Month: April 2009

IBM April 12 A short at $106

Hamilton

IBM APRIL 12

IBM april12

Since Feb 27 we recommended stepping aside to see where it would go. Clearly it is making the correction larger than before and is going for the 61.8% retracement level at about $106

I realize that Bill Carrigan likes the stock, as per the Star report d.d. April 11 titled “Shares of multinationals offer profit, protection”. I do not understand where from he draws that conclusion as the stock lost 50% in 3-4 months, hardly blue chip behavior. In the article he also refers to one of the 4 bears, as in the “Night with the Bears” as  a “lunatic fringe” presumable for believing in the Kondratiev long-wave cycle. Which, by the way, was first discovered in 1913  by Jacob van Gelderen , a very sane Dutchman.

TXT Textron, April 10, where there is smoke ………

Hamilton

The chart below is on a log-scale which often gives a better “picture” when a stock has made large  moves in fairly short periods of time.

TXT april 10

Textron made a big 48% gain yesterday, supposedly on a take-over bid by Kuwaiti and other Middle–East interests at $21. The stock was $3.57 a few weeks ago. So we missed this one while paying more attention to Bombardier that served our purposes very well. Anyway at this point the real question is, is it too late to get on board? Lets start with the chart. i am not overly happy with the 5-wave count shown (there is a problem with wave 3), but even so a return to $21 (or at least $19) is well within normal expectations (top of triangle wave 4). Similarly the “gap in the middle” theory also points to that same level. (this is log-chart so optics are odd). Of course this company with Bell Helicopters is now very critical not only to US defense but also the Federal Reserve, which if true makes it only more plausible. Cessnas are great flying machines and at a mere $300.000 or so within range for many “middle-class” hobbyists , just stop by Buttonville or Markham airports and see for yourself.

Wait for a pull-back towards the gap, if it occurs  (low $12) and use stops!

By the way, sell T, Tellus as it is not working and you are not losing anything. Will revisit that one later.

DW Dundee Wealth Management, April 9

Hamilton

By chance I tripped over this chart. It has a very well defined pattern.

dw april 9

First and foremost, when you go from $22 to $4, or down give or take 82%, all this stuff about the great depression and stocks dropping 90+% becomes pretty meaningless as for all intents and purposes you are already there (assuming, of course that the company is viable). Secondly this pattern is quite common and very reliable, essentially it is an A-B-C with the C=A as vectors (the B itself is either an a-b-c or a triangle) Recent examples would be Ivanhoe and Reitmans; a better example that already has done its thing is CI (US) Cigna.

ci1

Ci2

As this occurred a while in the past the top chart is from the past and the bottom one shows what can happen. The low was in 2003 or thereabouts and it went straight to the moon and back again. I do not anticipate anything so robust but on average the stock should return to the top of the B wave, say $15 and should do so in about the same time as it took to go down, about a year, or half of that. Given where it is a good trade would be to $9 where you earn 50%

As always click on the chart to enlarge, you can then even move them around to get two side by side.

AA April 7

Hamilton

On March the 5th we recommended a buy on this under $5 . The next day ,March 6th , the stock traded at $4.97 and it has rallied quite nicely and even after today’s lousy earnings this will probable continue a little longer. Anyway, sticking to our 30% rule we should be out a long time ago. Fortunately we forgot that we owned it, so are selling belatedly today at $ 7.70. Here is the chart.

AA april8