X , The Toronto Exchange

Hamilton

X Jan 26, 2010 X Jan 26 2010, 2

What better stock could there be other than the Toronto Stock Exchange itself. This used to be a little club of sorts that only went public in 2003. In late 2008 it peaks at about $56.50 , a fivefold + increase over a similar number of years (remember that in 2003 stock markets were quite depressed having dropped precipitously as a result of the tech meltdown). Then it drops to about $20 (very close to 61.8%) and starts a rebound which, so far at least has all the earmarks of a well formed B-wave that will soon retrace 61.8% (at $40) once again. By that time the c will , more or less,  be vector equal to the a within this B wave. The move after that will be the C wave of the larger correction and if it does what these waves so often do, it will equal the A and that would bring the stock to about $10. Not the end of the world by any means , just an 8/9 year round trip. but why go if you do not have to?

Cl, Colgate Palmolive

Hamilton

On Jan 27th, 2010, about a year ago we recommended selling this stock at just under $80. Here is that chart.

CL Jan 27 2010

At the time the stock was near its upper parallel trend-line , always a good spot to sell even if the count was not clear. That was a little premature but today the stock is at the same level and the count is, relatively clear. here is the chart again;

cl 2011

For greater clarity this chart represent a 10 year shorter time-frame but the red trend-line from the original is more or less duplicated in the new chart. Two counts come to mind. The alternative one (not shown) would have at least two 1-2s at the beginning and  , therefore, also two 4-5s at the end. In that scenario the top could already be in. In the count shown we assume that the stock is in its 5th and last wave. Given the degree of overlap that has already occurred chances are very high that the stock is forming a diagonal (wedge). This is the only structure that allows for overlap, it also only exists in either 5th, or c waves. It is an exhaustion pattern that is ,almost invariable, retraced in its entirety, in this case back to $40. You can wait for it to go to about $90 or just say thanks for the ride.

SLE, Sara Lee

Hamilton

sle jan 2011

We have been waiting for sometime now for a takeover bid to propel this stock higher (see blog Aug 2010 and Jan 2011). This is a near perfect EW cycle. 5-waves up into the top at $32, than a drop back to the 4th wave of previous degree in a very nice A-B-C where C=A (even if it arrives 1 1/2 years late) Then a new bull market or, at the very least a B-wave up. The $20 bid will, of course, frustrate the “normal”progress this stock would have made without the bid. The interesting take from this chart is that you should not be in a hurry to tender into the bid. Without it the stock might have gone to about $24 so , who knows, the bid may be improved or bested by another suitor.

MCD, McDonalds

Hamilton

MCD 2011

We were a little premature in expecting the stock to fall after it had completed a triangle and what then seemed to be a sufficiently large 5th wave (see previous comments and chart below). The main principals underlying that call (the stock always returns to the lowest point in the triangle ) applies just as much today and now it is so much more compelling. At $80 this was a sell and every indication is that it may go to $45 or lower.

MCD JUL 2010 2