Just a quick update on the TSE . The retracement of wave 1 or A down could be over here (at wave 4) but it can just as easily continue to about the 62% level or higher. Then , as a minimum, we should get a second 5 wave move down. This could take us to the 12650 level or farther down, depending on it being either a 3 or C (the former typically can go a lot deeper).
This is from March 10, 2009. We liked the chart as it had completed , or nearly completed a very nice 5 wave move down. You have to pick your spots! The low was just under $7 and from there it did what almost all indices did, universally. Here is todays’ chart.
What is interesting is that the counter-trend retracement of the past two years retraced precisely 62% ((14.5-7)x0.618 +7)= 11.5 ).Also interesting is that all three legs A, B, and C are equal. This is the same retracement structure we have seen for at least two dozen different stocks. To add to this curious symmetry, the low was established on the of March 2009, and the high point on the 28th of Feb. 2011, about a week shy of two years.
The EWJ deviates substantially from the Nikkei so one does not necessarily substitute well for the other. But curiously enough, the EWJ is trading exactly like CCO, both requiring another 4-5, 4-5 to complete the initial move.
A week ago I mentioned , tongue in cheek, how this ETF had played havoc with a lot of portfolios, many held by PROs, that is brokers themselves. At RBC they are so careful that a year and a half ago they changed the rules and now brokers must be options licensed in order to be able to peddle this stuff. The ETF, that day, traded and closed at around $4.80 and the last trade today (at this time) is at $5,41 The catalyst is the somewhat unbelievable contention that Japan will have to import more of this stuff to generate power (gas turbine generators can be built in a few years, reactors take 15/20 years). Makes you wonder why GE was slammed at the same time, given that it is one of the few companies that can build these plants. Anyway, when the news is at its worst (as in the Star article) things often turn on a dime, regardless of the excuse.
Where you put your buy order is a matter of how afraid you are of being wrong. “Objectively speaking”, as if such a thing exists, $24 seems to be the more precise number. Suppose you do get filled at that level than you should expect a rebound of ( (44-24)xo.38=7.8) about $7.8 over less than 1/2 year, which happens to be about a return of 78% per annum. If the stock drops another dollar or two (to $22) it will not change the outcome one iota. If the stock does not drop below $25, your return will be zero. Simple a lost opportunity? the question is, is there another train coming by behind this one?