Year: 2015

DOW and S&P, same story

Hamilton

dow oct 11 2015S&P oct 11 2015

Both the DOW and the S&P have similar corrective moves. It is not entirely clear how one would arrive at 5 waves down from the March highs but notwithstanding that the a-b-c’s are quite clear. In fact they are a days trading within a nice Fibo 62% retracement level, but of course waves 2 can retrace a lot more than that. For the Dow that level is at about 17218 and for the S&P about 2033.

For the moment we will assume this a-b-c is a wave 2. Should it stop at these levels the next thing is wave 3. This one is usually 1,618x to 2.618X wave one so roughly 5000 to 8000 points on the DOW. For the S&P the numbers are 432 and 699. We will see what happens, if anything, because from the Plunge Protection team to every broker, pension fund manager and, nowadays, politician will do everything in their power to avoid this kind of outcome.

DD update

Hamilton

According to the Dogs of the Dow, Dupont was the best weekly performer this week at 14% up. Next in line was General Electric , GE, at 10.2%.  Of course only the 30 Dow stocks are included.

Here is our usual then, 28th of July, and now comparison;

dd july 28 2015 sDD oct 10 2015

The stock did follow our script but it did so with a bit of a lag going lower for longer. But then the rebound was even larger than expected. Putting all this together suggests that the bounce off the lows is not a wave 4 (of 1) but a wave 2 of 1. At about 40% this rebound may have very little left in it all though $62, the 200 day moving average, remains a possibility. We would sell in view of the Big picture (see previous blogs).

GE was number two. However, measured over about a month and a half it managed to increase by almost 50%. This is almost unheard of for such an ex-bluechip stock. A mini tantrum followed by a melt up??

ge oct 10 2015

Enjoy Thanksgiving.

TSX and SLB updates

Hamilton

TSX oct 9 2015slb oct 9 2015

This week, in case you missed it, everything shot up in tandem presumable as a result of the Fed. not doing anything and even opening the door to never doing anything. Oil shot up 9% (see our blog), the Can. Dollar had a great week and everything else that was down between 30 t0 80% over the past year had a great day. Will it last? As always we have no idea but we do take our cue from the patterns, in this case the TSX and Schlumberger as a, random, proxy for the oil companies. There are very clear a-b-c’s, they are corrective and that does not bode well. Obviously that could change but for now we prefer the bear side. The TSX did the usual 1000 points, twice actually and the second time in little more than a week. That should do it give or take one little push after thanksgiving.

There are many others that follow this general pattern. Halliburton, HAL, is another excellent example.

HAL oct 9 2015

FM, First Quantum Minerals update

Hamilton

We start with the usual then, June 2011, and now charts;

fm oct 2015

At the time we observed the near perfect B wave that created the top in 2011. This called for the C wave to be next. Normally it should create a new low below the lows of A and it should develop in 5 clear waves. So far it has done neither. That low was at $2.70 on Dec. 5th, 2008 which is stock split adjusted. The low of $4.52 recently is close but we could still go lower but the long-term trend line may be hard to cross. There is also no clear 5 waves down. If anything there is a pretty clean a-b-c both up and down. This suggest, potentially at least that some sort of double zig-zag is forming. That would argue that there never was a B-wave and that the real or orthodox top is actually the one in 2011, not 2007.

The stock has doubled from the recent lows at $4.52, no doubt on massive short covering. The same has occurred with TCK.B but in both cases we would caution the investor/gambler that the bottom may not yet be in. Overcapacity is rampant and much is financed with borrowed money. Demand is scaled down considerable and there does not appear to be much improvement in the near future.. This is your classic hog-cycle which may take a little longer. In the mean time you have saved  nearly 80% of your money by not owning this stock.