Month: May 2012

STD, Banco Santander S.A. (American Deposit Receipts)

Hamilton

std may 2012std picture

This just happens to be the biggest bank in the Euro area. It gobbled up the likes of ABN-AMRO, albeit only briefly, and a whole slew of other banks or finance companies. Originally it hails from the Santander region of Spain. In terms of building headquarters these guys out spent most of the competitors.

When they say buy when there is blood in the street this is what they mean. The stock is trading at a P/E of 6.7 and yields 20.6% and it may just get a little better than that over the next few weeks. The magical number seems to be $4, and should it get there it will be the third time in less than ten years. Then when it bounces it moves quite impressively.

From an EW perspective the pattern is a large A-B-C X A-B-C , which is simple an A-B-C, except that the details differ. Theoretically the ideal target would be $4 or a little below. Presently we are either in the 5th wave of a thrust out of a triangle (having already completed the triangle measurement), or we are in a “wedge” type of structure with very little left to go down. Today’s low, so far , was at $5.52 or about a single dollar above the lows. A buy at $4.50 would only be suitable for those that are willing to loose it all, but it is exactly those people that become rich.

MS, Morgan Stanley update

Hamilton

Like Discount Corp. (now defunct) Morgan Stanley was created as a means to circumvent Glass-Stegall. It is a spin-off of JP Morgan. Now, of course, it is legally also a bank but  no doubt that can be changed back with the same speed as it was done in 2009. Apart from GS this is the only other remaining big gambling casino, but without the bad reputation or the over-sized rolodex. Here are the charts;

MS may 2012

This is a little different from the last blog. With all due respect to the Gainesville gang, it would seem to me that this chart looks a lot like GE and that it is conceivable that MS has done the entire correction! Alternatively, as shown before and in the chart below, we are still in some 5th wave, in fact the 5th of the 5th. The large A-B-C down is almost perfect, starting at about $100 and going to $10. The pattern is very symmetric.

ms s may 2012

Supposing we are in a 5th of some sort, waves 1 and 5 would be equal at about $9, just $3/$4 from where we are now. (probable 3 of 5 of 5). The stock trades at a p/e of 20 but that is meaningless. We caught the $11 to $21 move correctly but did not execute well. This time there is a chance of doing both. For the moment this should be a buy at $9 for sure but for the more courageous perhaps already, if, for instance, this is a b-wave almost complete. Perhaps, once again, their will be a stream of talent flowing from JPM to MS. The RSI and MACD certainly suggest a change is in the air. Below is that comparison in a chart, MS in green and GE in blue.

ms ge may 2012

Click on the chart to enlarge, one dropped from 100 to 10, the other from 60 to 6. MS is more volatile as would be expected when compared to industrial turbines and so on, but by and large, the correlation is inescapable.

SLV, Silver update.

Hamilton

slv may 2012

We are rather agnostic about the precious metals. The idea of buying them as a hedge against the world collapsing does not seem to be fact based. They drop together with stocks. That they constitute “real” value as in contrast to fiat money is also a little stretched. Both are highly dependent on a “mutual understanding” with respect to their value. And everyone can readily sympathise with the notion that it is a complete waste of time and money – better used elsewhere – to dig up the stuff and then bury it in a vault, why not just agree on who owns it where it is? But apart of all this it does look like silver is at a critical point here or near here. We are at a 4th wave of previous degree, a normal retracement level. It has lost 50+% of its peak value and more of the run up over the past 10 years or so. The RSI is oversold and the MACD is already pointing the other way for 1/2 year. We are aware that some EW-ers like to suggest that the whole structure is, somehow a triangle. There is no such thing to our knowledge. The count that might fit is the one shown. An initial a-b-c down followed by an a-b-c up which has yet to complete the c part. This is bullish only on an interim basis as it targets about $37. Even so it could lead to nice gains on such silver stocks that have recently been cut in half (proportionate to silvers price). FVI would be an example even though we do not recommend the juniors. A Kinross at $7.40, down from $25 is starting to look a little like value, at least relative to where it was.