CP revisited

Hamilton

A few days ago we recommended this stock as a short to our broker friends (there is only one). We have been way too early before on this one and that may happen again, but we feel strongly that this stock is in it’s own bubble. We now also have a plausible wave count as per the chart below;

cp june 4 2013

The count may well be wrong but it is nevertheless plausible. The e-wave in the triangle is a little underdeveloped but otherwise most other aspects fit the description.

cp and cnr june 4 2013

Also the stock’s performance , apart from , perhaps, the operating ratio, is on a par with CNR. And, after tripling their money the hedge fund primarily responsible for the agitation, has now made it known that their position has grown relatively too large. Is this legal ?? Anyway a number of extremely astute investment dealers like RBC have now cut back on their expectations for the stock (this is known as “running with the bulls”). Add to that a p/e of 41. If the stock does what it is supposed to do, it should return to the bottom of the triangle in about the same time as it took to climb up. The stock could therefore be below $60 by the end of 2014. A put option would fit this situation best.

WY, Weyerhaeuser and WFT, West Fraser Timber.

Hamilton

wy june 2 2013

Slightly more than two years ago this stock looked like it was ripe for a fall from about $24. It did, losing about 1/3 of it’s value but then restarted the trek upwards. It did not follow the script shown in green. No doubt a little well timed Fed QEeeing did the trick and pushed the stock to new, all time, highs. Even so the structure has not changed, it is still a “flat” A-B-C, 3-3-5.  In fact, it is now more appropriately a flat. Next big move should be down to about $7. Perhaps the housing market is not as hot as it is made out to be, we will see. Below is WFT, it did all of the above and then some, trading at 38x p/e. Clearly this stock is is ahead of itself. See previous blogs.

wft june 2 2013

HXD update

Hamilton

HXD may 30 2013

We were premature in thinking that the HXD was on its way up. It took roughly two more years but here we are again at a very distinct point, the end of a diagonal wedge. If correct a move up should start any moment and be rather dramatic. Keep in mind that this was once at $41. A buy.