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Canadian Dollar

Hamilton

The usual then, July 17, 2015, and now charts;

can dollar july 17 2015canadian dollar Oct 7 2015

In the text of that blog (tag; Canadian dollar) a target of about 1.35 or 74  cents is suggested. This corresponds roughly to a 61% retracement of the bull move from 1.61 to 0.90  Fortunately I have a lot of experience trading currencies and that paid of in this case as well. Here it is in detail;

Canadian dollar oct 7 2015 s

These are futures so they do deviate a little from the spot rate but at 1.3450 the prediction was essentially spot on, no pun intended. At the time a reporter at one of our largest papers had some real nasty stuff to say about the competence of our CB governor. Wisely they chose to ignore it rather than start a defamation suit which , no doubt, would have opened a whole new can of worms.

The improvement in the C$ has been fairly dramatic and coincides with moves in oil. Where it goes from here is not entirely clear but from an EW perspective a move back to parity is definitely a possibility and one that the market does not appear to consider. For completeness we add oil below. For the moment at least it seems to be making an a-b-c correction targeting about US$54 per barrel;

oil oct 7 2015

TSX update.

Hamilton

tsx oct 4 2015

Remember the difference between first and second order errors? Not sure I do but vaguely it was that in one case your hypothesis was wrong but the conclusion was nevertheless correct and in the other case the conclusion is wrong but you throw out the correct hypothesis. In the case of the TSE our hypothesis is that we are in a big flat A-B-C and have most of C ahead of us. Best guess we are in or at the beginning of wave 3 of 3 of C.  Of course nobody believes any of this, which is why we repeat it ad nauseam.

There are a few hurdles along the way. The first one, appropriately annotated with a 1, we have already passed. Right now we are on our way to 2. In the mean time we did manage to loose 2000 points or about 15%. For a US investor you can add another 25% for the currency for a total loss of about 40% and the party has not even started in earnest.

If our hypothesis that we are in the 3d of 3 is correct, the next 3000 points will evaporate faster than lighter fluid. That (point 2) will, by the way, set us back to where we were 16 years ago. This should continue at least to point 4 but, perhaps, much further. The reason is fairly simple. Janet Yellen, who is also the head of the Bank of Canada, was recently (Sept. 17) asked if it was possible that she would keep interest rates at zero forever. She responded by saying, quote “I can’t completely rule it out but really that’s an extreme downside risk that in no way is near the center of my outlook.”  With that all economic theory is thrown out of the window, in fact the very word economy loses its meaning. Simple concepts like savings, financial risks, investments, pensions etc. etc. are reduced to rouble and the always fragile TSX will follow.

QCOM update

Hamilton

The usual then, March 7, 2013 and now charts;

QCOM mar 7 2013QCOM Oct. 1 2015

Obviously our take on this stock was anything but perfect. It took a year longer and about $10 more than we expected. That is the Yellen effect. In the mean time the big picture, that of a large B wave, remains the best interpretation. Short-term it is near impossible to put a reasonable count on this stock but things will, no doubt, come into focus soon. The first target is at about $30, after that at $10.

VRX, Valeant Pharma update

Hamilton

We have the then, July 24,2015, and now charts as usual;

vrx july 24 2015 arith.vrx sept 29 2015

Valeant with an e is really Canada’s only pharmaceutical company. There is, I believe, a TSX sub-index for pharma but it is about 98% VRX so you might as well just buy this stock. This stock has outperformed just about everything and recently the company was actually Canada’s largest by cap., beating even the Royal Bank.

    This stock is the example, par excellence, of what a momentum stock is and does. Our friends at Merrill Lynch Pierce Fenner Smith understood this perfectly well when they very deliberately chose the bull as their brand for the simple reason that it was so capable of stampeding mindlessly  in one direction at the slightest prodding of their cowboys. In the process, of course, many otherwise innocent bystanders are sucked into the wake of the charging herd. This phenomenon is not unique to animals, it has been the object of many a scientific study on the subject of group-think where normally intelligent humans congregate in like-minded groups, as in a management team, a board or whatever. If , for instance, the members have IQ’s ranging from a low of 60 (3-year old) and a high of 140 (equal to mensa entry level) and there are, say 10 of them, then collectively their IQ is 1000. Invariable it was found that the group functions at a level that corresponds to the lowest member’s IQ, in this case 60. It seems that in these settings the lowest common denominator trumps everything else and prevails, regardless of the shape, square, round, or oval, of the boardroom table. This works un till it doesn’t. VRX doesn’t work anymore. It closed the gap and is on it’s way to $120 and possible lower.