EEM (and XEM), Emerging markets

Hamilton

eem june 2011

Back in January it was anticipated that this ETF would not trade above roughly $50. So  far at least it has not. The pattern is fairly clear. An a-b-c in which the b is a very nice expanding triangle. The c wave travelled about 60% of the a –wave ( normal) and peaks at the appropriate time. Emerging markets are always the last investments to turn, if for no other reason than that no one really knows what is in them. The possibility of one more high is quite remote as it stands, so it should be high time to reduce one’s exposure.

MMM, Minnesota Manufacturing and Mining

Hamilton

MMM is one of the last “blue chips”. It is best known for its post-it notes, has a dividend yield of 1.7% and a P/E around 17. Solid and boring, here is the chart:

MMM june 2011

There is a lot of scribbling in this chart and also a lot of ambiguity. For instance it is not clear which top is THE top. What is clear is that both tops are tops, both have wedges driving the stock into the peaks and in both cases these wedges have been, or will be, retraced entirely so look forward to at least a drop to about $72 (about 25%from the top).

What we have here is a good example of double-topping and the Mount Everest effect of a stock trying to reach $100. Once that is reached usually a good drop follows. It matters little (for the moment) which top is the real one. In either case a drop back to the 4th wave of previous degree should be anticipated (at $40 or so). Lets see what happens.

RIM

Hamilton

RIM june 20 2011

RIM is going down beyond my initial target. Looking at it on a log-scale it is still possible that the pattern is correct but that notion would have to be abandoned if this continues another day. What is unclear is what the count would be if the “wedge’ does not work. A series of 1-2s from the initial $90 level is a possibility but that would be extremely bearish and , at this time at least, improbable.

Not that it means much but the RSI is at the lowest level in 3 years!

RIM rsi