Month: February 2011

HXD and HXU

Hamilton

You could do all your trading with just these two ETFs. The Horizons X(TSX) D for down or U for up. They are leveraged so one should not go overboard but otherwise they do most of what is needed. Here are the charts;

hxd20112 HXu 2011

The HXU, the bull one on the left could have been bought for $8 at the lows in March, today it is at $24 and appears to have completed an A-B-C of sorts. The HXD, the bear version is on the left and seems to have completed an A-B-C as well, ending with a pretty nice wedge that seems to go on forever. Today it hit a low of $8.03 and even though one cannot be absolutely certain, it is clearly a buy at these levels and should trade towards the $20 level and perhaps a lot higher!

The wedge , in detail , is below. It is the 5th of the 5th which is the wedge so do not confuse the two charts.

HXD20113

NVDA

Hamilton

nvda nvda2

No position in Nvidia Corp., just showing it for the beauty of it all. We have shown at least a dozen or more B-waves over the past few months and this one is worth adding to the list for its pure perfection. The stock drops from $40 to $6, clearly a bit of a bear market; furthermore it does so in a very distinct 5-wave move. From the low the stock has rebounded 62% and right to the level of the 4th wave on the way down. Moreover, wave c and a in this rebound are vector equal. Next move should be to the downside. Given a p/e at nosebleed levels that is not a big stretch.

BRK.A , Berkshire Hathaway. Warren Buffett,the Oracle of Omaha

Hamilton

To get some idea where this market might be going, it may be worth looking at BRK, after all that is a company run by the undisputed, best value investor ever. Some grown men jump through hoops just to get their picture taken with the sage, hoping, perhaps, that somehow some of the wisdom will rub off on them. Here is the chart;

BRK.A feb 2011

First of all it is clear that the Sage is just as bad as everyone else in avoiding crashes. Even before the tech crash his stock had dropped by 50% (he does not invest in tech, so one might have thought that he would skip the whole thing. Not so he was even early. Again in 2009 the stock drops about 50%, on a par with the S&P etc.etc., making a low in March. What is different is that the stock goes much higher, nearly twice as high in 2008 compared to 1998. Most other markets (except, for instance,Toronto), more or less double-topped at best. in a way this supports the argument that the two down-legs are NOT both part of a single structure(a flat).  From the March lows the stock retraces about 76% before hitting the parallel trend-line. This is precisely where the Dow Jones is at today’s close (roughly 12400) . Time will tell if this is it. If it is wave C down should now take the stock to about 40,000, the “normal” retracement level.

By the way, wave 5 of 5 is an extended wave, a normal occurrence in at least one of the three up-legs. The leg stretches as it were and travels a disproportionate distance (about 40,000). Without the extension the stock would have been contained inside the channel (purple).

RY, CM

Hamilton

ry feb2011 cm feb 2011

As the head of the largest Quebec based pension fund recently cynically observed, the TSE is one big China play if you take out the banks. Everything goes up 50 points a day for months on end but most of the time the banks do not partake in this feast. The RY has even earned an outright sell rating by one of the better and independent (though ironically affiliated with RY) analyst bureaus , that goes by a name that suggests it is telling the truth, albeit in Latin.

   We have steadfastly maintained that the Royal Bank should trade at around $44 before it does anything else. Despite the fact that it has taken about 4 months longer than originally anticipated nothing has changed that outlook. The first leg down from the all time peak of $63 (and double-top plus a little), was a clear 5-wave move. The correction following that very quickly regained almost 62% but it was only part of a more complex correction. Now the stock is again approaching that level and even though it could go slightly further it is within a few dollars of the target. Then it should drop at least to $44

The Commerce (a longer time frame!) has followed a different path but it is equally clear. The A-B-C from the lows has a very clear (so far at least) wedge formation that is within a single dollar of the upper trend-line. Amazingly the RSI and MACD do not confirm the new highs.

By the way, the CM/RY spread trade would have worked exceptionally well!