PMG, Petrominerales

Hamilton

A small oil and gas company operating in places like Columbia and Peru. Used to be part of Paramount Energy , I believe, but was spun out as a separate entity. It trades on Toronto and on the Columbian exchange a.k.a the Bolsa de Valores de Columbia, which may, one day, be an advantage given how well we here in Canada are able to integrate our 13 regulatory bodies and two languages. Here are the charts;

PMG b 2011pmg b2 2011

Needless to say I have never looked at this stock before, but then using EW you really do not need to have. Only the waves count!

Clearly there could be a 5-wave structure up from the lows in early 2009. That would coincide with most of the rest of the world so that is not to big of a stretch. Furthermore, as we are now overlapping the preceding bump, that must have been wave 3 and, all though there is no history prior to mid 2007 one must assume that a complete 5-wave sequence ended at the $41 high. If that is the case that would be wave 1 up and this drop should be wave 2. Standard first target, all other things being equal, is the 62% retracement level at $16 where we were a few days ago. In detail:

pmg s 2011

Typically a correction is an a-b-c, three wave affair. Often the waves c and a are vector equal due to some mysterious law of nature that just loves symmetry. With a little imagination that is exactly what we have here. Last , but certainly not least, the RSI with not one but two drops below the 30% line is clearly announcing a change in mood. The MACD is not far behind. An initial target, by the way would be at $32, but even $21 for starters  would be nice.

By all means use a stop, say at $16. This is Columbia so  who knows.

Happy Holidays!! and “yeni yiliniz kutlu olsun”.

BBD.B, Bombardier

Hamilton

bbd.b

Bombardier has a “compelling valuation” according to an RBCDS analyst. There are now 20 buys against 2 sells, quite a turnaround in sentiment that had been unreservedly negative, almost comparable to RIM. By the way, this stock now has a capitalization of around 6 bln, well below RIM’s. It yields almost 3%, trades at a p/e of 7 and has lost half its value in the last year, and almost all of it over the past 10 years.

The company recently won another 700 mln. order from Stuttgart’s transit system and is virtually the only company left making trains. Same thing with the medium sized jets even if they share that position with the Brazilians. These things are simple not going to go out of fashion any time soon. Anyone who has seen John Candy’s movie “Planes, Trains & Automobiles” will know how important and durable these things are, Bombardier covers 2/3 of them.

The EW patterns are not clear. A large A-B-C correction from $26 to $2 could have been it. If so the stock is in a new bull market since then but the patterns are not clear. What is clear is that the stock is pretty close to the 20+-year line that connects all bottoms. Perhaps a good time to buy? See also previous entries for this stock!

CF, Canaccord Financial.

Hamilton

cf 2011

For value investors the above metrics are irresistible. After all where can you get a stock that pays a dividend of 5.5%, has a p/e below 7 and has a lot of value as it is already down almost 60% this year and some 75% since the highs of $26+  From an EW perspective this is a very dangerous stock. The A-B-C rebound since the lows Dec. of 08, exactly into the Fibo ratio of 61.8, almost guarantees a new low below the levels of 08.

MS Morgan Stanley, SI Siemens and the TSX

Hamilton

MS according to the charts could be forming a triangle. Here is an update;

ms dec 22 2011

We are following this with a little more interest than usual, having missed the opportunity to buy at $12. At the risk of boring the reader, I have done a little math just to test the validity of this being a triangle. Wave c relates to a by a factor of 0.652 and d to b by a factor of 0.748. Not ideal but close enough not to reject the notion of a triangle. Wave e now may not exceed c at $17.50, but also does not have to be contained by the triangle’s boundaries. The ideal level for e would be at $16.89. All this is mostly academic as you should not trade on it. But if it does all this, and it is a big if, then it will be a screaming buy at just under $10 where it would hit the upper channel line as support. $10 is also what was paid for Bear Sterns by JP Morgan. It is unthinkable that it would not pay that sum again for it’s own, far more distinguished, offspring now that it has been orphaned by it’s other parent, Glass-Steagall.

There are many other stocks that have a triangle forming, at least the possibility for one, Siemens (SI) and the TSX are possible examples;

si dec 22 2011tsx dec 22 2011

Both are presently in their respective e-waves, and whether or not they are actually forming triangles is perhaps less important than the fact that they have been going sideways for 5 months. Consolidation patterns are invariable resolved in the same direction in which you entered them, in this case down.