Year: 2015

DOW (Chemical), the classic B-wave.

Hamilton

DOW feb 26 2015 b

This is one of the better examples of the B-wave that we have observed all over the place. This one is in a flat. Flats typically start with 3-wave structures, not 5-waves. That is clear here but I did not catch on in time and consequently made the mistake of thinking that the upward correction was over at about $42 in 2011. It was not. It was only an intermission albeit a pretty deep one. Even so, three years later the B-wave becomes perfectly clear leaving very few alternative (The only realistic one at this time would be a very quick rise to about $55 to double-top followed by the same anticipated collapse.) In detail we have;

Dow chem feb 26 2015s

This may be a triangle wave 4 of c of B. It may also be a series of 1-2’s. You are presently roughly at the midpoint between those two possibilities and consequently risk/reward favours getting out now. Especially if the volatility is taken into account. In the last 5 months this stock has traveled a same amount as its value over a lifetime (thank you central bankers for bringing stability), not a time to tiptoe around.

STOXX600, Europe’s best

Hamilton

STOXX600 febr 25 2015stoxx600 s febr. 2015

This is fascinating stuff. The STOXX600 represents the broadest selection of European stocks. All those names that everybody recognizes even on this side of the pond are in it. Bayer, Phillips, Unilever, Nestle etc. etc. are probable in there. I think it is a sell. Here are a few reasons;

a. We are up about 30% in the last 4-5 months.

b. We are outside the channel of the past 3 years, or arguable last six years.

c. There appears to be a seven year cycle between tops and bottoms, reminescent of the   Brenner cycle 7-8-9.

d. Soon the tops will connect, on a downward line proving that buy and hold sometimes does not work for 16 years.

e. RSI is getting overbought and MACD is turning.

f. If you were lucky to survive the first dive, and then the second dive are you in the mood for the 3d dive just as you are closing in on retirement?

g. Wave 5 looks very much like a wedge, not good.

Investors waiting for word from the Fed.

Hamilton

sheep, ewes

Waiting for word. Will it be “a considerable time” , “patience”, “data-based” or something entirely new? The direction is clear, so does it matter?

P.S. Those who do not believe in the Fed, or Keynesian mumbo jumbo for that matter, may want to read some of L. Albert Hahn’s writings, most specifically The Economics of Illusion. Unlike Bernanke or Yellen this fellow had one foot in academia but the other firmly in reality. Furthermore he did not just study this stuff but actually lived through parts of it. Some of his writings are available on the internet. The crux of his argument is that Keynes or the Fed are like a doctor with only one single remedy, say a laxative, that is then liberally prescribed as a cure for everything. The resulting unintended consequences invariable then outweigh the immediate good , if there even is one, of the prescription.

Photo is from the McDermit ranch. Pavlov is asking, “Where  the he.. is the bell??”.