The Fortune 500 list just came out for 2009 (covering 2008). No big surprises, Exxon overtook Wall-mart and so on. Of course the Fortune 500 list is not the same as the S&P500 but who cares, in broad terms they should approximate each other. Earnings dropped from $645bln to $98.9 a mere 85%. Using the usual “ceteris paribus†this implies that the P/E ratio, which , for the sake of argument , was assumed to be 16 ( I have no idea what it was) is now 107, but after the give or take 50% drop in stock prices, about 53. Cheap? Only in comparison to the 70 on the Nikkei back in 1989.
Year: 2009
TSE April 18
Here is the TSE again. As we have seen with RY this leg counts best as a 5-wave affaire whereas with the insurers MFC and SLF it looks more like a two wave affaire. As I am sure not too many readers are too interested in the E-wave implications of this difference, it should suffice that at least as a minimum we should retrace the entire “wedge†in the next move, that is down 1000 out of the 2000 points we have gained during the past 6 weeks.
RY April 17
On January 22 I made a first attempt at “calling†RY. Here is the chart and that comment.
Ok, so we bottomed in the high $25 (we recommended buying at $26) range and now we are at $43 or so, not that far from “at least $38 “, so where are we going???
Should we retrace 50% of the entire drop it would bring us to just under $44, basically where we are today. Notice that the RSI, for the first time in years is above 70% and the MACD is pretty well at the ceiling.(all this after a $850 mln write-off, just goodwill so it does not count?). A little higher is possible to about $48 where 61,8% retracement resides or even $52. As I think today is a top of sorts ( see yesterday’s comments) in markets in general, I would get out immediately as the stock should trade back to about $35 even in a bull market. RY is unduly benefitting from a “home-bias†effect combined with a Canadian tradition to buy the banks when in doubt. Sell.
CFW Calfrac, April 17 (from March 25)
Recommended at $7.30 with an INITIAL target of a little over $10, we are over $10 which is a 37% gain so we are out (but it will go higher) here is the chart.
