The then and now charts. Time to move on.
Month: June 2016
NPI, Northland Power
Not all charts are the same. From the Globe and Mail we get a very good looking triangle with the prerequisite lower highs and higher lows. Stockcharts paints a different picture with higher highs and higher lows. Regardless, it is a 2 to 3 year period of consolidation which normally leads to a “thrust” of sorts and that seems to be exactly what we are getting. In fact, we might be very close to the end of this thrust seeing that we are quite near to the upper trend-line going back almost twenty years. This company invests in so-called clean or green energy projects, solar, wind and so on.
In our opinion, EW based of course, the stock is overvalued particularly when compared to the more traditional forms of energy. A drop to the base of the triangle $12 or $15 should occur in the near future.
BCE update
Are we there yet?
For some superstitious reason I have focussed on the Fibonacci or “golden section” ratio of 61.8 for a termination point for this stock. This is the last of the blue chips in Canada but one should not forget that it also gave birth to one of the largest financial disasters in Canada’s history, Nortel Networks, which filed for bankruptcy protection in 2009, just seven years ago all though troubles started much earlier, arguable, in about 2001.
It is possible to show 3 different “diagonal triangles” in this stock using different timeframes. We only show the two shortest ones. The first one speaks for itself. The second one, starting from about $52, only 2 dollars higher than the first, can be interpreted as either a diagonal or simple a 5-wave sequence. As a diagonal, shown in green, the 5th wave cannot exceed the 3d wave if it were then to become the shortest wave. That puts a maximum upside of roughly $62. In the case of a simple 5-wave sequence, the trend line exclusive of a throw-over, should do the trick. That same trend line should also hold the advance on the bigger chart.
The high so far is $61.10 intraday so we reiterate our sell recommendation for this stock. Of course we do not recommend anything as this blog does not give advice, all we do is think aloud, hopefully.
FNV, Franco Nevada
This chart comes straight from the company’s website and should therefore be completely free of any bias. Like Royal Gold this is another royalty or streaming company that makes it it’s business to separate the good from the bad in the mining business and then invest only in the good part. They have done very well, but will it continue?
Notice that there is a pretty clear triangle in this chart. These are invariable 4th waves (or Bs) so even though we do not have info from before 2007, we are assuming a completed 5th wave sequence into the top at 350%. Both the apex and the measurement of the mouth of this triangle would allow for further upside to about 400-450%, but the straight line from the top of wave 1 through the top of the b-wave of the triangle, suggest this is the peak.
Taking the propaganda out of the charts we move on to Bigcharts and Stockcharts. Clearly the line connecting the tops of waves 1,3 and 5 suggests that we are at a significant top, or at least, could be. Also, if you look at the red arrows you will see that wave 5 has travelled about $5 more than wave 3, but if you were to assume that wave 1 started at , say, $5, you will get a situation where wave 5 travels the same distance as wave 1 and 3 combined. This is a common occurrence. Also wave 5, starting from about $35, can easily be characterized as an expanding diagonal 5th wave. In any event, the last leg up from $50 is quite clearly a contracting diagonal 5th (of 5) wave even if it could be argued that it is not yet complete when looked at on its own. The maximum potential would be in the order of $95 or so but we are satisfied that this will not pan out.
There are warrants on this stock. They show the same diagonal pattern so we would be sellers of this stock.
By the way, the difference between the 50 and 200 day moving averages on FNV, now at about $13, has never been higher since the great recession and, needless to say, some of the other technicals as the RSI and MACD are also not supporting the recent up move.