Month: May 2010

TSE update

Hamilton

TSE May 24 2010

Due to the holiday in Canada the chart skips a day so the anticipated 4th wave triangle is a little harder to discern. Anyway, for the moment it looks like today’s 250 or so point decline at the open , followed be an almost flat close for the day is wave c of the triangle, d and e still to follow. After that wave 5 should take the TSE to about 11000 or so and that MIGHT then conclude this specific leg. however it is not clear at all what the exact degree of this wave is , other than that it is not a bottom!

TSE update, so far so good

Hamilton

tse may 21 2 2010

We went right back to the upper trend-line, no big surprise after 1000 points. However, within wave 3 wave 2 was a zig-zag as was the wave 2 of the entire structure once complete so, no matter how you count it chances are pretty good that the zig-zag in todays trading is just a part of an incomplete pattern which, in all likely hood will ultimately take the shape of either a “flat”, or a “triangle”. Todays action would just be the a wave of an a-b-c or of an a-b-c-d-e (as shown). This triangle measures about 300 points which would imply that once this 3d leg is complete we will be just above 11000. Then another 4 and 5 to complete this wave that started at 12200. Then another 4 and 5 to complete wave 1 of C.

    The above count is very tentative. Very often a series of 1-2 waves starts an initial move and things just keep going, also the degree in the above analysis may be incorrect, but these are just minimum targets!, things can get a lot worse.

TSE May 21 2010, so where are we?

Hamilton

tse may 21 2010

It is always risky to be too precise with regard to making predictions using EW, nevertheless I will make a wild guess as to where we are.

I always expect the TSE to do a 1000 points, all though Canada is supposedly metric there are still too many vestiges of the old colonial days but, as far as the TSE goes the 1000 point mark seems to fascinate the market over and over again. So we did that at the open. However I would not expect much more than a feeble bounce which may or may not already have run its course. By my estimation we are probable in wave 4 of 3 of w 3 of Wave 3 of wave 1 of3 of C.

Given that Wave 1 of 1 of C was 600 points or so Wave 3 may well run 2.6X that which would be about 1600 points, then 4 and 5 still have to occur to finish wave 1 of C. C itself always has to be 5 waves so that can easily get you to lows that are (substantially) lower than the lows set at March 2008. 

An interesting article appeared in the  John Maulding letter written by Niel Jensen of Absolute returns.  In it he explains why the commodity game is a con job. It is copywrited so I cannot share it here but you can find it on the internet at info@arpllp.com  .  Combine that with a little stockpiling in China and you end with a pretty toxic brew.

Stay with the HXD.

The importance of Fibo 0.618, TSX, Dax, S&P.

Hamilton

One should never underestimate the value of Fibo ratios in this business or, for that matter any other (Google the fellow from Pisa and you will be amazed at all the mathematical properties of this “golden “ ratio.  Any way to try this out once again I have taken the 5 year charts of the TSX, the Dax, and the S&P. Here they are (click on them to enlarge).

tsx may 19 2010 DAX May 19 2010

S&P May 19 2010

For all three I have taken the high, the low and taken 61.8% of the difference and added that back to the low.  For the TSX the high was 14969, the low 7591 and the difference 7378.^61.8%of that is 4559 added back to the low gives 12150.

For the DAX the numbers are 8092, 3666, 2735 which yields 6401

And for the S&P 1557, 683,874,540 and 1223.

Please note that these numbers do not correspond precisely with the actual highs or lows as these may not reflect the intraday trades or may suffer from other, minor deficiencies. The point here is that all three came within 1/10%-2.5% of these targets. For the TSX the target of 12150 was slightly exceeded as the high was 12280 (off by about 1%), the Dax with a target of 6401 hit 6249 or short by about 2 %, and the S&P with a target of 1223 made 1217 off by only a miniscule amount. Just for the record, these targets were calculated a very long time ago! the main frustration was the time it took to get there.

    So what do the TSX, Dax and S&P have in common? Precious little except that in bear markets the correlations between asset classes tend to approach 1, and the more the world globalizes and we all read the same stuff, the faster this is happening.