Month: February 2009

CI Cigna Feb 23 (re; FFH) More on insurance.

Hamilton

On the 6th of Oct, 2003 we had a little round table do at the National Club where I presented a few choice picks, one of which was Cigna, recall that this is exactly at the same time that FFH is making a low of about $50

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Note that the stock had completed a very nice 5-3-5 corrective A-B-C where the C was about vector equal to the A. Nearly always a buy, in this case with a minimum target of $37 (top of B). Needless to say , nobody bought it.

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Which was a shame as the stock exceeded the target  by $20 or so. More importantly after the new highs the stock is once again slaughtered  which may be somewhat indicative of what one might expect from the insurance business at this time. Much of their earnings are derived from their investment returns, without which the premiums are insufficient to cover the risks.

FFH Feb22 Fibonacci and the distance to zero.

Hamilton

Mr.  Prem Watsa (?) has my total admiration for being , apparently, a pretty smart investor who until recently was primarily in cash and/or short equities and for being RIGHT. Not a mean feat as contrarians are alone and unloved making it difficult to stay the course wherever that may take you.  But one is only as good as the last trade; below is the chart from the past.

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I remember that back in 1999 there where quite a few young brokers, new to the business, who dutifully listened to the analysts and bought the stock only to watch their clients get slaughtered as the stock dropped precipitously. I am afraid of heights which stopped me from getting involved (except later at about $100 only to get stopped out). What next???

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Who knows. But we do know that the distance to zero is once again pretty large at $400 recently Also we know the Fibo ratio of 61.8%, which roughly applied yields; (600-50)x0.618 +50 = 390 and as the low was a little above 50 that is close enough. Also the pattern over the past few weeks was clearly that of a rising flag (wedge), usually a dead give away. The stock will have to hold $250 as otherwise we could be in the second 5-wave leg down of this correction which would lead to a new low. (see for instance GE chart shown earlier, same numbers X10).

BMO Feb 21 , 10 reasons to buy!

Hamilton

BMO Feb 21

As always there are different ways of counting this one, for instance a big triangle could be inserted right in the middle as wave 4. However , no matter how you slice it the low of wave 4 is at about $21 and that is where you normally return to. (1) The “box”as Gartman refers to it is at 50-60% retracement. At $21 we would have 71% retracement. (2) The drop from 72 to 24 could be a 5 wave structure that is much larger than ever seen before. (3)

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The diagonal, or in English the clear wedge formation is near perfect and promises a rapid and violent return to its base (which I do not believe but there you go). (4) The wave 4 triangle in this structure measures to about $23 , about where we are (5) and the low is situated pretty well perpendicularly under the apex (6). Any time the RSI, relative strength indicator drops below 30 their is a turn-around of $5-$15; we are there again (7), same thing for the OBV, on balance volume which has never been lower and cannot go lower without going off the page (8). The stock pays an 11+% dividend and has a P/E of about 6 which I think is Benjamin Graham land (9) Last but not least this , on a risk/reward basis, has to be a buy relative to the other Canadian banks based on the relative size of the correction to date (10). Target $37.5 minimum.