Month: February 2009

DAX Canary in the coalmine?

Hamilton

The Dax is down 160 points as I write this, that is about 4%. Remember that one should, barring other information, always look for  a 50-62% “correction” after a full up cycle. We double topped at about 8000, a dead give away that trouble was just over the horizon. Then we dropped pretty rapidly to 4000 or the 50% level. For the past 4 months or so we have been flirting with this level ( actually under one count pretty well the exact same time we spent in wave 2! ). All this is not to say that we have to do 62% (about 3000), but the possibility is very realistic and getting more so.

dax Feb 20

WMT Feb 20 (by special request)

Hamilton

WMT feb 19

WMT is on its way to $42 for starters, where the triangle has its base. After that it should implode as it catches up with the S&P index’.

wmt feb 19 2  This is the 5 wave up, the triangle is , of course the 4th, the 5th is a failure like most of us as we get older, it did not make a new high but it did meet its life script, almost as if mother-in-law is watching. This one is going to do the usual 50-62% retracement.

WMT feb 20 3

At least to $42 but potentially a lot lower, for instance if we are looking at a 1-2, 1-2 situation.

Stay short, the best is yet to come.

BMO , RY Feb 19 again

Hamilton

Another look at the banks can be informative. First I have made it rather well known that I was VERY bearish on the banks, way too early perhaps as I have held this view for at least 3 years now, if not longer. Here is why;

RY bc feb19

RY big c feb 19

First of all the stock is up in (arguable) 5-waves, increasing the tangent with each new leg up suggesting a bubble of sorts  that would require a large correction any time. Normally to the 4th wave of previous degree that could be at $23 to $14. This move, as with all the banks does not correlate to the growth in population or any other metric that would justify it. Also it far exceeds all the “other” stocks as shown in the lower chart overlaying the TSX, which itself did pretty well but was outperformed by about 1500% from the base in ‘74.

Looking at BMO things are a little clearer as the position of the 4th wave is less ambiguous.

BMO BC Feb 19 The target here is $21, if we go that far.