F, Ford update.

Hamilton

Last May when the stock first reached $14 it was suggested that one step aside as the easy money was made and the stock could drop to about $7. Here is an update only for those that are interested in EW! Enlarge to read!

ford aug 2010

The blue was the original thought. It is an a-b-c as a minimum to get back to the top of the diagonal triangle that had preceded it. A drop back to the b wave is dead normal in that scenario hence the $7 target. Notice that a and c are of about the same size, about $7 each, and have similar structures with little triangles in the 4th wave position, a frequent occurrence. This is still a probable scenario but not the only one.

   The ideal target of $16/17 was never reached so it is still possible that we have to go one higher. The most elegant count to allow for this possibility is the green one. We just completed wave 4 and are already on our way up, or wave 4 will develop into a triangle first and then we move up. As wave 3 is slightly shorter than wave 1, and as wave 3 cannot be the shortest the maximum for this scenario is < $17. Breaking the channel makes this a low confidence scenario.

   Another possibility is (in pink) is that we had 5 waves into the high. This would itself be a first wave for the next major bull market. Not implausible considering the stock did drop to below $1 and has survived. As first waves are typically retraced quite deeply, often more than 62%, the $7 target is even a little optimistic but very realistic. Wave 2 should then take the form of two down legs with an intermission in the middle, i.e. an a-b-c. This seems to be the case and if c=a we would get close to the $7.

Putting all of this in the blender, the best thing to do is stay on the sidelines un till we get to $7 or one of the other scenarios becomes compelling.

MDA, McDonald Dettwiler

Hamilton

MDA

This is a fascinating company, not just for it’s businesses but also the performance over the past 5-years. At a glance it is obvious that the stock double-topped just recently at about $50; always a good time to step aside if just temporarily. On closer scrutiny the last up-leg – from $35 to $50, see detail chart -, is quite clearly a three-wave affaire (at least so far), coming immediately after a three-wave correction from $45 to $35. This suggest that the stock has in fact peaked. An immediate target would be $35 again. However, if the entire move from the low of $15 is a B wave (the A-B-C shown in the chart would in its totality constitute wave A, then wave C may be in progress which could (repeat; COULD) imply a return to the $15 lows.

Time will tell but in the meantime stepping aside is the only good option.

HSE, Husky Oil

Hamilton

FOUR different time-frame charts:

HSE Aug 2010 3 HSE Aug 2010 2

HSE Aug 2010 hse aug 2010 4

Depending on the minute details of the last few wiggles, there is still a risk of about one dollar to the downside, otherwise this should be a buy now. Apart from the compelling EW counts, both the MACD and RSI are not confirming the recent lows. Also the stock is down about 56% from the top, in the middle of the 50/62 % range. It yields 4.9%

Initial Jobless claims.

Hamilton

This is a stat provided by the US department of labor; it is a weekly report that counts the initial – that is NEW – claims for the week it reports on. It says absolutely nothing about the total (accumulated) number of people claiming unemployment benefits (that comes a week later as the “continuing jobless claims”, presently at between 4/5 million ). The number is a function of the different eligibility criteria for each of the States.  500,000 roughly, or a good number that is 30,000 less, not counting last weeks revision, is completely meaningless. Here is the chart (updated);initial jobless claims

Notice that the only comparable period to today was in the early eighties when interest rates were about 15%, not 3%. Typically during the late stages of a recession demand for labor increases dramatically, this time around nothing of the sort has happened yet.