TRQ update

Hamilton

trq dec 2012

We had an ideal target for this stock at $7.08 based on Fibo ratios. Impatience got the better of us and consequently we thought it might be a buy already at $7.70. In the mean time the stock has made a marginal new low at $6.91, close to our target and has spent almost a half year doing so. The RSI and MACD are not confirming the new low.

As far as a count is concerned we not at all sure but the best fit would seem to be a 5-3-5 A-B-C with C almost vector equal to A. Any rebound from here could be substantial. This is a big mine that could, by itself, upset the balance of supply without  being effected much because of its low cost of production. Below is just one example of the machinery used.

TRQ photo

P.S. Sometimes rougher charts appear to be more accurate,here is the same from MSN showing the top as the second top!

TRQ Dec 6 2012

Copper, the stuff update and FCX, Freeport

Hamilton

copper s oct 2012copper dec 2012

The then (29th of Oct.) and now charts. This is a bona fide triangle, an E-Waver’s dream as these things are highly predictive and accurate. This triangle is in a B-wave position, not a fourth, therefore the expectation is for a C-leg to start any moment now and travel, perhaps, the same distance as the A-leg. That would bring copper to about $2.20 a pound and , yes, we are aware that the Chinese will do more to stimulate but for the moment their Shanghai index recorded a 3 year low. Stocks like FCX, Freeport will not fare well under such circumstances.

Here are the Freeport McMoran Copper and Gold then (Jan) and now charts for a comparison;

fcx s jan 2012FCX dec 2012

We recommended a sell at the time (at $45) even if it might go a little higher. At today’s level of , give or take $31 that is a tidy saving. The company decided to go into the oil business presumable to diversify. Presently it may be tracing out a similar triangle to the metal itself, even if it is running behind just a bit. The e–leg is missing but these can be awfully short so it wont take much to get the two realigned. Sell all copper related stocks, except perhaps Ivanhoe, TRQ see next..

RDS.B Royal Dutch

Hamilton

rds.b dec 2012rds.b dec 2012 and chevron

On the left is Royal Dutch, one of the larger integrated oil companies, just like Chevron which we think is a sell because it has so out performed all the others and is totally uncorrelated to the stuff (oil) itself. Both are shown on a relative basis (relative to the chosen starting point!) in the chart on the right. Royal Dutch appears to have completed a triangle but unlike Chevron would still have to make the thrust upwards to complete a 5-wave sequence. So why does one look like it is ready to go down and the other ready to go up? As always the answer is in the details;

rds.b dec 2012 s

Triangles must consist of 3-wave legs (not 5!) All legs could be said to meet this requirement except the first which is better viewed as a 5-wave leg, despite a single tick failure.(Also the c-leg from the beginning of 2012 to June is probable a “diagonal”, so despite the overlap it still should be viewed as 5 waves). That then becomes wave 1 down followed by a rather clumsy a-b-c correction back up as wave 2. If correct we are presently in wave 3 (at the beginning) and both stocks are aligned. The RSI and MACD seem to be supporting this outlook.

A nice, market-neutral, trade would be to sell Chevron and buy Royal on a 1 for 2 basis, roughly (see spread below). Just don’t use warrants or other option-like instruments as that does not always work out that neutral as the guys at Sprott & Flatiron can attest to.

rds.b compared to chevron

CP and CNR

Hamilton

cp dec 2012 bcp dec 2012 s

We have been completely wrong on both CP and CNR (see under CNR). Both have behaved like runaway trains far exceeding our expectations. CP is now trading at a p/e close to 24 and a yield of about 1.5% The new boss has just announced his plans to get the operating ratio down another 10 points, the recipe is the usual one, fire a quarter of the workforce and announce it just before X-mas. Just like in that famous movie that is always played over and over around this time -  the new boss even fits in well – , this may ultimately backfire. Even the analyst at RBCDS is looking for a double digit drop. The scary part is that this situation demonstrates clearly to what extent a hedge fund can actively muscle its way into the running of a company, perhaps a good thing at certain times, perhaps not when it is a little overdone. This is a sell on the next bounce.