Month: May 2011

MRVL, Marvell Technology Group

Hamilton

mrvl l

I have no idea what this company does, just happened to notice some very distinct patterns and it trades at a P/E of about 11, so from that perspective anything is possible. This stock has an unbelievable predilection for “diagonal triangles” either expanding or contracting. These patterns that are simple wedges are extremely reliable providing a pretty good predictive value; the art is recognizing them in real time.

On this bigchart the wedge is in the middle, from about $22 to below $5, just short of the lower trend-line (see Ford for another example). The wedge virtually guarantees a return to its origin which it promptly does. A level that also happens to be very close to the 61.8% retracement. These patterns can be either 5th waves or C waves which implies that the entire move down from $36 to $5 is  either a 5 wave sequence or an A-B-C. The 5 wave sequence would suggest that we are in a zig-zag requiring another wave down soon.The obvious problem with that is that it would lead to a negative stock value (see purple lines). With few exceptions, installment receipts being one of them, this is impossible so I would prefer the second option, that of an A-B-C (for wave A of a flat). The flat, as the name suggest, is a large pattern that goes nowhere after the initial leg defines its size. Typically it follows the A-B-C structure in which the A breaks down into an a-b-c, the B does the same and the C is a 1-2-3-4-5 sequence, as always. Given this possibility the stock could climb to about $30 to complete the B. The entire B leg would look like this;

mrvl m

To complete the  (minor) leg c the stock still needs to drop slightly below $14 to finish its 5th wave and, by the way, complete a 50% retracement right into the 4th of previous degree! Then it should move up smartly. The RSI and MACD are already confirming a turn. In more detail we get the following;

mrvl s 

Notice that there are two more “wedges” in this chart. We are interested in the last one that appears to target , give or take $13.90 to complete the fifth wave of c of B. Then up we go. First to $16.50, the top of the wedge, you virtually always do this so it is almost risk-free. Next to the gap at about $17, then $22 and last to about $30.

One can never be sure of the accuracy of such predictions, that is why a running stop-loss is highly recommended, not initially but after a few dollars of gains. Remember that smart people do not necessarily make the money, disciplined people do.

EWG & EWN , Germany and Holland

Hamilton

 

ewg may 2011 s ewg 2011 may

Germany and Holland have a lot of differences but economically they are attached in a way similar to Canada and the United States. Their economies are so intertwined that neither one can make policy without the other, granted obviously that the elephant always appears to get his way. Unbeknown to the world at large, Holland was once the largest energy producer in the world, relatively speaking ( it still is on a put-through basis ).  Gas in Friesland’s cow pastures propelled Holland into the  luxurious position of being able to run very large budget deficits with little concern; now known as the Dutch Disease. Canada is following the script pretty well and soon it will be known as the Canadian Disease. i.e. Alberta does well and Ontario suffers.

The above charts are of Germany’s EWG ETF. Clear, to me at least , is the A-B-C pattern of a wave 2, or at least some “corrective” move. For some reason, not sure what it is, the EWG differs markedly from the DAX. It has exceeded the 62% retracement, but barely. Below is Holland’s EWN (the AEX or Amsterdam Exchange is still far away from its top). You can click on the charts and out them beside each other. ;

ewn may 2011

The correlation between the two ETFs is rather obvious. The EWN is even more precise in it’s retracement level, pretty well a perfect  62%. It could go higher in the event C equals A but there is no need for it to do so. For the moment I would prefer to be on the side lines!

LUN , Lundin

Hamilton

LUN2 LUN may 2011

On the left is the expected trajectory for Lundin Mining as of the end of Feb. On the right is what we got to date. The stock, as apparently is “normal” in these bullish times, went right to the maximum of $9+. Then it crumbles despite two take-over bids; it should continue lower, perhaps much lower.    Click on the charts to enlarge.

CCO, Cameco, misssing the boat?

Hamilton

ccomay24 2011

It is quite possible that no further moves down are coming; the red line connecting the lows may have done its work by providing support. A look at uranium itself makes this very plausible;

Uranium may24 2011 uranium 2

According to InfoMine.com the stuff hit a low of about US $ 40 per pound around June of 2010 well before anything had happened at Fukushima, Japan. Recently China’s  nuclear Energy Association announced that it will boost atomic capacity 8 times by 2020. India announced a similar expansion of production of electricity using nuclear fuel 13-fold by 2030.All of this should lead to a doubling of the demand for the fuel, never mind what other countries will do.