IMG, update.

Hamilton

img aug 25

The requirements for a triangle are relatively simple: it should have the a-b-c-d-e (f-g-h) structure, usually each alternate leg is about 61% of either the preceding leg or the one before, wave c is usually the most complex and e can break the trend line but may not trade below the low point of c (however, if it does it may simple mean that the triangle is much bigger than initially thought.  Also, even if it is not a triangle, it still is a consolidation pattern with, potentially, more bullish implications as the triangle is invariable an end-game whereas all other patterns can go on a lot further. In fact , the triangle here is the least bullish compared to ,say, a count that views wave b as 1 up, wave c as 2 down and d again as 1 up. This could take the stock much higher than assuming the triangle. See below;

img aug 26 2

  Assuming there IS a triangle, it could still have a larger wave c to become more complex. This would happen if what is shown as e were to travel to $15 or even a little lower. That would not negate the triangle and, in fact , ABX has one that seems to go on forever. The requirement that all legs within the triangle are a-b-c’s seems to be met but for waves b and d it is certainly less obvious that for a and c. So perhaps we are already impulsively on the way up but starting with very small steps like in the chart below.

 

Then again , if we do have a triangle this may be what is going on;

img aug 26 3

What argues  against this longer triangle is that it does not seem to be in synch with the rest of the market. The best and most “balanced” approach may be to wait for the stock to go through $20 which would suggest the 1-2, 1-2 scenario is operative. There is NO clear bearish possibility right now, given that all down legs are clear 3’s, but that can always change. e already complete is not a very pretty picture!, so unlikely to be correct.

MFC

Hamilton

mfc aug 25 2010

At $11.27 we are essentially on the trend-line. This should be a buy for a $3/$5 gain regardless of where the stock ultimately goes. The all time low at $9 + (since it was demutualized, I believe) is only 2 dollars away and as it is unlikely to go directly through that point the risk is manageable.

MFC again

Hamilton

mfc aug 24 MFC Aug 24 2010

This one is either going out of business/ taken over or it has to be a screaming buy. ask your broker. Being the optimist I always am, I would again give it the benefit of the doubt, albeit with a tight stop. More negative talk has come out in the last week than I have ever heard, on almost any stock. Could be good, maybe??

For the record, I worked for Confederation Life just before it filed for bankrupt in 1994, I also worked for Manulife. Both impressed me by their complete and total lack of urgency: their approach to business was/is almost biblical. When they believe, they do so with gusto, but it only takes one single mistake to run a company into the ground,; Manulife’s was that they believed their own marketing  nonsense  with respect to their “income plus” product.

   From an EW point of view, the stock could be in a 5th wave on its way to new lows. However, in that scenario a 4th wave up is still required and this could be good for $3/5 which ,relatively speaking is pretty good. Alternatively, the A-B-C down to $9 was the entire correction in which case the latest move down from $26 is a wave 2 (itself an a-b-c). The next move would then be 3 up.

My gut is that it is still a buy for at least 1/2 year, but only with a very responsible trade, that is with a tight stop-loss a few millimeters below whatever price you buy it at. The latest talk I heard was that it would cost the company an additional 7 billion to buy insurance for the event of another 50% drop in the markets for all its guaranteed products ( the first 10% is self insured). I do not know if numbers like these are real or imagined, but if real that still only represents about 1/3 of its equity.

RY, IN A BEAR MARKET?

Hamilton

ry aug 2010

OFFICIALLY, whatever that means , you have a bear market when a stock drops by 20% or more, so the Royal, if it was not already there in July, it is now. Amazing , considering all the accolades that the Canadian banks, and our regulators,  received since the second great depression.

Where do we go from here? Not clear. We may have done a clean 5-waves down in which case we should get AT LEAST one more which could take the stock to $43 (or a lot further down). If we are now completing a 5th wave after a triangle, we are almost at the bottom but this flies in the face of the market overall. Rather than try to count, lets suppose we are roaring bullish on this example of probity and assume that a new bull market is already underway. In that case the move from $26 to $62 would constitute wave 1. Wave 1 is usually retraced quite deeply but lets assume a modest 50% would do the trick. That gets us to $44. Once we get there it will be clearer what is going on.