Author: Hamilton

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??”.

FTSE, London update

Hamilton

FTSE feb 23 2015ftse feb 23 2015 s

These charts with all the annotations become very messy very quickly and , for those that are not really interested in the finer points of EW, rather annoying as well. It helps a little if you click on them to enlarge them. The “executive summary” reads as follows;

The FTSE is near completion of the first two legs, A and B, of a multi year “flat”. Once complete wave C should follow and take the index below the low of A. The high point of B is typically found where sub waves a and c are equal in magnitude. This should occur in close proximity to the starting point of A – that is why the whole thing is called a flat!. Essentially that is at the double-top level. Wave B itself should have a 5-3-5 structure and certainly wave c of B must subdivide into 5 waves.

    In the detailed chart  which does not show the entire c of B leg due to the 3 year limit, wave 3 is the extended wave and 4 a triangle. There are numerous variations but they all boil down to the simple fact that wave 5 starts at one of the 3 low points since October of last year. Again, typically, when the 3d wave extends there is a tendency towards equality between waves 5 and 1 (blue arrow). RSI and MACD are also turning so EVERYTHING suggests a top, soon.

    The one and only, remotely possible alternative bullish interpretation would be that this is not a B-wave and instead it is a 5th wave of the bull that is forming a wedge. That is extremely improbable and in any event does not project all that much higher (7400 maybe)!. Below is an example of what a wedge would look like;

ftse feb 23 2015 b2