the chart;

nestle

Unilever fits in this same category but has not moved this much ( yet?). Nestlé  dropped from $57 to$44 or roughly 22%, much of it in the last few weeks. Relative to the rally post March 2009  ($35 to $57 or $22 it has lost 59%. The chart both in the big picture but also looking at the details very strongly suggests that this drop is not over by a long shot.