Author: Hamilton

DAX update

Hamilton

dax jan 12 2015

The DAX sports a similar triangle as discussed elsewhere ad nauseum. These triangles are invariable either in a 4th wave, or a b-wave position. (Alternatively they are misinterpreted as triangles but are, in reality, a series of 1-2’s). The different position depend on whether or not this wave up is part of a normal 5-wave sequence that subdivides in individual 5-wave minor waves or, whether we are in a wedge-like structure within which all the sub waves are 3-wave structures. Either way,if this is correct, we should get a thrust, or c wave up to at least 10500 and then the whole thing should more or less collapse. Do not trade on this. Neither the RSI or the MACD provide any meaningful clues.

G, Goldcorp update

Hamilton

g jan 10 2015

See our previous blog from a few days ago. So far there is no decisive resolution of what is happening. A wedge or an incomplete 5th wave are still possibilities. Just a little higher we will get overlap and if we can get a little higher yet, say to $27, the probability shifts to the view that the low is in for the time being.

See also HGU and ZJG, neither of which are resolved decisively either.

PD, Precision Drilling

Hamilton

pd jan 10 2015 b

pd jan 10 2015 mpd jan 10 2015 s

We have all three charts here, big, medium and small. The top of a cycle is assumed to be in 2006. From there we have an absolutely classic correction in the form of a perfectly formed A-B-C that wipes out almost all the progress over the previous ten years or so. It hits bottom in synch with the rest of the market in early 2009. The low is around $3.38 exactly where both legs of the zig-zag are equal. This is the point where a stock either goes bust or starts a new upward cycle. We assume that wave 1 up of the new cycle occurs from 2009 to 2011. Next we have the inevitable correction of wave 1, wave 2. Wave 2 appears to be doing a very symmetrical a-b-c down and in the process takes back nearly all of wave 1, as is normal. The c of 2 does not look as if it is complete as 1. it is not yet equal to a, and 2. it has not completed a 5-wave sequence as all c waves should. You need a very sharp pencil to figure this out but nevertheless the target would seem to be around $4.75 or so, not far from where we are today. Furthermore, assuming our interpretation is correct, the stock should not trade below $3.38. The next move should be wave 3 up which at the very least should exceed wave 1 in size, that is >$16. So roughly speaking you could lose 30% or gain 300%. When did your broker present you with such a proposition? For free!

We have no fundamental view on what might make this happen. One possibility is that the famous Belgian dentists of the past mistake this company for some sort of association of dental practitioners in the forefront of that science and are all over it to get a piece of the action. Investors’ memories are, after all, very short.

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.