XFN Capped Financial ETF update HFD

Hamilton

xfn dec 8 2012 scxfn dec 8 2012 reuters

These charts are both from the ticker XFN, however, the Sharp chart  uses the Index Fund whereas all other charting services use the Index pure and simple. It is, I believe a consequence of using a total return and a price only concept interchangeable. This causes the chart on the left to slope upwards and the Reuters chart on the right to slope downwards. The Big chart and the Globe and Mail do the same thing, that is slope downwards;

xfn dec 8 2012 g&m

Whatever, in any event from all three charts it is clear that the Capped Financials (that includes insurers!) could be right on the precipice of their own little cliff. The EW count as well as a Head and Shoulder pattern  indicate that as in the Dow Jones a turn could actually occur just about any moment now. Also these charts explain why this market has been so intensely irritating for both bulls and bears. With the exception of the first 6 months or so following the lows of March 2009, the financials as a group (without cap. weighting) have accomplished absolutely nothing for the last 3 and 1/2 years. If change is going to occur imminently , and to the downside, you may want to look at the HFD ETF;

hfd dec 8 2012 bhfd dec 8 2012 s

This is , of course, the Horizons Capped Financial Down ETF and basically the inverse of the one above even though that is hard to tell from the chart – these ETFs do not track well. The low Friday was at $5.97 and it comes from near $60. Good luck!

DJIA update

Hamilton

djia dec 8 2012

Presently the best guess for a peak in wave 2 and the timing is around 13300 – where we reach the wave 4 of previous degree and where c is about equal to a within wave 2 – and either side of next weekend , 14th or 17th of Dec. This assumes that we are in a wedge and are presently nearing the peak of wave 3 with 4 and 5 still to go. Furthermore the RSI needs about another week to get into the “overbought” level from which a turn is more likely. As always, time will tell.

WFI, Water Furnace Renewable Energy update

Hamilton

Yes, these are the guys that figured out how to burn water, but, as always, timing is everything. Here are the then  (Aug 18, 2011) and now charts;

wfi aug 8 2011wfi dec 7 2012

You need to enlarge the charts to properly see how nicely the stock followed the script. The low so far was at $12,30, very close to the indicated 61% anticipated drop. The count does not quite look as if it is complete. The third wave on the way up was extended and often corrections go right to the top of the first wave, in this case $12 . Do use a stop just in case somebody exposes the truth by finding out that their proprietary formula for burning water does not work as well as advertised. The stock pays a dividend of 6.7%.

Below is a more detailed chart that shows that there might still be a wave missing;

wfi dec 7 s 2012

TSX update

Hamilton

tsx dec 22 2011

More than a year ago we contemplated the possibility of a triangle, as shown in this chart from Dec. 22 2011. Today we can update that notion again as follows;

tsx dec 7 2012

tsx dec 7 2012 volume

That triangle turned out to be just the midpoint of a wave a of a triangle that has been going on all this time and appears to need another week or two to complete. The typical characteristics of a triangle are comparable to a rope pull across a moat at fraternity or other juvenile games. As either party gets closer to the water it becomes more focused and stronger, causing a to and fro between the parties until one side gets dragged through the moat. The midpoint here is about 12000 and the index coils around that level making lower highs and higher lows on decreasing volume. As these are consolidation patterns the normal thing to happen is that the stock or index continues in the same direction as it entered the pattern, in this case down. Each leg within the triangle should be sub dividable in 3 waves and the legs often relate to each other by a ratio of 0.5 to 0.618, either to the preceding leg or the one before that. Using that we get 12421 as a guesstimate for the top of e. Should C equal A, we are looking at 8940, but often C is substantially longer. This is what the big picture could look like;

tsx dec 7 2012 vb

Notice that the 8940 would obtain simple by regression to the lower mean. The 4th wave of previous degree is at 6000 plus. The only fly in the ointment is that C waves should always consist of 5 separate and distinct waves which the suggested pattern would not have. We will cross that bridge at a later date ( a series of 1-2s maybe?).