WMT Jan. 2010

Hamilton

WMT is another one of those stocks that is impervious to the market in general. It looks a lot like Colgate-Palmolive except it was not able to thrust up after the triangle appeared to be complete. This may indicate a failure which would support the idea of a reasonable sharp decline. Before that the stock could still gain a dollar or two but I doubt it. Why the stock might go down is not clear, other than the pattern of course, but within the context of China/USA Wallmart is the poster child par excellence and the possibilities are legio. Moreover WMT is famous for its great labor-union relations which may start to deteriorate for real. In the end, under the new Obama approach for trade, less imports more exports , it is perhaps good to remember that WMT is the single largest importer in the US (mostly from China).

WMT Jan 2010WMT Jan 2010 2

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MCD or the yellow arches, Jan 2010.

Hamilton

This one has eluded me for some time. I was reminded of it last weekend when after driving for a good many hours my wife and I were starved so we went to McDonalds. For two Agnus burgers, two french fries and two cockes (that we did not want) the price was about $18. Fortunately my wife had a few coupons to cut that down a few dollars. The setting was comparable to a jail cafetaria.    When the kids were small you could do this for 4 at 1/2 the price!

    Anyway the stock lost about 80% in the 2000-2003 stock market drop , but has been totally impervious to the more recent events. That is it has traced out a very clear triangle over the last year or so. I expected it to crash but made a point of pointing out that triangles can reslve themselves in EITHER direction. Now we know it was up. We also know that the next move is down. The high should be reached soon at $66 to $68 after which it should drop to $44 and perhaps to $10 ( a previous 4th wave!)

I like the $4 up $20 down (perhaps $50 ) ratio for the risk/reward profile. Options are best for this one and even though I expect all this to occur fairly soon (see RSI and MACD) I would still go out about 6 months. 

mcd jan 2010 2 mcd jan 2010

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HUI or Gold Bug ETF, Jan 2010

Hamilton

Like the XAU the HUI is a great index to see what might happen in the gold space. In this case, see below, it more or less confirms, or at least , supports our bearish stance. Also it provides a very good example of how patterns occur over and over albeit usually in a specific order. These are both standard wedges, they always occur at tops and are invariable retraced in their entirety. Notice also that both the RSI and the MACD both warn of imminent tops, in the former case even by almost 6 months.

HUI

Another dead give away is the double top without a clear impuls  wave leading to the second top. Chances are that the first top is the “real” one and the second simple the result of an overly exuberant retracement, which may mean that what we are looking at is an A-B-C flat in which case the HUI  might (repeat might ) trade back to the lows.

XIU (TSE ETF) Jan 2010.

Hamilton

XIU Jan 2010

The XIU, a proxy for the TSE is dropping right on target, it is now at 16.50 on its way to , at least, 14.50 but first we probable need a little rebound as the TSE tends to do its business in increments of 1000 points.  In the mean time our favorite HXD has moved in tandem and at roughly twice the pace. Both have a comparable base value right now and as the XIU moved from about 17.50 to 16.50 or one point. the HXD went from just under 12 to almost 14, or two points. This pattern in the XIU calls for another 2 points down (as a minimum) so that should get the HXD to about 16. Ultimately I would look for much higher levels. (41+??)