Month: July 2011

GOOG, Google.

Hamilton

GOOG L GOOG S

Google is a very interesting stock. Normally I would not attempt to venture a guess where this is going. Eye-balls and that kind of stuff is not my cup of tea. As a matter of principal I would never buy a stock that trades at $500 , whatever.

The chart is intriguing so I will hazard a guess. The stock should go down. The initial drop from $750 to $240 is either an A-B-C move or 5-waves, I prefer the former but is does not matter much. If it was an A-B-C that could have been it and a new bull would have started and it could be argued that the initial move back to $630 was wave 1 up and everything thereafter wave 2 down. The internals do NOT support this. On the detailed chart there are two 5-wave moves of almost equal size. They channel well. Therefore the mid leg cannot be a b in a wave 2 and must therefore be a C of the correction. The next 5 waves then has to be a wave 1 down (followed by a nice wave 2 a-b-c, mostly on news, stellar earnings). If correct the next move should be 3 down! Time will tell.

VRX, Valiant update.

Hamilton

This is one that keeps going and going, mostly sideways. Here are the old charts;

VRX vrx apr 2011

This wedge would allow for a top near $57, but this stock appears propelled by financial engineering and the love of our largest brokerage firm, even if it has exceeded even their (then) lofty targets. $55 seemed like a good top. Perhaps not;

vrx jul 2011

For about 4 months this stock has done nothing. Except it has gone from one side of the channel to the other. Usually it does not pay to short a dull market. this would certainly be the case if this were a 4th wave triangle which targets a price of about $56/57, right on the target. Keep a tight stop on this one and if it does get to $55+, sell it. Both the RSI and MACD do not look very promising.

In EW terms the original chart may have had a 1-2 too many. Taking it out puts you in wave 4 of the entire sequence. If this is a triangle it has to be a wave 4.

NVDA, Nvidia Corp. update

Hamilton

nvda nvda2

This was back in Febr. 2011. The stock was trading at a P/E of 56, not that that matters. The chart showed a very , very, clear A-B-C corrective retracement of the big drop. Furthermore, it retraced a rather intriguingly precise 62% and reached the wave 4 or wave B level. I have shown dozens of these together with at least as many B-waves. Sometimes they remain suspended for months, sometimes they go a fraction higher but in most cases they will do the expected. Here is today’s chart;

nvda jul 2011

The stock has dropped from $26 to just above $14, roughly 46% in 4/5 months. The P/E is no longer at 56 but at a more moderate 34 (still high according to the value investors that look for a P/E <10). On this move the stock might reach $10 where it hits the line and coincidentally again retraces 62% of the retracement. It may not quite get there in this bullish environment. In the end the stock could drop to $3 or so but if it does, it is unclear how it does it, so I would suggest leaving it alone at around $11.

I have no idea what this company does other than that it is in the semiconductor business. A look at the SOX index may add light to this analysis.

CLX, Clorox update

Hamilton

clx 2011 last

At $75,10 this stock is right on target, actually 10 cents above that but then it did not stay there either. All this is happening as a result of another bid for the company by Carl Icahn. It is now a sell. If you have a broker that charges you a fortune  like 2.5%, then it sometimes makes sense simple to tender the stock into the bid at the appropriate time and circumvent paying these commissions. If the transaction costs are not too relevant one should normally sell as from here on there is only downside risk in the event the deal falls through. This has happened with increasing frequency.