Nikkei, Ford , the US long bond and Mr. A Wiggen of Agora fame.

Hamilton

The other day I happened to see Mr. Wiggen on TV. Every 10 years he sticks his neck out to predict what will be the next 10 years best investment. Last time it was long gold/short the Dow Jones – which proved to be a very good trade. This year his best choice is long the Nikkei, short the US Government long bond. The guys at Agora are fiercely independent and even if they can be accused of all sorts of things like sensationalism they are definitely out-of-the-box thinkers. This 10-year call resonated well with me so here it is revisited.

Nikkei 225 Jan 2010 F Jan 2010 3

 F Jan 2010 2

St louis fed jan 2010 long bond

I put Ford in simple because it had recently completed a pattern known as a “diagonal” or an expanding wedge. It takes stocks down ( or up, as the case may be) beyond an extreme value and therefore leads to a rather violent reversal once complete. Japans Nikkei may be close to a low but the pattern is not complete and consequently, even though I agree with Mr. Wiggen over 10 years, I do think we should go a few thousand points lower first.

Note that the 30-year bond chart is similar to the Nikkei chart, however, its down trend lasted 30 years or so whereas the Nikkei has only been at it for 20, ergo a few more years and a little lower is certainly not out of the question.

CL Jan 27, 2010. Colgate Palmolive.

Hamilton

This stock is as pure as the soap etc. that it sells. It is a defensive stock par excellence. The p/e at about 20 and yield of 2% are not bad for this kind of blue chip. Evenso the chart is downright ugly. See below.

 CL Jan 27 2010 cl Jan 2010 2

We did catch the triangle, if that is what it is, for a $20 ride , but after that left it alone. Looking at it now it looks to be right at the top of its trend line, perhaps 5-waves up from way back when, 1971 or so. This one could easily return to about $50, in any case the chances of going much higher are pretty slim. If you own it, it is a sell.

IMG Jan 27, 2010

Hamilton

Gold stocks may be very risky at this time, especially the smaller ones or  the silver types like Hecla HL, this is because the entire up-move from 2001 may actually be a B-wave rather than a new bull market. See below;

IMG Jan 27 2010

IMG Jan 27 2010 2

Now if you were lucky enough to buy this in 2001 (we recommended Hecla ! ), or at the recent low of $3 obviously you should have sold at about $16 after the triangle thrust. Having failed to do so there there is now a distinct problem that this one is going a lot lower, certainly if we go under $12 and negate the possibility of this A-B-C still morphing into an impulse wave up. My advice. run for the hills.

Royal Dutch Shell RDS.A

Hamilton

RDS Jan 26, 2010

Royal Dutch is a good example of proper technical analysis and perhaps a reasonable indicator where energy stocks might go for the next little while. Predictions for oil vary from well above $200 to below $30 over the next year or so. Even assuming that one sides with the $200 scenario, this stock should have been sold because.

1. You do not simple want to guess.

2. The RSI is dropping like a stone.

3. The MACD is not confirming the tops.

4. The stock has retraced a near perfect 61.8% Fibonacci level

5. The rebound has a nice A-B-C pattern where C=A, give or take.

At the very least a stop-loss should be entered at about $55 to keep some of the profit from the lows of March. This applies to a good number of energy stocks.