Month: June 2012

TPX, Tempur-Pedic International

Hamilton

TPX june 2012

These guys make memory foam mattresses. High tech stuff supposedly invented by NASA. They announced ……Tempur-Pedic, which sells higher-priced foam-based and other specialty mattresses, now expects flat sales of about $1.43 billion in 2012, down from its previous forecast of $1.6 billion to $1.65 billion.  ……….

Sounds pretty innocent but look at the stock. The initial drop was entirely predictable to about $45, the rest was not and certainly not the speed at which this happened. Slightly more than 10% of the stock was held by shorts and it is doubtful that they covered their positions entirely. An abrupt bounce is a good possibility, either from here or a few dollars lower just in case we are in a 4th wave. This is the kind of trade you would prefer to do with “other-peoples-money”. But the stock is oversold according to the RSI so this might actually be a golden opportunity.

TSX update

Hamilton

tsx june 2012

Un till there is a convincing argument to expect otherwise we will stick to the basic EW model A-B-C correction. The target is about 7500 and perhaps a lot lower. When is hard to say but it is obviously a function of the forces that are working against this happening. These take time to exhaust themselves. Amusing things happen in the mean time. Who would have thought that the Americans would blame the Europeans for the most recent problems, conveniently forgetting that their economic situation is about twice as bad (at least in terms of debt). It is unreasonable to expect the Greeks and Germans to fall in love all of a sudden, but the chances of the Republicans and Democrats agreeing on taxation being part of civilization is even more remote, despite three years now with above a trillion deficits. Anyway the best guess would be between now and 2016. How is easier, see below;

tsx june 2012 s

This is just a tentative picture. C waves are always 5-wave structures and should develop more or less along the above path. It may not be Europe in the end, perhaps it will be the USA. Elections are only a few months away and the “back-burner” status that the US has enjoyed while Europe blows up, may soon be over.

ZJG , BMO junior gold companies ETF

Hamilton

ZJG june 2012ZJG s 2012

ZJG is the Bank of Montreal junior gold miners ETF. It has the charm of some degree of diversification so instead of trying to figure out if PAA, FVI, IMG etc etc are the right one for you , you get the group. You do get a slightly different perspective. On this chart it looks like the rebound is taking the form of an a-b-c where the c is about to equal the a at around $16. The really critical point, however is at $17 as that is where overlap would occur. If that happens the bull looks a lot better. Wait till it does and sell in advance. You can always re-enter.