Year: 2014

CP update

Hamilton

cp feb 10 2014 lcp jan 10 2014 s

We have been premature in calling a top on this one and therefore have been wrong so take all this with a few grains of salt.

Un till about 15 years ago this company was part of a conglomerate that consistently traded at a discount despite it’s historic significance as the binding force behind the Canadian nation. It took an American, ironically but perhaps not surprisingly, to wake this thing out of permanent hibernation. Or was it the delays in building pipelines? At this stage it does not matter, the stock trades at a p/e of 33x and yields a very rich dividend of just under 0.9%. The chart looks awful. Not only is the stock back into the channel established between 2001 and 2008 (not shown), but over the past two plus years it has traced out a classic 5-wave move, more than tripling in the process. A initial drop of about $50 should be expected.

It could still be argued that such a drop would only be a large wave 4 in an otherwise incomplete up move, but if the ‘08-‘12 move is interpreted as a large triangle (with a truncated e), this alternative becomes rather far fetched. This is definitely a sell or short right here or just a few dollars higher.

S&P update

Hamilton

s&p feb 08 2014

The S&P is slightly different from the DOW. The chart shown in the thumbnail looks distinctly like a 5 wave move, half and a bit of which has already been retraced rather rapidly. Typically 5 waves do not stand alone. This might imply that a serious downtrend, and at the very least an a-b-c down is in the making. However, it may also imply that the second top at 1850 is actually the top of a b-wave and the big drop is a c that completed an entire a-b-c down already at the 1737 low. There are a number of reasons not to prefer that alternative but we have to remain alert to that possibility. In the DOW, not shown here- see previous blog- this could be a minor 4th wave to be followed by a fifth before this drop is over. The wedge on the S&P suggests a drop to about 1620 should be favoured.

DUCA (bonus shares) an investment?

Hamilton

hcg feb 08, 2014cwb feb 08 2014

You do not need to pay for bonus shares, you get them “for free” provided you do a certain amount of business. When it comes to share based incorporated companies you typically have to pay to get the shares (except for DRIPs etc. etc.) The above two graphs are of Home Capital Group, HCG and Canadian Western Bank, CWB. HCG focuses on table crumbs from the big banks and CWB finances all things yellow that smell of diesel fuel.Both are, shall we say, focused. Inserted in both charts is a red line that represents the value of Duca bonus shares that were introduced in 1998 or 9. The comparisons are not entirely fair but in a very broad brush sense they are, particularly when going back 14 years or so.  The question here is what is better, getting shares for free or paying for them. Can you spot the winners ??

DOW update

Hamilton

DOW feb 4 2014

The DOW has dropped by slightly more than 1200 points, essentially erasing all those wonderful gains over the past 9 months. Most of that (95+%) was accomplished in the past ten or so days. I am using some of the novelties that are now available on StockCharts.com. First instead of the MACD I am using the POM, the price momentum oscillator, it is more reliable I have been told. Secondly there is now the option to add a thumbnail enlarged bit to the chart to explode the last little while.       We are not done yet in my opinion. 14500 would make much more sense as a 4th of prev. degree to complete wave 1 down, but short term the thing is a little oversold as measured by the RSI. Perhaps it is time for a 4th wave of 1.  We do not suggest trading the counter trend waves, they could be very short and fast.