Year: 2010

CL Jan 27, 2010. Colgate Palmolive.

Hamilton

This stock is as pure as the soap etc. that it sells. It is a defensive stock par excellence. The p/e at about 20 and yield of 2% are not bad for this kind of blue chip. Evenso the chart is downright ugly. See below.

 CL Jan 27 2010 cl Jan 2010 2

We did catch the triangle, if that is what it is, for a $20 ride , but after that left it alone. Looking at it now it looks to be right at the top of its trend line, perhaps 5-waves up from way back when, 1971 or so. This one could easily return to about $50, in any case the chances of going much higher are pretty slim. If you own it, it is a sell.

IMG Jan 27, 2010

Hamilton

Gold stocks may be very risky at this time, especially the smaller ones or  the silver types like Hecla HL, this is because the entire up-move from 2001 may actually be a B-wave rather than a new bull market. See below;

IMG Jan 27 2010

IMG Jan 27 2010 2

Now if you were lucky enough to buy this in 2001 (we recommended Hecla ! ), or at the recent low of $3 obviously you should have sold at about $16 after the triangle thrust. Having failed to do so there there is now a distinct problem that this one is going a lot lower, certainly if we go under $12 and negate the possibility of this A-B-C still morphing into an impulse wave up. My advice. run for the hills.

Royal Dutch Shell RDS.A

Hamilton

RDS Jan 26, 2010

Royal Dutch is a good example of proper technical analysis and perhaps a reasonable indicator where energy stocks might go for the next little while. Predictions for oil vary from well above $200 to below $30 over the next year or so. Even assuming that one sides with the $200 scenario, this stock should have been sold because.

1. You do not simple want to guess.

2. The RSI is dropping like a stone.

3. The MACD is not confirming the tops.

4. The stock has retraced a near perfect 61.8% Fibonacci level

5. The rebound has a nice A-B-C pattern where C=A, give or take.

At the very least a stop-loss should be entered at about $55 to keep some of the profit from the lows of March. This applies to a good number of energy stocks.

X US Steel, Jan 26, 2010

Hamilton

How to decide whether to buy or sell ? Use all you have, start with gut feel or intuition AND use all the tools the world of investing offers. Here is a good example in the form of US Steel or X, shown below.

X Jan 26, 2010

This stock trades around $20 for about the length of this chart and probable more; in fact it is basically down hill for many years dying with the rest of the US rustbelt under the weight of mismanagement, inefficiency, union demands etc. etc. All of a sudden the China factor comes out of nowhere in early 2003, presumable because the population there had grown from 1.4 billion to 1.400.000.001 causing the proverbial “tipping point” to occur.  Voila, in a mere 4 years this sleeper increases in value by a factor of 10. Our maestro Greenspan would certainly not have recognized the small bubble forming –BUT ANY SANE PERSON WITH A GUT WOULD AT LEAST BE AMAZED .

   X Jan 26 2010, 2                           

It drops even faster than the financials following EW rules to a tee. Also observe that the RSI,  relative strength indicator WARNS every single time that something is about to happen. It did again a few weeks ago and today the stock got hammered more than 10%. these indicators are worth paying attention to.

Is any of this predictable? Absolutely not ,  but is there a good reason to sit on a 10-bagger without a trailing stop-loss? Absolutely not. Unfortunately this is the part of “buy low sell high” that is most often not understood or practiced. It takes away 1/2 of the potential!