Month: December 2011

EMP.A Empire Company

Hamilton

They just reported today and earnings are down by almost 1/2. Under new economics 101 this is no doubt something to applaud and therefore the stock will go up. Old fashioned EW analysis suggest the stock has peaked and a huge drop is right around the corner and long overdue. Here is the chart;

Empire Co.diagonal

The 5th wave in this sequence is a “diagonal”.  It is the only structure that can have overlap and most often does. It is always a 5th wave (or C) and occurs at the end of the ride. In English it is a rising flag, pennant and half a dozen other things. I have put the model next to it so you can draw your own conclusion. Just a hint here, normally these this fall back to at least the base, here at $35. After that 50/62% or whatever else could follow.

See also my previous blog of August 5th 2011 where this stock was predicted to go to about $62 and then fall. It did a few extra dollars but the may point was dead on, so far at least.

RIM

Hamilton

Research in Motion Ltd

Research in motion just keeps going and going. It has lost 87% of it’s former value. All the analysts and brokers that thought it was a buy  at $100 + are now in a decidedly nasty mood. This is what they mean by  buy when there is blood in the streets. The company is reporting tomorrow and my gut tells me this is a buy for at least 3 to 5 dollars. Unfortunately my EW analysis of a wedge did not work even if the stock kept hugging that line. Time simple ran out, but now may just be the right time for a quick trade.

MS, Morgan Stanley update

Hamilton

MS - dec 14 2011

Earlier this month, even when it was at odds with the count, it was worth contemplating whether or not MS was in a (4th wave) triangle. A week has gone by and so far at least, the stock seems to be following the script. All legs in a triangle have to be a-b-c’s, three wave affairs. That , arguable, appears to be the case, or at the very least it could be possible. Also, normally the legs relate to each other by a  factor of 0.62 alternatively, so c should be about 2/3 of a and d 2/3 of b. So far that too is the case. If this were to continue than chances are that we do , in fact , have a triangle. If so we will dive down to about $7 around New Years and then bounce  right back up to $16.5/$19.5  None of this may happen, but if it does you can be prepared by having a great trade for the beginning of next year.

CCO, Cameco if at first etc. etc.

Hamilton

Cameco Corp., CACCO Advanced Chart - (TOR) CACCO, Cameco CorpCCO.TO - SharpCharts Workbench - StockCharts

Continuing on the previous theme , that is that electricity is the basis of civilization and that we are running out of fossil fuels, one would think that nuclear power would get rather popular rather quickly. Markets are notorious in their ability to ignore reality for the longest time and then, all of a sudden, acknowledge the inescapable and catch up real fast. Having been too early in liking this stock once before I hesitate to recommend it now. But should it drop further and make a slight new low below the March 2009 one (roughly below $15), then it would seem to me to be a compelling buy.

In EW terms the stock should trade at a new low under $15 to fulfill the pattern shown in the Bigchart. Then, depending on the degree of wave 5 into the top, it should not trade below $10as this would cause overlap (the top is actually wave 3 and for the past 5 years we have been doing wave 4).  Looking at the shorter term chart, there is no question that it was an A-B-C corrective rally, which should be completely retraced. The structure itself is a 5 wave move with a 5th wave diagonal expanding triangle (that is a wedge). It appears to need one more push down to complete. It should then trade back to the origin of that wedge ($27.50). An ideal point would be where the wedge is equal to wave 1, 2 and 3 combined, see black arrow.