WN George Weston Ltd. a.k.a Loblaws and President’s Choice

Hamilton

wn jan 2012 bwn jan 2012 s

Ad nauseam?  I have included the big chart just to show the range that this stock has gone through over the past 15 years. The move from $10 to $140 was , of course, absolutely normal and the way markets are supposed to work. The next $100 drop was an absolute calamity  for which there was no ready explanation, despite the rather obvious fact that the rise was much steeper than the drop. Perhaps it was Wallmart’s entry into Canada.

It regains it’s composure by roughly doubling in what is a fairly clear B-wave. Then even before Europe almost blows up the stock loses 1/2 of its value in next to no time. From that point on it has been working on the longest triangle of them all.  For ten months now it has higher lows and lower highs and probable has a few dollars to the upside before completing the required 5 leg sequence. Given its size, this is probable not a 4th wave triangle but a B-wave triangle. Alternatively it is a series of 1-2s masquerading as a triangle. The important thing is to know that “consolidation patterns” are continuation patterns, you keep going in the same direction.

In this case , that is down. We would sell now.

PHM, Pulte Homes update

Hamilton

phm jan 2012

August 30 we recommended this stock for the simple reason that it had dropped out of a triangle and should return back to that level. As the stock proceeded to drop for most of September you should have gotten it under $5. Here we are, almost back to the triangle , good for a 60% gain. It may go higher but it should drop back to $5.25 before it does that, if it does.

BID, Sotheby’s Holdings Inc.

Hamilton

bid jan 2012bid s jan 2012

Sotheby’s did exceptionally well since the March 2009 lows, going roughly from 5 to 55 and getting close to a double top. Not selling there is an unforgiveable error. The stock is on it’s way to about $23 as a first target. This chart is identical to the one before, so it is truly ad nauseam that your are getting the same, or at least similar picture. Here too there is possible a triangle 4th wave, it could be complete or still in need  of a d and e, which would simple consume time but not change anything else. By the time you get to that $23 level, the B wave in the larger B-wave, you will have lost 1/2 of your money when measured from the top. If the stock does indeed go to the expected target, below $5, any gains will be lost.

Germany IShares MSCI EWG

Hamilton

ewg jan 2012ewg s2 jan 2012

Germany keeps confusing, one day it has the lowest unemployment in 20 years and confidence is at its highest since whatever and the next day GDP goes from a healthy 3+ % to actually shrinking, albeit at a very small rate. There are also at least two dimensions, one political and the other economic and the undercurrents are very difficult to recognise. The charts should tell the story.

The DAX , as with the DJI, is not always the best index to make a point. Both contain the top 30 companies and their performance is far from average. Furthermore these indexes obviously attract those that may wish to influence the outcome. This is less so with the somewhat more obscure EWG IShare MSCI. You can click on the chart to enlarge them. At the risk of repeating myself ad nauseam , the B wave in the large chart is perfectly clear. This alone suggest a new low should be forthcoming. In the small chart, as in so many others, a triangle is clearly visible and complies with all the rules. The fact that it trades sideways out of the channel is perfectly normal. In this case the triangle must be a 4th wave as it is occurring in the C leg. The ideal target would be wave 4 of previous degree, about 8. The `normal` thrust from a triangle would get it to about 16-14, BUT it is not unusual for a 5th wave to cover the same distance as waves 1 through 3 combined, roughly 10 which would do the trick.

In terms of how far-fetched this prediction is, or how radical perhaps, note that if this does happen we will be back exactly where we were 10 years ago!