Month: November 2011

SLF again and MFC

Hamilton

slf nov 15 2 2011

Here it is in a little more detail. Today’s low registered at $ 20.96  If there was a triangle wave 5 already has the required 5 wave subdivisions even if they are hard to recognize. If there never was a triangle, a wave 4 and 5 is still required to finish the job.  A move to, say $23 followed by a drop to a new low would do the trick. The 5th wave is already almost equal to wave 1 and time wise we are pretty close to the apex (if that applies). The best you can hope for is about $20.25 and it should happen within two weeks. Little point in waiting!

Unless you look at Manulife which is either making a very complex and incomplete wave 4, or simple just another 4 and 5;

mfc nov 15 2011

If it does that it will likely get to the all time low of $9

SLF, Sunlife Financial

Hamilton

Sept. 22nd , 2011 we had a tentative target for Sunlife around $ 22. Here is that chart and today’s.

slf sept 22 2011 slf nov 15 2011

We have gone a little further than $22, and have done so in a decidedly unclear way. Nevertheless the picture overall suggests a 5-wave movement down to the lower channel trend line at just under $22 is complete. The stock is now earning almost 7% and trades at a p/e of about 7. The end of wave 3 could be as shown, possible making wave 4 a rather awkward triangle; or wave 3 could end at the lowest point in the middle of the channel. Waves 5 and 1 are about equal, a common event.  A rebound of about $5 to around $26 is now highly probable. That would even be the case if we have only finished wave 3, as wave 4 would also require a $5 rebound.

slf nov 15 b 2011

Conceivable this stock could require another C leg up to complete an A-B-C countertrend correction (the B is the a-b-c shown). This is a little at odds with the market overall and , more specifically, the headwinds that insurance companies are experiencing in this low interest, low investment returns environment.

RL, Polo Ralph Lauren Corp.

Hamilton

Some luxury goods sell more at a higher price. They are called Veblen goods after one Thorstein Veblen who first pioneered this perverse phenomenon  of conspicuous consumption and status-seeking. Incidentally stocks arguable belong to this category as well. If you recently tried to get a team of polo players together for a Saturday afternoon game, you will know what I am getting at. Here are the charts:

rl big

rl middle rl small

From big to small. The big picture is telling, there is no overlap of waves 4 and 2, they almost touch at about $30. Wave 4 is a text-book a-b-c, where the c = a. Wave 5 has a “throw-over” , that is it moves beyond the upper channel trend-line.

Mid-term the stock channels well, even if the count is not completely clear. It could have a series of 1-2’s at the start and hence should have a similar series of 4-5’s at the end. Even without that it is relatively easy to construct a 5-wave sequence up.

The short-term chart is the most ambiguous. The best count would be a wave 4 expanding triangle (a.k.a a megaphone), followed by said 4-5’s. Alternatively a wedge is forming that would allow for one more minor 5th wave that should itself unfold as a 3-wave structure. This could , repeat could, take the stock to about $170.

Either way the next big move is down to about $105 (4th wave of previous degree or base of wedge). After that possibly to wave 4 of the entire thing (at $30). It might get increasingly difficult to get that game going as more and more players lose their shirt. This is definitely a short, either now or at $170 if you want to play it safe.

RUT, Russell 2000 small cap index

Hamilton

Rut nov 2011

For the Big Picture, the Russell 2000 is as good as any. The pattern , of course, is identical to that of the DAX, AEX, FTSE , and half a dozen others. It is different from the SMI or the TSX but nevertheless gives a good roadmap for the world stock markets overall. The 5 waves down is relatively clear and the a-b-c correction back up for wave 2 even clearer. The a-b-c is well formed and retraces about 62% ending just slightly above a wave 4 of previous degree. The speed is a little off but as long as adults engage in games of sophistry , arguing whether or not a voluntary default is a default, anything is possible.  The most reasonable take on this is that we will soon be in wave 3 down, that is when things get serious.