Month: June 2011

CCO update, RIM update, Ford update.

Hamilton

cco june18 2011

If you use a sharp pencil , you could say that today’s low is right in the trend-line. More often than not it does not even get there. The stock could still drop to the $22 level but regardless where you buy it, it should have a rebound to the $30 level.

RIM june 18 2 2011

RIM has dropped slightly below the trend-line. Things have never been so dark so from a contrarian view it must be a buy.

F june 18 2011

Ford also had one of these diagonals. It too exceeded the trend-line briefly. Now it is in the correction of the first bull leg. As mentioned earlier this correction can be very deep and should look like and a-b-c. $11 is where c=a, $10 is the low point in the triangle on the way up and a 60% correction would take the stock to just under $8. Where it will, in fact stop, time will tell but on average a buy at $10 will probable be profitable.

FM First Quantum

Hamilton

fm june 2011

This is a repeat of an earlier blog in which we showed the B-wave. This Google chart shows that scenario even better. B waves are counter-trend rallies and therefore 3-wave affaires. Counter-intuitively they can, and often do, climb above the corresponding A wave, but usually by a relatively small margin (less than 25% or so. Once complete the breakdown starts, usually to below the low of the A wave. You do not want to own this when that happens.

Pattern Recognition , Nikkei 225 and RIM

Hamilton

 

Nikkei 225 june 2011

RIM june 18 2011

These two charts are unrelated, the top one is that of the Nikkei 225 , an index , covering a period of 30 years or so. The bottom one is that of RIM, a single tech. stock, that , by the way, is reporting tonight.

I used to have an investment advisor sitting right next to me at WG. JP were his initial and he is now a frequent speaker on BNN. I would put two identical charts under his nose and ask if he could see the correlation. More often than not he couldn’t. From that I learned to understand that everything is truly in the eye of the beholder.

To get to the point, I think RIM may or may not drop another dollar or two but the next big move probable is up and quite a bit. The Nikkei has not completed the “diagonal” ( read wedge) yet and should soon drop. In the end both charts will look almost identical, unless you are JP.

Correlation , incidentally, does not, of course, imply any causal relationship! The common factor here is sentiment that has moved from euphoria to grinding despair.