Nikkei 225, update.

Hamilton

Speaking of expanding diagonal triangles, Japan’s Nikkei 225 is, I believe , a great example. Here is is once again using a semi-log scale chart;

Nikkei 225 aug 2011

You do not have to go all the way to the lower trend-line. More often than not it does not even get close. But you should get a 3-wave move in this 5th leg down (as well as the others). A low below 6994 would achieve that. Perhaps 5000?? It is down about 2000 points since the first time this formation was presented, at a time when the market was pretty gang-ho on Japan.

The Japanese economy has just been downgraded, and the central bank keeps intervening to keep the Yen down with very little result. The population has stopped growing and is now shrinking at an alarming rate. Government debt is the highest anywhere in the world at about 220% of GDP, which supposedly does not matter as they own it to themselves. Who knows, anything would seem possible.

IVN, Ivanhoe

Hamilton

There are 10 previous blogs on this company. Last time in Jan.2011 the expectation was that the stock could drop quite a bit to around $13 from the $30 level where it had peaked. Here is that chart;

ivn 2011 1

$13 was the most extreme as it was entirely possible that the drop would stop at the trend-line at $17.50 at that time if the drop was steep. It was not but it did get to that level. Today this is what we have;

ivn aug 2011 ivn aug 2011 s

So it did not  as deep as expected but it did trace out a very, very, nice “expanding diagonal triangle” wave C with the A and B in front of it. This is a highly reliable formation that calls for a sharp move back up to at least the origin of $30. A drop below $16 or so would negate this entire scenario.

Just the other day this company made the claim that it could mine its copper at a negative cost, that is the by-products (gold etc.) fetched enough to pay for the operation. This stock is out of phase with the rest of the space and it is huge.

The Fed.

Hamilton

We all know that the Fed. was created in the middle of a dark night off the coast of the Carolinas in 1913 or so. It is not a government agency as just about everyone wants to believe. It is more a quasi partnership between banks of different nationalities to save the world, after saving themselves.

The market, supposedly is looking forward to whatever rabbit will be pulled out of the hat at Friday’s Jackson Hole conference. Last time it was QE2, might it be QE3 this time ? Apparently it is not yet abundantly clear to the vast majority that “pushing on a string” or bringing the proverbial horse to water does not matter if the beast does not want to play ball. Even so hope is eternal and the market seems to know that there will be a rabbit, no matter how small.

In the mean time the San Francisco Fed (there are 12 of these) did a research study that was pretty well ignored, at least the impact was less visible than the earthquake. Here is that study in short;

fed populat 2  fed populat 1

They, the research guys at the SF Fed found a correlation between age and investment behavior. Nothing new, we had that here with Foot and others already. But here is the point, they expect with a high degree a statistical credibility ( a lovely 61% correlation for Fibo  believers) in support of their conclusion that stocks should trade at a P/E of about 8 or so in 5 to 10 years. We are at 14 now so the Fed is telling you stocks might drop by 1/2. So much for QE3 or the next rabbit.

The M/O ratio is the fraction of people between 60 and 69 that own most stocks and are about to retire. More at the website SFFRB.

ACN, Accenture Ltd.

Hamilton

acn l acn s

Accenture, like all or most, is on its way down. A reasonable first target would be around $36 or so. Short term it is possible to count 5-waves down (black) in which case we should get an immediate bounce. More in line with the rest of the market would be the blue count at about $43. We will keep an eye on it.