Month: February 2012

DOW, DAX, SPX, NYA , STOX600, TSX, DJT

Hamilton

indu feb8 2012

The DOW has clearly exceeded its May 2 high of 12876 by about 50+ points. This would normally negate the count, that is the one where this was wave 1 down followed by an a-b-c correction/rebound. I simple do not know what to do with this! The structure is just fine, only it should not have gone this high. EW is supposed to work when markets work, that is when there are a multitude of participants who freely make up their minds to buy or sell. Perhaps this precondition is no longer met now that CB’s have thrown in 15 trillion into the punch-bowl (1/3 of the value of world equities!), never mind all the other “stimulating” factors. I just do not understand but at the same time will not get religious or dogmatic about it. Other than the Nasdaq, which is in a completely different phase, just about every other major index has NOT negated this count, so for the time being we will stick with it. Below are some examples;

DAX feb 9 2012SPX feb 9 2012NYA feb 9 2012

stox600 feb 9 2012TSX feb 9 2012DJT

You can click on them to enlarge. Un till such time that a few more of these “negate” the count I will take the catholic approach and simple nullify this one  single incident.

RUS, Russel Metals

Hamilton

rus feb 2012RUS s feb 2012

Russell Metals is another one of those stocks that has followed a very bearish pattern. However each time it retraces so much of the preceding drop that it is hard not to wonder if this is the correct interpretation. A few more dollars and this stock will make a new high! Un till it does remain bearish. This stock trades at a p/e of 15+. One alternative scenario would be a much larger B-wave making new highs. This is so contrary to all the evidence that it realy cannot be taken seriously at this time. After QE5 and another 10 trillion who knows.

Greek bailout.

Hamilton

acropolis

Can we have a bid please?

One decidedly negative outcome of the resolution of the Greek bailout would be that we would lose all hope, after all this farce has concentrated our attention for quite some time now while we wait , time after time, for the “deus ex machina” to come on the stage to resolve this tragedy. We are not quite there yet but this farce is starting to resemble that other story, “one thousand and one nights”, where the sultan’s wife tries to delay her execution by telling fascinating to-be-continued stories.

This whole thing is a wonderful example of sophisticated political engineering. There will not be a default but right away you can whistle good-bye to 70% of your money if you are a creditor. The remaining 30% will be exchanged for 30-year bonds paying an interest rate of, reportedly, 3.6%. As soon as interest rates in the world, and the Eorozone, normalize (if they ever do) to say an interest rate of 6% (the basis of the last 30-year US bond futures contract), you will lose  one half or more of that 30%, leaving only the hope of getting back 15%.  Straight out of Alice in Wonderland?