ADM, Archer Daniels Midland, MON, Monsanto

Hamilton

ADM

Another B-wave. Sorry to bother the reader with yet another B-wave, but the sheer numbers are what support the overall bearish outlook and , amazingly, they all more or less peak at around the same time if measured over a month or two.

This one is exceptionally clear as can be seen from the stylized A-B-C in red. Further more it corrected just a little over 62% and found resistance 4 times at the lower trend-line of the past ten years or so. We already have some overlap making if quite unlikely that the pattern will develop in anything more complex.

To stick with the “agricultural complex” another peek at Monsanto supports the bearish outlook. To date this company has not been able to recoup even a minimum of 38% of it’s losses into 2009! Check out  such funds/etf-s as COW or MOO if you own them.

MON july

Short term MON could go a little higher, perhaps to $88 but after that it does not look good, see also a previous blog for a different count.

TRP, Trans Canada Pipe a.k.a trap

Hamilton

trp jul 2011

I must confess (see earlier blog) that at one point I did not expect TRP to go beyond $39. I was wrong. Such is life. Today I sincerely believe this stock is going to surprise everybody, big time.  Once upon a time, not too long ago (but well beyond the memory span of the typical investor ) this stock was considered a blue-chip, in the true meaning of that word! Widows and orphans (that is their brokers) flocked to buy this trap. Then they did the unthinkable, at least for the backwater standards of Canadian finance outside of Vancouver; they said repeatedly that they would not cut the dividend. And then they did! This lack of probity and behavior unbecoming either an officer or a gentlemen , not playing cricket and so on, did not go unnoticed . The stock was creamed to the $9 proverbial buying opportunity.

Memories are short and utilities that are sanctioned to earn a reasonable return of, for the sake of argument 6 to 7% no matter what, thrive in a zero or negative interest–rate environment. (Theoretically one could argue that at effective rates ,even below zero, the value should be infinite.) Well that was taken to heart and the stock was propelled up 5X in eleven years. Using the rule of 72 that is a return of roughly 25% per annum for the first six years. For the average broker, exactly what you should expect from a market that is there for the sole purpose of helping you retire. In any case we are looking at $30 for starters, then $20 to the trend-line, and then back to wave 4 of previous degree at $9.

All good things do come to an end, this according to the often ignored economic rule( applicable to other disciplines as well)  that if something cannot go on forever, it won’t. That is where we are today , actually we were there in late 2007 but got lucky. We got a B-wave, to be more precise an irregular B-wave. Typically the downdraft is even more devastating after an irregular B-wave than a normal one.

Clearly a prediction like this will meet with derision , but it might be useful to remember that trap lost 71% of it’s value a little more than ten years ago. There is absolutely no reason why this one could not live up to it’s name again!

P.S. One could make a case that , in EW terms, the whole move from $9 up is, in fact, a fifth      wave. The end result remains the same.

TRE, update

Hamilton

tre july 28

Today’s high was $8.29, shy of the expected $8.36. It may still happen if we are in a minor wave 4 of C, and then again, maybe we go much higher by closing the gap. I would get out as my computer does not allow micro analysis since i cannot get tick charts. Also this is becoming a duel between the I-hate-the-stock and the I-love-the-stock hedge funds. I suspect both are massaging their own book, as usual.

SU, Suncor and the B-wave.

Hamilton

Back in Febr . we anticipated SU to make a B-wave, and then drop. Can. Oil sands had a similar pattern but there were good reasons to have misgivings about the validity (see previous blogs). Here are the charts , then and now;

su 20112 Su 2011

above was then, below is now;

su july 2011 l SU july 2011 s

The target then was estimated to be about $50, mostly based on the usual 62% retracement. In reality the stock reached $47.5. Given the action subsequent to that event, there is overlap, it is now highly unlikely that the B-wave scenario would prove to be wrong, which implies that we will see $30 soon and much lower later.

If this prediction turns out to be correct, it will be most upsetting to the “analysts et al” that are simple convinced that this is the blue chip to own in the oil, and mostly, gas biz . If there ever was a “confirmation bias” this would be it.