Nestlé is a blue-chip if ever there was one, it is in the food bizz and Swiss and has been around for ages. Here is the chart;
Unilever fits in this same category but has not moved this much ( yet?). Nestlé dropped from $57 to$44 or roughly 22%, much of it in the last few weeks. Relative to the rally post March 2009 ($35 to $57 or $22 it has lost 59%. The chart both in the big picture but also looking at the details very strongly suggests that this drop is not over by a long shot.
3M is by all accounts “blue-chip”, so is J&J, P&G,IBM, Colgate,TRP in Canada, the Royal Bank Siemens,SKF,Nestle etc. etc. The way you know that you are in a bear market is when these stocks for seemingly no good reason, en masse,start dropping and often rapidly. Another good indicator is that you get stopped out of all the carefully selected “buy” stocks such as Cameco, R, Pfizer etc.
3M is an excellent example. On the left are my comments as of July 26, the stock that day was around $91.50. On the right today’s chart with a low of $78.50, that is 14+% in about ten working days. From the top in early July of about $98 it is 19.9% The first target still is $72, and that is not necessarily the bottom by any means so be careful not to fall for the temptation of buying “bargains” Last time your broker bought RIM for you at $80 it too was a bargain seeing it came off $160 whatever.Today, it is a quarter of that.
It is near impossible to get a tick chart, even on the internet, so I will use this one from Stockcharts. I suspect that we are in some sort of 4th wave of 3 of 3, this may be a wrong assumption but at least it give a road map.
Yesterday’s low was at about 10600.The rise thereafter was was good for 600+ points to about 11200. It is , I think, a 5-wave move, which immediately excludes the possibility of a triangle! This morning’s dive down was for about 400 points (very close to a normal Fibo 62%) to 10800. This corrects the euphoria created by the Fed acknowledging that we are indeed in BIG trouble. Next move should be another rise of about 600 points to 11400. Then down it goes again as we are nowhere near a bottom. We shall see.
Here we have it. A market rejoicing in the fact that even the Fed. ,certainly not the most astute observer, believes it is time to tell us that it will hold rates at unbelievable low rates for another two years. What happened to capital formation, the cornerstone of all civilization, what happened to honesty, do we really have to go by the backdoor by way of degrading our currency?? I do not think that Bernanke has even a remote idea what he is doing.
From an EW perspective , we may be in wave 4 of 3 of something the degree of which is yet unclear. The market should go down first and then may go higher, this may take some time, but in the end the fundamentals will prevail, and that means stocks are going lower.
What happened to capital formation? If you were a bond trader is it time to pack up? In my opinion the Fed. has no idea what it is doing. We need much higher interest rates, period.