At $11.27 we are essentially on the trend-line. This should be a buy for a $3/$5 gain regardless of where the stock ultimately goes. The all time low at $9 + (since it was demutualized, I believe) is only 2 dollars away and as it is unlikely to go directly through that point the risk is manageable.
This one is either going out of business/ taken over or it has to be a screaming buy. ask your broker. Being the optimist I always am, I would again give it the benefit of the doubt, albeit with a tight stop. More negative talk has come out in the last week than I have ever heard, on almost any stock. Could be good, maybe??
For the record, I worked for Confederation Life just before it filed for bankrupt in 1994, I also worked for Manulife. Both impressed me by their complete and total lack of urgency: their approach to business was/is almost biblical. When they believe, they do so with gusto, but it only takes one single mistake to run a company into the ground,; Manulife’s was that they believed their own marketing nonsense with respect to their “income plus” product.
From an EW point of view, the stock could be in a 5th wave on its way to new lows. However, in that scenario a 4th wave up is still required and this could be good for $3/5 which ,relatively speaking is pretty good. Alternatively, the A-B-C down to $9 was the entire correction in which case the latest move down from $26 is a wave 2 (itself an a-b-c). The next move would then be 3 up.
My gut is that it is still a buy for at least 1/2 year, but only with a very responsible trade, that is with a tight stop-loss a few millimeters below whatever price you buy it at. The latest talk I heard was that it would cost the company an additional 7 billion to buy insurance for the event of another 50% drop in the markets for all its guaranteed products ( the first 10% is self insured). I do not know if numbers like these are real or imagined, but if real that still only represents about 1/3 of its equity.
OFFICIALLY, whatever that means , you have a bear market when a stock drops by 20% or more, so the Royal, if it was not already there in July, it is now. Amazing , considering all the accolades that the Canadian banks, and our regulators, received since the second great depression.
Where do we go from here? Not clear. We may have done a clean 5-waves down in which case we should get AT LEAST one more which could take the stock to $43 (or a lot further down). If we are now completing a 5th wave after a triangle, we are almost at the bottom but this flies in the face of the market overall. Rather than try to count, lets suppose we are roaring bullish on this example of probity and assume that a new bull market is already underway. In that case the move from $26 to $62 would constitute wave 1. Wave 1 is usually retraced quite deeply but lets assume a modest 50% would do the trick. That gets us to $44. Once we get there it will be clearer what is going on.
Quite some time ago I ventured to comment on the Nikkei and made some purely EW observations. Here is a repeat, more or less. Please feel free to disagree or look at it as pure rubbish (secretly I may even sympathize). Anyhow a lot of things Japanese are hard to imagine, for instance a 20 year bear market, the Imperial grounds worth more than the State of California, real estate values down more than 80%, a people that is at the edge of extinction at this pace , a currency that is at a 15-year high and so on and so forth.To the point, here is the chart;
The interesting thing is that all the action since 1995 could (repeat COULD) be a single pattern known as a diagonal expanding (or contracting) triangle, that would constitute a wave C in a large A-B-C correction. This formation occurs fairly frequently either as a wave C (as in this case), or as a 5th wave, is very reliable and has a high predictive value as it represents an end-game and is, consequently, invariable fully retraced and usually quite violently. Also, perhaps because of the end position it takes, absolutely nobody believes the message!!! Just to elaborate that point, here is Ford during 2009 when it had this pattern (at the end of a 5th wave rather than as a C wave, but the point is the same).
If have stylized the point of wave 3 a little and this may be incorrect, but apart from that the resemblance is pretty obvious. Ford went to under $1, when it reached the trend-line. This is NOT a requirement of the pattern as often it falls well short of reaching that line. Evenso, given where we are now we could get to the 3000 level or so (where the market was in 1970). Should it ever get to those levels the Nikkei, like Ford in December of 2009, should be a screaming buy.
Once again, you can click on a chart to enlarge it AND you can move it around to make the comparison a little easier. if you do that this is what you get.
