DAX and Siemens

Hamilton

dax sept 2011 si sept 2011

One would expect the Dax and Siemens to be dancing to the same tune, more or less. There are slight differences but in the main they go up and down at about the same time and pause at around the same time. Stylized in the two charts above, both clearly made A-B-C corrections, retracing similar proportions of their losses into March 2009.

The Dax needs to drop to about 5120 to retrace 62% of the rally, for Siemens the number is about $81 . Both have a count that would suggest that wave 3 is about to complete. A month of sideways movement could then be expected  for wave 4, and then 5 down should take both the Dax and Siemens to those targets which also correspond, roughly, to the level of the B-wave. In detail;

dax sept 2011 d si sep 2011 d

All of this is just wave 1 down!!!

Global Dow

Hamilton

GDOW

You may want to enlarge this. I ran out of colors so there are only 17 countries and I took a good deal of artistic license putting this together so it is far from perfect. Colgate-Palmolive is not a country but it might as well have been. On average the markets, at their recent lows (not today!), were pretty well at the level of the b-wave of the a-b-c counter-trend rally that retraced an almost precise 62% of the drop of 2008/2009. Expectations now should be focused on wave 4 of previous degree at about 700. The timing would be about a year from now, a little less so perhaps July, 2012.

Colgate should break down any moment.

CL, Colgate Palmolive fine tuned update

Hamilton

Because this is the ultimate blue-chip stock it is good to keep a close eye on it. So far it has done mostly as expected even though just a few weeks ago it looked ready to go but then manages to regain it’s composure in short order. Here are the charts again now that we have reached $90.99;

cl aug 31 2011

This is the preferred count. It has a pennant, wedge, rising flag or “contracting diagonal triangle” as a 5th wave. It should peak exactly at $91 but my pencil really is not that precise. Furthermore a “throw-over” of a dollar or two is not at all unusual.What supports this count is the fact that wave 3 remains the longest, not a necessity but nevertheless the most common situation. It also fits the markets overall best considering they started moving down half a year or so ago. But there is a possibility that this count is incorrect:

cl aug 31 2011 2

Using Google charts for variety, a case can be made for a 1-2, 1-2 start which then has to end in a 4-5, 4-5 as shown. The overlap does not matter because it does not occur within the individual legs. The potential target would be $100, that is to the upper trend-line. I do not know which interpretation will prevail but I do prefer the top one. In the end, if you buy your puts as suggested you should profit quite a bit either way. The most logical target is $40!

$90 puts for Jan 2013 are going for about $9/$10. The stock moved $10 up and down during August.

CI, Cigna

Hamilton

July 12 we warned that this stock was ripe for a solid drop despite the reasonable P/E etc. The stock had been around $52 the day before. Here is what happened:

ci aug 2011

Barely a dollar higher and a week or so later the stock goes into a tailspin dropping from $53 to almost $41 or almost 23%, right into the first logical target in a nice 5-wave move. It has also retraced 62% or so in an a-b-c correction. The next dive should come soon and take the stock to about $30 (see previous blog).