Month: November 2014

TSX update

Hamilton

tsx nov 23 2014

This time it supposedly was a 40 beep lowering of the Chinese CB discount or whatever rate, from 6% to 5.6% AND more Draghi talk about an urgent need to do something. In any event it was good for a 2.6% rise in the DAX (you have to hold a 10-year bond for a few years to get the same return!) and a pathetic 1/4 percent in our own index.

For the past 5/6 years markets always seem to go beyond what they “normally” do and here again we have retraced more than 62% and may go even higher. Nevertheless we note that the c is now equal to the a in the ( so far at least) a-b-c correction. Moreover the RSI and MACD are touching on overbought readings. Stepping aside is the prudent thing to do here.

DGC update

Hamilton

The usual then, 5 Nov. 2014, and now charts;

dgc 5 nov 2014dgc nov 18 2014

We went from $6.02 to $10, almost 70%. The call was based on this being an a-b-c correction. That still looks to be the best bet, but there are other possibilities which might be less bullish. This stock is extremely sensitive simple because it is the new kid on the block (see previous blogs), but it is by no means a cheap producer. So if you are not completely confident take the profit and run.

TSX update (and HXD)

Hamilton

TSX nov 15 2014

The TSX is relatively simple in its structure. The high was in early September and the initial drop was a clear 5-wave move. 5-wave moves never stand alone, there is either something in front of it (not in this case) or it will be followed by another 5-wave move in the same direction. Retracement of initial waves are usually quite large, almost equal to the initial move, so this may have a way to go yet. Even so retracements often stop near the 62% level, or near the 4th wave of 3 of the initial move, in this case just under the 15000 level. We are close, time will tell.

hxd nov 15 2014

Our favourite HXD is, of course, doing the mirror opposite with leverage. The c of the a-b-c down appears to be forming a wedge. If correct it only needs one more little push down to complete. An excellent buy at these levels or slightly below.

ERF, Enerplus

Hamilton

erf sept 2014erf nov 13 2014 l

The chart on the left is from Sept. and was not published on this blog. On the right is today’s chart, this time on a semi-log scale. We believe the chart on the left has the wrong EW count in it as the stock would need to drop well below zero. Consequently we will go with the one on the right. Corrections invariable take the form of an a-b-c, most often a zig-zag which is an a-b-c in the most simple form. However this can be repeated once or twice to form a double or triple zig-zag. The chart on the right suggest that we had a double zig-zag, i.e. an a-b-c X a-b-c . It seems unlikely that this would still morph into a triple, simple because there is so little room to do so. Looking at a longer chart one could make a plausible case that this is far enough, $67 to $11 is a fairly serious correction after all.

erf nov 13 2014 1

The line shown is where the bottoms were over the past 25 years, a lifetime practically speaking. If we go with the other count the recent drop would become a wave 2 and should not go below the lows. Given how close we already are the practical approach would be to stay with the trade.

erf nov 13 2014 s