Year: 2015

TSX showing all the possibilities

Hamilton

tsx jan 9 2015

Using the TSX , here are the possibilities discussed earlier. First is a series of 1-2’s of different degrees( in purple). This is in line with a very bearish outlook as the bottom is very far down. Then there is the rather awkward possibility of this being a wave 4 (in black), one more high would be needed around 16000 or so this summer and only then will the real bear start. To me, with oil already in the dumps and the banks obviously overbought it is not entirely clear what would bring this about. Then the third possibility is that this is a triangle B-wave (in red). The problem with that is that the downside would be limited to about 11000. Time will tell.

HXU update, could it be telling us the TSX might yet go up??

Hamilton

HXU jan 8 2015 b

I left RBCDS involuntarily on Nov. 6 ,2008. It is hard to believe that 6 whole years have gone by. Just before I left I had put buy orders in for the HXU in fairly large numbers and for relatively large amounts, basically anyone who would listen. Those orders were no doubt cancelled before they could be filled as there was nobody left to deal with such an esoteric product as the Hor. BetaPro  leveraged 2x TSX up, which is , of course, the opposite to the HXD (U=up, D=down). The objective was the usual 62% retracement in the form of an a-b-c. We got precisely that all though in fairness we would probable have bailed at $18, not having the patience to wait two years.

After reaching the 62% mark it dutifully drops 62% to about $14. It should have continued to almost zero as Europe fell apart but the powers that be saved the day with oceans of money and other goodies. Three more years pass and the goodies just keep coming and as a result the markets experienced one of the longest rallies ever without major interruptions, that is un till Q4 of 2014. Today we are essentially where we were 4 years ago! So where do we go from here?? This may come as a shock but despite my beliefs to the contrary, it would seem that we should at least entertain the possibility of being wrong! Here are the charts;

HXU jan 8 2015 mHXU han 8 2015 s

Just as with the inverse head-and-shoulder possibility on the NYA (two blogs ago) there is the equally alarming possibility that the HXU might go up. The main cause for concern is a triangle formation that seems to be forming over the past four months or so. In such a triangle all 5 legs must develop as a-b-c’s which does not seem to be the case but it is very hard to tell. Otherwise the triangle is well formed needing only c of d and all of e. This could be complete, if it happens at all, in one month or three months so the apex can shift both to the right or left. In fact the whole thing could already be complete! The triangle, as it must be, is clearly in a 4th wave position. It measures about $8 so a reasonable target once the “thrust” is done would be between $34 and $38, which would allow the HXU to double top. Time will tell!

For the record, I do not have an open mind and I cannot conceive of the TSX improving much further with what is happening to oil and the banks. So I will stick to the HXD on which I have already lost a lot, but I am aware that what should happen, does not necessarily happen which I understand is the main reason why people lose money.

The bears should keep in mind and console themselves with the thought that some triangles, at tops, are actually a series of 1-2’s which is very bearish.

SLB, HAL and RDS.b

Hamilton

SLB jan 7 2015HAL jan 7 2015RDS.b jan 7 2015

Here we have Schlumberger, Halliburton and our favourite Royal Dutch. The first two have very distinct B waves whereas Royal Dutch appears to have a 5th wave. It does not matter much for the next big move, all three should move close to the bottom of the chart. This, by the way, also applies to CVX, XOM and a few others. So how is this going to happen? Here is Royal Dutch in greater detail;

rds.b jan7 2015 brds.b s jan7 2015

We anticipated large moves, both up and down but were surprised that they actually happened. As a result we are “stretching” our wave count so that it can reach our initial target at around $58 (see previous blogs), and then later drop much further. The recent move smell like the start of a triangle which suggests it is a 4th wave (it could also be a B-wave, but that does not fit as well but if it is then our original thought might still prove to be correct. This triangle would start one leg later and when finished the stock would climb to about $75). The thing to remember is that the drop is not over for any one of these stocks!

NYA, New York stock exchange index

Hamilton

nya jan 7 2015

This is pretty messy. Too many lines and too much stuff. Anyway this is the broadest index and should therefore be representative of the US market, at least more so than the Dow. Initially we thought there was a 5-wave sequence down in Sept. and Oct. from the high (by 3 ticks) in early Sept.  That was pretty well retraced ,just short by about 40 points. Then we do the whole thing again and may be halfway in doing once again after that. All that could be construed as a series of 3 1-2’s of different degrees. This is extremely bearish as once this bounce is done a wave 3 will start and that is where the real damage will happen. And if you have not noticed, this index managed to gain all of 200 points over an entire year which is about 2%. The Russell 2000 (RUT) the CAC (Paris) and GDOW have similar charts but there is more of a downward slope and they all lost over the year. All this despite a lot of massaging by the Fed. et al.

    If you look closely through all the clutter , there is a very nice inverse head and shoulder pattern. I have no expertise in that area so I looked it up and below is an example of such a pattern;

inverse head and shoulders    The inverse H&S pattern is a continuation pattern and if that is the case here it should be quite bullish, good for at least another 1000 points. We do not believe it but just present this possibility to show that anything is still possible.