Month: June 2016

POT update

Hamilton

pot june 28 2016 bpot june 28 2016 s

We have been neutral on this stock for a while now. Given the up and down movements over the past five months or so, without any clear progress one way or another, it is highly probable that a triangle or some other consolidation structure is forming. More often than not these are ultimately resolved in the same direction as before, that is down. A reasonable guess would be by about six dollars which would put the ultimate low at about $15 to $16. It does not have to go that far, but as we pointed out earlier, a total retracement of the bubble move up would be around $10. That is a lot of room for error so we would keep an eye on the RSI and MACD or any other technical indicator you might prefer.

For the record, buying at about $16 is buying at about one quarter of the takeover price back in 2011 or 2012. That price was then dismissed out of hand by the premier of Sask., whos government was, to a great extent, responsible for the creation of the monopoly without which this bubble would never have existed. Never mind the outrageous income received by the American CEO.

SAN, BBVA update

Hamilton

san june 26 2016bbva june 26 2016

Spain is voting today. These two banks are close to the bottom so there is not a lot of room left. These banks are big, too big to fail, as the cliché goes. So, unless you are expecting the end of the world, these two banks MUST BE A BUY.

Back in 1980 or so, the Canadian federal government issued 17.75 % , extendible 5-year bonds. (straight long bonds were actually a better buy). Using the rule of 72 your money doubles in slightly more than 4 years, so this presented an opportunity to quadruple your money and then some, quite a bit of some actually, without, theoretically, taking any risk. NOBODY WOULD BUY THE STUFF. Perhaps we are at the same fork in the road.

BBVA jul 25 2012

So we got that part right. Now the best count suggests that there was an a-b-c X a-b-c which is a double zigzag.  The wedge in the above chart is the end of a of the second a-b-c. A 62% relationship between the a and c of the second a-b-c suggests a price at just under $5. For BBVA that is about where the red line runs.

VRX update

Hamilton

vrx june 23 2016

Valeant has now dropped from $350 to $27, or slightly more than 92%. This is normally enough, at least for a little while, to create bottom fishing interest. At this point one could argue that the correction could be complete as C now equals A and then some. Even so the low, to make a full circle, is more in the order of $9 or so.

The Globe and Mail recently came out with an article comparing this company with Nortel. When things get that far it is often time to be a little contrarian and we would suggest starting to nibble at this stock. The fourth wave of previous degree  starts at about $50 and it would not be surprising to see this stock move up to that level, which essentially would imply a doubling of your money. Much higher levels are, of course, possible but we would put in the sell order after each buy as things may not allow the time to think.

ABX update.

Hamilton

abx june 16 2016 babx june 16 2016 s

ABX has moved up at a much faster speed than we ever expected. Typically there should be a noticeable pause somewhere, usually near the middle, of the counter-trend correction. We have now almost retraced 50%, far more than most other gold stocks so we have to assume that our analysis was wrong.

Initially we expected a pull back after the first leg up to about $17. What may have happened is that the pull back (wave b in an a-b-c) simple moved sideways rather than down. Possible this was an expanding triangle wave b that lasted about 5 weeks. If c started from that low point, equality between c and a would get us to somewhere near $28/$30 in the next few days, if not done already. If so this correction would have lasted about 8 months which is very short compared to the 4 years it took for the stock to find a bottom.

By comparison we show the ZJG, the BMO junior gold ETF.

zjg june 16 2016

This one is also on a semi-log scale but the stock only just made a 30% retracement. Clearly ABX is ahead of itself and today’s action up $2 in the morning (when the charts were made) and down $2 in the afternoon may be a warning that it is peaking at some degree.