Month: November 2011

BNS, Bank of Nova Scotia.

Hamilton

bns nov 18 2011 bns nov 18 s 2011

The question is, where are the Canadian banks going. The answer is down.

BNS has a very interesting chart and the bank has held up quite well, perhaps because of it’s more international (South America and Caribbean) exposure and better growth prospects. But it should in any case fall to the B-wave level which is at $42.5. In short it is reasonable to expect a 5th wave now. Over the past 4 months the stock has moved no less than 8 times between , roughly, $49 and $53.50 and this is the 5th time it has dropped back to the $49 level. All of this is characteristic for a triangle, either the whole structure or just the tail part as in 4-5-triangle. I prefer the latter but it does not make much difference. The stock should drop about $8 bringing it close to the $42.5 target.

MGO, Migao Corp.

Hamilton

This one is in the Sino-Forest category where truth is simple in the eye of the beholder, certainly when it comes to the analysts who move from ecstasy to utter despair on a dime on even the slightest rumor. Here is the chart from June 14th and today’s.

mgo mgo nov 2011

As you can see , I have changed the count. Like all stocks, or at least most, I assume an A-B-C counter-trend correction into early 2011. Despite the fact that the C did not exceed the top of the A leg , this “fits” much better (click on the charts to enlarge). We got the 4-5 as anticipated and made new all time lows. This may be as good as it gets but another 4-5 is certainly a very real possibility , even if it goes a little higher at first.

ANF, Abercrombie & Fitch

Hamilton

ANF b2 2011 anf s

This stock dropped from about $78 to $47 in a matter of a few weeks. The recent quarter performance was actually quite good despite a “miss” of 14 cents, if you bothered to read the details. This retailer of moderately upscale clothing sold a lot more than the previous year but suffered from a slight compression of margin. Were there warning signs to prepare you for  a drop of almost 40%??

1. The top was actually in 07, and one can argue which of the three is the real one, but the 5 waves up and the very distinct wedge for the 5th wave pretty well guaranteed that that was the top.

2. The fairly clear B-wave from the lows, almost retracing the entire drop warns that the move is not “real”.

3. The triple top, just as in 07 is a classic formation telling you to get out, or at least step aside.

4. The a-b-c corrective wave 2, retracing, again, almost all of wave 1, warns you that it too is not real.

5. The p/e ratio , now at 21 according to Bigcharts must have been in the low 30-ties, not cheap by any standard.

There will be more of these.