GS Goldman Sachs, update

Hamilton

Then and now charts;

gs jul 2012 lgs dec 28 2012

We had this as a buy at $90 for a target of $135. It did not get there (yet) so we changed the outlook to include a triangle and now are changing it back again to the original a-b-c. Also, instead of contemplating a simple 5-wave sequence for wave C, we now prefer the notion that this may be a diagonal unfolding. This would allow for overlap that occurs at about $129 if you assume wave one to be larger than shown in this chart.

The alternate possibility that contradicts most other information, is that this stock is in a new bull market and is presently in wave 3 up. Not very likely. By the way, this pattern is very similar to that of Manulife and Morgan Stanley. Considering that this company is the global finishing school for central bankers and other powerful players we suspect that it will do better than MLF and /or MS.

Bayer

Hamilton

Then (a year ago) and now.

Bayer dec 18 2011Bayer AG dec 28 2012

Sometimes things do not work out. This is one of those times. Rather than succumb to bear pressures this stock decided to go in the opposite direction. It is a good reminder that the EW approach, or the practitioner, is not entirely infallible. At least we got the A-B-C part correctly, so in the event that one had played this one aggressively short, the damage would still be minimal (as measured from first blog!); and that assumes that no stops were used.  Now that we are here one must assume that there is either a distorted flat A-B-C on its own, or a triangle, equally ugly. The measurement for the triangle would be around $105. However the trend line is right here and the Mnt. Everest target is at an even $100. Our inclination is to get out or go short again even if demand for aspirins is about to explode.

PCP, Precision Castparts Corp.

Hamilton

pcp dec 27 2012

This company makes various metal parts for the aerospace and defence industries. It is the only  US company in the S&P that is headquartered in the state of Oregon. In the early fifties it made chainsaws. It keeps growing organically and by acquisitions. Sales and profits have risen tremendously but not quite as fast as the stock. At $196 the vertical distance travelled in wave 5 will equal that travelled in waves one and three combined, a frequent stopping point. It is right on the upper trend line and 5 wave sequences can be counted in all degrees. We think it is a sell between here and $196.

Interestingly, it is on RBC’s 30 best picks for 2013.