Month: September 2010

The World -DAX

Hamilton

I am getting thoroughly irritated by this market. September is typically the worst month in the year, this time you have to go 71 years back to get a better one. Everything takes unbelievable long with very little happening. Also you could still be wearing diapers but as long as you speak with a South African/ Down Under accent you are an immediate guru. In Canada everything is perfect or so we smugly believe, the truth is more that we are a backwater without even knowing it. In any case this is a good time to re-evaluate the bearish case.

There are a number of things one would look for. An a-b-c correction of about 62% (it can be any other number but on average this occurs often). A retracement to the 4th wave of previous degree. An RSI or MACD that is turning over. A full moon if you want to howl with the wolves and an equinox to tell you that winter is coming. We have all of the above for the following markets;

  FTSE2010 SPX2010

NYA2010 COMP2010

CAC2010 AEX2010

rut2010 smi2010

The charts are from the S&P, COMP-Index, TSE, CAC, AEX, Russell2000, NYSE, and the FTSE. What is clear is that ALL of these have traced out nice symmetric A-B-Cs, all are within a few points of the .625 level, all are back at the level of the 4th wave of previous degree and in most cases the C is approximately vector equal with the A. A few could move a tad higher but not much. (Again click on the charts to enlarge or move them around.)

The overwhelming conclusion is that the bear is in all probability waiting around the corner. As mentioned the DAX is the only exception having recently made a new high but that can be explained in different ways.

SC , Shoppers

Hamilton

sc sept 2010

First recommended on July 2d as a sure buy at about $33, with a near certain minimum target of $38/39. Perhaps time to exit. It is entirely possible that the B in this A-B-C was a triangle in which case the stock can go a lot higher. Against that should be weighed the possibility that we are only completing a wave 4 of C and will soon make a new absolute low.(as shown in the labeling in the chart). When in doubt, get out! Take the 15% gain and keep an eye on this one, it would be a buy again if a new low is made.

CP , Canadian Pacific

Hamilton

CP sept 21 2010 cp sept 21 2010 2

CP dropped from $90 to $30 in a couple of years , pretty well 2/3  of its value. Now that all the worlds financial problems have been resolved the stock is back up to $65 or so, a clean double plus. Perhaps the stock will go (a lot) higher yet BUT the move from the lows over the past year or two look to me like a near perfect wedge, the signature of a correction gone too far. Looking at the big picture it would appear that the stock dropped in a nice A-B-C, which could be all there is. However, it is also possible that the entire A-B-C is just wave A of a much larger correction!  I do not have the answer but from a risk/reward point of view the stock is up $35 with  – perhaps – another $10 ahead but could drop any moment t0 about $50/$45. A sell.

IMG update

Hamilton

IMG sep 2010

IMG has not, so far at least, shown a clear count. Previously a triangle was a distinct possibility despite wave b looking more like 5 waves than 3. Right now the lower trend-line of the entire structure coincides with the lower trend-line of the triangle itself. Normally that line should be broken briefly so if that does not happen I would assume that the uptrend started from $13 and has completed a 1-2, 1-2

Looking at the XAU a very distinct triangle occurred, see below;

XAU sep 2010

This triangle measures about 60 points which would yield a high of about 230 for the XAU, which is actually not that far above  a double top. Further evidence that the gold stocks may go up a little further comes from Kinross , not just the stock but the warrants K.WB;By comparison there is a chart showing what Hecla , HL, did  back in 2001.

K warrant B sep 2010 HL sept 2010

Goldcorp G actually has the best triangle structure of all of them. Here it is together with the warrants (as mentioned earlier a long time ago, the warrants provide a bigger bang for the buck).It desperately wants to at least double top. (click to enlarge).

G sep 2010 G.WG sep 2010