BNS

BNS, Bank of Nova Scotia

Hamilton

Late last week BNS reported annual earnings of $5.27 bln., an increase of 21% over the previous year. The same day Royal reported an annual gain of $4.85 bln. down from the previous year’s $5.22 bln. (about –7%). To be fair they had a large single  charge for abandoning certain US activities that did not work out that well. BNS, on the other hand, had expanded it’s international network in Uruguay that did contribute to the banks international earnings. So, logically, BNS is down and RY is up. Here are the charts;

BNS dec 5 2011RY dec 5 2011

RY, as expected, has been moving up even in advance of the reported earnings and is now up almost $7 from the lows of $43+ and may even move another dollar or two even if we would not press our luck too much. The BNS is going the other way and is now within pennies of it’s lows of $48+ (both stocks come from identical highs of $61+, so the Royal had a little catching up to do) Vital statistics (from Bigchart) have the Royal earning a dividend yield of 4.37% and having a p/e of 12.348. BNS’ numbers are 4.27% and 10.9276

If you are a big player and have a broker that does these things, a market-neutral spread trade would be appropriate here ; sell RY and buy BNS in equal amounts and wait. For more normal investors just buy BNS. It’s chart has a pretty distinct triangle in it, even if one can argue where exactly the thing starts or ends and typically the stock will trade back to the level of the apex ($52), but more often than not to the highest point ($54). The best result (on the spread) would be obtained if both stocks traded back up to their 200 day moving averages, for BNS at $55 and RY at $53 ( a gain of $3 to $4)

BNS may, repeat may, be in an expanding wedge pattern which would explain the overlap. It requires one more low below $48 and should then trade back up to it’s origins of $53.5. This should happen rather rapidly. Here is a picture.

BNS dec 5 wedge 2011

The Banks again.

Hamilton

capped financials

Rather than take an individual bank, I have used the TSX capped financial index in this Yahoo chart. I am not entirely happy with the count but , at the very least it is plausible. If correct most of the Canadian banks (and other financials) should, barring any idiosyncratic anomalies, follow this basic pattern as they are, after all, joined at the hip and listen to the same drummer.

BNS nov 25 2011  BNS, Scotiabank, follows the pattern to a t . The whole thing could be compressed to make a triangle out of all the up and down action over the past 4 months and the conclusion would be about the same. A 5th wave is still required and seems to be targeting a level of about $46 (which is still high relative to the “logical” level of $41 (as explained in previous blogs).

ry nov 25 2011

We missed the $5 up and down trade by being too flatfooted and indecisive. But now there is so much more clarity. The stock could trade towards $40 after which there should be about a $10 rebound. Essentially you can buy the stock even now and still make a good return!

slf nov 25 2011

SunLife, has been a little annoying. Like the energizer bunny it just keeps going and going. It is now down an unusual eight dollars in one go. But on the positive side the RSI is as low as ever and a turn should occur soon. Even Manulife has stopped going down the last few days.

mfc nov 25 2011

BNS, Bank of Nova Scotia.

Hamilton

bns nov 18 2011 bns nov 18 s 2011

The question is, where are the Canadian banks going. The answer is down.

BNS has a very interesting chart and the bank has held up quite well, perhaps because of it’s more international (South America and Caribbean) exposure and better growth prospects. But it should in any case fall to the B-wave level which is at $42.5. In short it is reasonable to expect a 5th wave now. Over the past 4 months the stock has moved no less than 8 times between , roughly, $49 and $53.50 and this is the 5th time it has dropped back to the $49 level. All of this is characteristic for a triangle, either the whole structure or just the tail part as in 4-5-triangle. I prefer the latter but it does not make much difference. The stock should drop about $8 bringing it close to the $42.5 target.

RY, Royal , Canada’s second largest bank, update. BNS

Hamilton

ry nov 10 2011

In the end we actually got the expected $5 rebound, but by tripping over our own feet in trying to execute on that. Anyway, this is where we are now. The stock has dropped back to about $45 and is bouncing off the upper channel line of 7 or so months. The move from the lows might include a minor failed 5th wave, leaving a clear a-b-c. Whatever the case, it is not an impulsive move. It could be just the A of a larger A-B-C that will be more complex but nevertheless still a correction ( in grey ). Alternatively a triangle wave 4 (in blue) could be in the making. This too will kill time and will limit the upside to $50 maximum. Either way you should be able to buy this stock cheaper, perhaps much cheaper.

Looking at the Bank of Nova Scotia a more complex correction seems to fit best;

BNS nov 2011

It looks like we are doing a small triangle wave b of an a-b-c wave 2 correction that could potentially take the stock to about $55. Then wave 3 down starts!