PH , Parker Hannifin

Hamilton

Back in January we thought this stock was a sell at about $96/97. Here is the chart again;

PH June 2011

We were off by a dollar, perhaps two. The error is in underestimating the attraction of big round numbers like $100 , even in countries where the metric system is so culturally  foreign that many have difficulty multiplying or adding 10 and 10 without a calculator. Call it the Mount Everest effect if you wish, we climb the mountain simple because it is there.

   The point here is that again we have a very nice , almost symmetric B-wave. This one exceeds the starting point of the A wave but it is still very much within the “normal”range for these events. We are in C (the long-term trend-line more or less confirms this(see previous blog). $55 would be a first stop; a new low thereafter.

ABB, Asea Brown Boveri

Hamilton

These fellows are an international engineering firm, one of the few Swedish/Swiss mergers in existence. In late 2002 the company got caught in an accounting scandal which almost killed it. I personally missed buying the stock by about 10 cents from the low (near $1.10) only to watch it climb 30x. This business does not forgive perfectionism easily.

In any case the stock was a veritable phoenix rising from it’s ashes enough to , just in time, participate in the great recession. Here is the chart;

ABB

Again we have the same large b-wave counter-trend correction that is now breaking down. The symmetry is near perfect and it is hard to escape the conclusion that most of Europe is listening to the same drummer. This is a sell.

Another look at Germany, Bayer and EWG

Hamilton

Bayer june 2011 EWG june 2011

On the left we have Bayer. English people cannot pronounce that and consequently they call it “bear”. As it happens the chart is very bearish. This company is the inventor and manufacturer of the aspirin among many other pharmaceutical and chemical products. In many ways it is comparable in importance for the German economy to GE for that of the US.

On the right we have EWG which is the German ETF. Both top out at around the same time with Bayer once again underlining the importance of big numbers like $100. After the top Bayer crashes in an A-B-C whereas the ETF follows a very nice 5-wave pattern. (the former suggests a “flat” is in the making and the latter is indicative of a “zig-zag”, the difference is immaterial for the moment).

Both charts are stylized, and if the outcome is as expected, the trapeze shown tells us where things might go. As always, time will tell but one thing is certain, stocking up on aspirins is not going to help.

Just for the sake of completeness, we add the Dutch i-shares EWN. Not that the Dutch economy is that important in and of itself, but, as it happens, it is probable the most open economy and its index contains a disproportionate number of large multinationals (Phillips, Unilever, Shell etc.) and it has its finger on Europe’s pulse – oil or the Rhine. It should therefore reflect the effects of a globalized economy best. Here is the chart;

ewn june 2011

The story is the same, if anything more bearish , as this one wasn’t even able to retrace more than the Fibo 61.8% . Here too it is unclear if the first leg down is 5 waves or an a-b-c. 5-waves fits better given the anemic counter- trend.