The TSE is at that point, or even exceeded it in the amazing euphoria in the wake of absolutely awful employment numbers this morning. This market just wants to go up. There is a slightly higher point that we can go to as shown in purple. Remain bearish.
When we first commented on SLF it was trading at $24 and the , highly predictive and accurate “diagonal” clearly called for a buy.(same but different story on MFC) A $5 dollar initial rebound was suggested as a minimum, however if the diagonal is correct , as I believe it is, we should continue to $31. The question therefore is do you step aside for the intermission or just wait till it gets to $31. Entirely up to how quick you can change gears, but I would be inclined to stay with this one.
Ultimately you will want out as the big picture is still negative for the stock market overall.
Update from May31, at which time we suggested the stock should drop. It has done so and has followed the suggested path quite accurately. It got a little lower than expected ($56 rather than $58 ) and it is now rebounding, perhaps to about $62. After that it should have quite a steep drop. Here is the chart;
Keep in mind that a 5-wave down never stands alone! so another 5-wave down should follow once the “intermission” is complete.
As far as the Blue-chip stocks is concerned, talk has it that these companies are now able to borrow at costs so low that it can become accretive to borrow for the purpose of buying back it’s own stock. The cost of the borrowing would easily be met by the dividends not paid on the stock cancelled. Theoretically this process could, in the extreme, continue to the point where just one single share is outstanding that would then be entitled to all earnings minus the costs of borrowing – ( which , by extension, is used to explain why the stock will never really drop much). This argument is somewhat flawed, as equity has always been very expensive because of the non-deductibility of dividends. Ergo the argument is neither new , nor does it give recognition to the different functions of equity and debt. Banks etc. are doing the exact opposite for very good reason.
SLF in this last down-leg from $31 to below $24 there is a lot of overlap so the possibility that this too is a diagonal is quite real. If it is we should (at the very least) move back to the $31 level, and do so in 3 waves (first to $28.50, than a drop of 2 dollars and then on to $31. An equivalent level on MFC is at about $17/18.This is obviously at odds with the market overall but keep in mind that a stock like MFC was close to all time lows whereas the market overall is only down a few hundred points from the highs which were 62% above the lows. Clearly their was and is room for these stocks to do their own thing.