Month: August 2011

DOW update

Hamilton

DOW 10 Aug 2011

It is near impossible to get a tick chart, even on the internet, so I will use this one from Stockcharts. I suspect that we are in some sort of 4th wave of 3 of 3, this may be a wrong assumption but at least it give a road map.

Yesterday’s low was at about 10600.The rise thereafter was was good for 600+ points to about 11200. It is , I think, a 5-wave move, which immediately excludes the possibility of a triangle! This morning’s dive down was for about 400 points (very close to a normal Fibo 62%) to 10800. This corrects the euphoria created by the Fed acknowledging that we are indeed in BIG trouble. Next move should be another rise of about 600 points to 11400. Then down it goes again as we are nowhere near a bottom. We shall see.

DOW.

Hamilton

indu aug 10 2011

Here we have it. A market rejoicing in the fact that even the Fed. ,certainly not the most astute observer, believes it is time to tell us that it will hold rates at unbelievable low rates for another two years. What happened to capital formation, the cornerstone of all civilization, what happened to honesty, do we really have to go by the backdoor by way of degrading our currency?? I do not think that Bernanke has even a remote idea what he is doing.

From an EW perspective , we may be in wave 4 of 3 of something the degree of which is yet unclear. The market should go down first and then may go higher, this may take some time, but in the end the fundamentals will prevail, and that means stocks are going lower.

What happened to capital formation? If you were a bond trader is it time to pack up? In my opinion the Fed. has no idea what it is doing. We need much higher interest rates, period.

F, Ford.

Hamilton

F aug 8 2011

Our ideal target for Ford was in the high $7, $7.84 being a Fibo 62% down. The stock may well be a buy at these levels despite being about $2 short of that low. The reasons are;

1. The stock dropped 50%

2. It dropped to the 4th wave of previous degree.

3 The drop is a crystal clear a-b-c, 5-3-5 structure, complete even of it could become more complex yet.

4. The RSI and MACD is at lows not previously seen over this period.

5. Fundamentally they are doing relatively well.

Recognizing that the correction could become more complex, for instance by moving back up to say $16, and then going south again towards $8 (shown in black). Even in those circumstances this is a buy for a very reasonable trade , up $5 or so is, after all 50%. Just use a stop, mental or real at $10.

NEM, Newmont and Gold and Silver.

Hamilton

NEM aug 8 2011

GLD aug 8 2011

slv aug 8 2011

The “conundrum” continues. Above we have NEM, Newmont, one of the lager or at least mid tier gold producer.  Below that , the stuff, by way of the GLD which represents 1/10th of the gold per ounce price, and below that silver by way of SLV, all in US$ terms.

These are 5 year charts. Newmont has gone nowhere, the stuff has roughly doubled over the last 3 years and tripled over 5. Silver out-performed the other two by a wide margin, more than quadrupling in just 3 years. But there is no harmony between the 3. Clearly there is a complete and total disconnect between the miners and the stuff, and then there is a disconnect between gold and silver. Silver looks like it has already peaked and is completing a corrective retracement. Gold has just broken out of its channel.

I suspect that the cause of these non-confirmations lies in the massive growth of the various ETF’s. The simplicity and liquidity of these investment products diverts capital in a disproportionate way into what happens to be in vogue at a certain point in time, without the limitations with regard to individual participants and volumes such as apply to commodity futures. Raw capitalism at its best, someone will be in tears before it is over.