Year: 2010

BBD.B Bombardier, March 2010

Hamilton

 bbd.b march 2010 2 bbd.b march 2010

Bombardier is a model EW stock doing exactly what one would expect. It did a beautiful 5 waves down, showing alternation between 2 and 4 and the last thrust out of the wave 4 triangle equates pretty precisely with the mouth of the triangle AND the low occurs more or less straight under the apex of same triangle. No wonder we felt very comfortable recommending a buy at around $2.25. Subsequent to that the stock has continued to be a model citizen in that it has done a model a-b-c retracement, pretty well to the 62% level and just a little above the wave 4 level. The wedge is fairly plain to see and therefore we would sell if you still owned it.

However looking at the longer term, given that the stock came from $25, is an infrastructure play if there ever was one, is the only manufacturer (apart from Brazil’s aircraft manufacturer) in this particular space and has had some good orders recently. it is entirely possible that we are on a real bull market for this one. So we would keep monitoring this with an eye to perhaps buy it back sooner than later. Click on the charts to enlarge.

TSE update Feb. 25 .2010.

Hamilton

I never stops to amaze me how the Canadian market operates just like a bunch of Pavlov dogs. Completely and totally mindless they start the day dumping everything and then end the day buying everything. Anyway so much for that. here is the chart.

TSE feb 26 2010

Remember that we had a first leg down from 12070 to say, roughly 11000, good for slightly more than the usual 1000 points. (wave 1), then we retraced slightly more than 62% to 11750 or so, (wave 2);  Then we drop 450 points in what may well be wave 1 of 3; next is wave 3 of 3 and that is where it starts to get serious. We will see.

CM Feb 2010

Hamilton

We have had our eye on Commerce bank before, usually in the context of a spread trade where you actually by the the one that breaths incompetence and sell short the star performer. The trade worked fabulously but required a certain degree of sophistication. Today the Commerce reported earnings and , of course they outperformed. What many analysts do not seem to know is that banks are not obliged to report like others under GAAP. They have their own rules under the Bank Act which, among other things, allows them , rather arbitrarily, to allocate loan losses over a 5 year period. That is known loan losses, not anticipated ones, which is why most of the loan loss allocation is little more than working the old fashioned cookie-jar. Well today’s euphoria was very much based on that , or perhaps people were simply happy that management did not again give away a few billion unnecessarily as in the case of Enron. Anyway here is the chart;

CM feb 2010

I am not sure how to count the retracement, probable an a-b-c X a-b-c, but that does not matter given the weight of the other evidence. As pointed out a long time ago, you do not want to own this if and when it gets closer to $78, which is roughly the standard  62% retracement. Already momentum as measured by RSI is failing. Same for MACD, not shown.  Remember also that 5-waves, which this one clearly has from the high of $105, NEVER stand alone. The potential for a severe down turn soon is therefore very real and should not be ignored.