Year: 2012

MSFT, Microsoft

Hamilton

msft lmsft s

Both charts are essentially the same. I like using two in this case as one sort of confirms the other. They can , as always, be enlarged by clicking on them.

Clearly there is a triangle in here somewhere. On rare occasions these structures that normally have 5 legs, a,b,c,d and e, add another 4 legs to make it an a-b-c-d-e-f-h-i.  This one is rather accurate. As triangles only exist in 4th or b-wave positions it has to be one or the other. In this case, being totally out of proportion with a wave 2 if one can even find it, chances are that this is a b-wave in an a-b-c , that is making a large B-wave from the lows. If c should equal a we would get to about $42 which would exceed the double-top level of $37 which normally does not happen. If , on the other hand, c climbs to 0.618x a it would target roughly $34, which also just happens to coincide with the size of the “mouth” of this triangle.

We have no idea what the right number is but the max is about $37, reasonable is $34 and in the end the stock almost invariable drops back to at least the lowest point of the triangle, about $23. So in reality the choice is  between $3 to the upside and $11 to the downside. An easy choice.

QCOM, Qualcomm

Hamilton

Qcom bQCOM

Qcom also just made a new high at $62.74. This stock has taken about 10 years to repair most, but not all, of the damage caused by the tech wreck in 2000/2003 ( see also our blog on the Nasdaq, which, almost to the tick, has recently retraced 62% of that drop). In this case the picture is absolutely perfectly clear, wave A down, followed by an almost perfectly symmetrical a-b-c B-wave back up, not quite getting to the double-top level. The c leg in this B-wave is almost certainly a “diagonal”, read wedge. It has not yet reached the upper trendline, which would be around $66. This is also approximately where wave c is equal to a in both time and amplitude (vector). The entire structure is a 5-3-5 , a-b-c. No reliable alternative counts present themselves. The stock has a p/e around 24. We would sell here or fractionally higher.

The ultimate target would be below the lows in 2003 by about the same amount as the stock fails to double top.

INTU, Intuit

Hamilton

This company makes software, particularly the kind that is used to calculate and file your taxes electronically. Things should be going well at this time of the year and they are. The company just reported a 62% increase in profits and the stock briefly peaked at $62.33. For Fibo enthousiastes this is a good reason to be alert. Here are the charts;

intu mar 2012 bintu mar 2012 s

Perhaps the count is wrong, perhaps not. The p/e is above 25 pretty lofty by any standards. 49.5% of Americans do not pay any income taxes at all. In Canada that figure may not be all that much different but people need to file anyway. Students etc. to accumulate RRSP room and get a GST rebate for rentals . Older people for GST, OAS supplements, real estate tax rebates and so on. But you can get the same package for a single payment of $20,see http://www.genutax.ca , and get an updated version each year for nothing. Also, maybe some day the CRA/IRS  themselves will wake up and decide that it should provide these services at no cost considering the huge benefits these agencies reap from not having to “input” the data. This is a sell.

HRB, H & R Block, a do-not-do-it-yourself outfit, that also helps with tax filings and a few additional services, is still trading at about 1/3 of its peak value years ago. It has a p/e of about 13

UTX update

Hamilton

utx feb 2012

Back in July, early August last year we were convinced that this one had only one way to go and that is what it did, right to an initial target of about $65. This stock hit the lows at about the same time as most stocks. What is by no means clear is how one would get to 5-waves down for wave 1. I suspect the 5th wave of wave one was a failure and either occurred immediately after the low (blue) or in October (black).That was good for a loss of around 30%.

What I certainly did not expect is that the stock would recoup 75% of that loss and that it would take such a long time. Perhaps this is what 15 trillion in bank reserves and other stimulus  does? In any case today, looking at this rebound, it is quite obviously an a-b-c and a fairly precise one at that. The b is probable a triangle and the up-legs, a and c are either as shown in black or in red. Variations are possible but the main message here is that, for the moment at least, this is a correction and therefore the downward trend should resume any moment. This is a sell as the target remains as before (see previous blogs).