EWG & EWN , Germany and Holland

Hamilton

 

ewg may 2011 s ewg 2011 may

Germany and Holland have a lot of differences but economically they are attached in a way similar to Canada and the United States. Their economies are so intertwined that neither one can make policy without the other, granted obviously that the elephant always appears to get his way. Unbeknown to the world at large, Holland was once the largest energy producer in the world, relatively speaking ( it still is on a put-through basis ).  Gas in Friesland’s cow pastures propelled Holland into the  luxurious position of being able to run very large budget deficits with little concern; now known as the Dutch Disease. Canada is following the script pretty well and soon it will be known as the Canadian Disease. i.e. Alberta does well and Ontario suffers.

The above charts are of Germany’s EWG ETF. Clear, to me at least , is the A-B-C pattern of a wave 2, or at least some “corrective” move. For some reason, not sure what it is, the EWG differs markedly from the DAX. It has exceeded the 62% retracement, but barely. Below is Holland’s EWN (the AEX or Amsterdam Exchange is still far away from its top). You can click on the charts and out them beside each other. ;

ewn may 2011

The correlation between the two ETFs is rather obvious. The EWN is even more precise in it’s retracement level, pretty well a perfect  62%. It could go higher in the event C equals A but there is no need for it to do so. For the moment I would prefer to be on the side lines!

LUN , Lundin

Hamilton

LUN2 LUN may 2011

On the left is the expected trajectory for Lundin Mining as of the end of Feb. On the right is what we got to date. The stock, as apparently is “normal” in these bullish times, went right to the maximum of $9+. Then it crumbles despite two take-over bids; it should continue lower, perhaps much lower.    Click on the charts to enlarge.

CCO, Cameco, misssing the boat?

Hamilton

ccomay24 2011

It is quite possible that no further moves down are coming; the red line connecting the lows may have done its work by providing support. A look at uranium itself makes this very plausible;

Uranium may24 2011 uranium 2

According to InfoMine.com the stuff hit a low of about US $ 40 per pound around June of 2010 well before anything had happened at Fukushima, Japan. Recently China’s  nuclear Energy Association announced that it will boost atomic capacity 8 times by 2020. India announced a similar expansion of production of electricity using nuclear fuel 13-fold by 2030.All of this should lead to a doubling of the demand for the fuel, never mind what other countries will do.

HXD. Horizons BetaPro TSX 2x bear.

Hamilton

HXD may 21 2011

This is our favorite instrument. $8 was always an interesting  point as that is where the inverse HXU traded at the lows in March of 2009, see below;

hxu may 21 2011

A difference of only $0.08, and it has now held for the better part of two  months. And the HXU did a fairly straightforward A-B-C, which, by definition , is a corrective move. I think the time has come (or passed already) to buy the HXD. even at today’s price of about $8.65 or so. The Fed etc.etc. can not continue this shell game. The simple reality is that the world has mis-allocated roughly 3 trillion dollars or more, perhaps a lot more. By kicking the can down the road time is won but the question remains – as always – who is going to pay, bondholders, equity holders or taxpayers. Inevitable there will be a very serious headwind when we find out.