RCI.B, Roger Communications

Hamilton

rci.b may 2 2013

Back in Jan.  of 2011 we thought this was a sell. It was for a short while but the call was wrong for the simple reason that wave A is not a 5-wave structure, it is clearly only 3-waves. Flats, including very big ones, follow the 3-3-5 script whereas zig-zags follow the 5-3-5 pattern. Flats, as the word obviously implies, are more or less flat and zig-zags normally are fairly sharply down. After 6 years this is most likely a flat and not a zig-zag. Certainly the normal initial target of the 4th of previous degree, here at about $21 strengthens this view. In tennis this would be called an unforced error, in trading it is called stupid. But, if at first etc.  Here we are again with a delightfully beautiful B-wave, this time to 100% retracement levels instead of just 60, also known as a double top. Time to get out.

Fundamentally the communications companies in Canada enjoy a 3 party oligopoly with very strong regional concentrations. Our CRTC does very little to counteract this. In a manner of speaking these telecoms are better of than the banks and typically charge multiples of what is charged in other countries. Someday technology will catch up and undermine this MO, or perhaps the Canadian population will wake up one day, one can only hope. Without the legal protection these companies would lose a lot of their earnings power. We would therefore be sellers.

BB update

Hamilton

bb apr 30 2013

We keep repeating this ad nauseam , triangles occur only in waves b or 4, nowhere else, so when you see one, or think you see one, you know where you are in a given sequence of patterns. But the market is very adapt at fooling you so the best approach is to look at the balance of the possibilities. If this is a triangle we should go down in wave e right away to around $15 to $14 ($13.50 max.). This would be a b-wave rather than a wave 4. Given its size that is a reasonable assumption at this point. A logical target would be at $20 as a very minimum going all the way to, possible, $26. A stop at $13 is warmly recommended just in case it turns out to be a b-wave within a wave 2 , shown in blue (see earlier blogs). You risk a dollar at the most if your stop is triggered and then you can try again somewhere around $10,50. If not your reward is about $5+ , or roughly 30%. The RSI is in line with this scenario and so is the MACD. Furthermore the CEO has just become a Canadian suggesting he is here to stay.

JCP update

Hamilton

jcp apr 30 2013

March 5, 2013 we suggested that this stock should be bought at about 13.75 (with a stop at 12). Had you followed up on that you would now be the proud owner and up almost 25% in less than a month. We would sell at around $18 (or even here if you are nervous), even though there is a good chance that the stock continues up to , at least, close the gap or even higher.

HON, Honeywell update

Hamilton

hon apr 28 2013

We were wrong on Honeywell (see previous blogs) thinking that it would not rise much above $60 or so, and here we are at  about $74. This time we are using the longest chart that we could find (Globe & Mail) to improve our chances of getting it right. The only thing that stands out fairly clearly in this chart is a wave 3 from 1991 to 1999, corresponding with the tech rise at that time. Everything else is educated guesswork. Even so 3 distinct possibilities present themselves. In black; the peak in 1999 is THE peak, so wave 3 is somehow not wave 3 and from that point on the stock traces out a “flat” with an unusually long B wave with a new, unorthodox, top. Wave C down should start any moment. Given that the pattern has ben in force almost 14 years already, any moment means sometime in the next three months or so.  In purple;  wave 3 is indeed wave 3 and following that there is a triangle wave 4. Given the $40+ “mouth” of this triangle a top at around $85 should be anticipated, after which the stock should drop back to the lowest point in the triangle ($20).       In blue; no triangle, just an a – b – c  flat followed by a very ugly wave 5. All that is needed is just a new high, which we already have.

The upshot is that all three are calling for a fairly dramatic drop, either now or pretty soon. Time to sell. See detail of B-wave (or 5th wave) below;

hon apr 28 s 2013