MS, GE and C update

ms ge may 2012ms ge c july 26 2014

The chart on the left is from May 17th, 2012, slightly more than two years ago(see those blogs). At the time I wrote – “With all due respect to the Gainesville gang, it would seem to me that this chart looks a lot like GE and that it is conceivable that MS has done the entire correction!”. On the right is todays version, this time including Citigroup, C. All three of these stocks went through an a-b-c correction that wiped out 90% or more of their respective values AND, with the exception of Citigroup, the a and c legs were more or less equal and in one or two cases even the b leg was roughly equal to the a and c. All this suggested that this is one single , completed, structure. For clarity I repeat MS below;

ms july 26 bg 2014ley Common Stock Stock Chart  MS Interactive Chart - Yahoo! Finance _2014-07-26_07-44-13Morms july 26 2014

MS never makes a new low in 2012. If the chart uses monthly data this appears to be the case but it is not. Anyway from both these MS charts the a-b-c correction is clear as a bell. Interestingly, after insisting for years that the “orthodox” top was in 2000 and all of the above was just wave A, followed by a large B to now be followed by a large C down, the count has changed as per the most recent Theorist such that the B-wave, which is now often way above the start of A, has now become a 5th wave, and not just for these individual stocks but for the Dow (and other) index as well. The end result will be more or less the same but the opportunities along the way, to either make or lose a lot of money is very much path-dependent.  So at least these four stocks, that do not look as if the will make new highs soon, may actually already be in the next bull market. If so they cannot make new lows but that does not imply that they cannot get close.

DOW again, another wedge perhaps?

dow july 23 2014 bdow july 23 2014 s

EW, apart from all the rules and guidelines , should adhere to the aesthetic requirement that the patterns should look good. Earlier this month we had a chart of Citigroup and offered the opinion that the two down legs in respectively 2000 and 2007 might just be parts of one and  the same complex correction. This may be true for the Dow as well which would then make this leg up a wave 5, which is often a wedge. This sure looks like one, both on the larger scale starting at the lows of 2009 and the smaller scale starting this February. Assuming that it is a wedge of sorts it should end before the upper and lower boundary lines intersect, there just isn’t any room left there after. As the upper line rises by about 130 Dow points a month 17360 is roughly as far as it can go, but do not expect it to get there simple because these structures stop well before the theoretical end, the apex.

Greenspan, we were told, owned exclusively T-bills. Bernanke was apparently equally conservative but Yellen owns a lot of stock (about $4mln or so) by way of individual names or ETFs. Most are up by at least 50% or more over the past year and perhaps someday we will hear if there was a conflict of interest. Socialism is nice but capitalism even nicer.

BTU, Peabody update

Then – Oct. 24 2012 – and now;

btu oct 24 2012 bBTU july 23 2014

Are we there yet? Depends how good you are at drawing a circle. The low so far was just over $15. Perhaps another dollar or two or three but clearly it is not a time to be short! The 5th wave of C is getting close to equality wave wave 1 of C.

HLF, update

hlf jul 23 2014

When in doubt, stay out. We did after the a-b-c down in 2012 was complete. The problem was that it was near impossible to determine what degree that correction was. As it turns out it was most probable a wave 4 in a 5 wave sequence that was completed, we think, at the $84 high. That happens to be where the channel upper side runs.  The initial move down to $50 would then be wave 1, or a, of a new bear market. The problem is that that move could, repeat could, be interpreted as a completed a-b-c correction. That is then contradicted by the very clear a-b-c wave back up to nearly $70 ( yesterday’s idiotic move would be the c of that wave 2). On balance we suspect that this latest move may have a few more dollars to go but will then peter out perhaps at, say $72 or so. At that point the shorts will have covered and the whole process is ready to start all over. Short at $72 with a tight stop for a target of $25. Below is a more detailed chart, also showing an alternative A-B-C down. That would then be a flat so paradoxically the stock could rise to a higher level before the C-leg starts!

hlf july 23 2014 s