Year: 2010

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.

SC Shoppers Drug Market

Hamilton

SC may 2010 sc may 2010 2

Shoppers recently dropped quite dramatically as a result of the Government of the day outlawing a rather elaborate system of kick-backs from the generic drug manufacturers on the grounds that this would ultimately save money for the health care system as a whole. Not exactly sure how it all fits together but you can bet your last dollar that some compromise will soon be found. There is even a competitor (Alimentation Couche Tard) announcing that they are going to open more pharmacies. Anyway this looks overdone and the EW count would suggest that a reasonable upside is there. Different counts can be attached to the charts but all suggest that $44 is likely after the lower gap is filled and in the end $50 (the top of the triangle range or wave b) is a possibility.

F , Ford update

Hamilton

f may 14 2010

Last time we suggested that Ford had done as much as one could reasonable expect, which simple means that you go either neutral or short. We were a little early as the stock managed to make a marginally, very marginally in fact, higher high a month and a half later. Adjusting the count accordingly we put the TOP at the latest high. From there we have either completed a wave one down followed by a wave 2 correction of about 60%. Alternatively wave one is not even complete (there is no overlap so that possibility remains open ) and we are now in an incomplete wave 5 of 1. Either way the stock should trade down to the $7 level or so.