Month: July 2012

CEF.A, Central Fund

Hamilton

See our previous blog of Aug 21, 2011. It was trading at around $26, now it is at $20 and has been below that.

cef.a 2012

In three different publications I have seen the action over the past year described as a triangle. It is not, period. Ralph Nelson Elliott who described the different patterns in detail, from empirical observations of course, would not accept a “triangle” if the boundary were in the same direction, they simple cannot both be down. I believe that Glen Neely later expanded the repertoire to include such structures which he called “running triangle”. So I guess it all depends on whether or not you are old school or new school. In any event it does not matter that much as if you were to use an a-b-c, with the c as a wedge, you end up with the same end result.  As far as I am concerned, anything can happen from here on, the light is amber.

ALA, Altagas Income Ltd.

Hamilton

ala 2012ala 2012s

Curious ticker! This company is in the generating, storage, transmission and distribution business for gas but also electricity. Essentially it is a utility. The stock lost about 1/2 of its value during the 2008 debacle and has since regained that value and then some. It has double topped and looks like it might try to go higher in a 5th wave, which could go as far as $34/$37 depending what one bases the expectation on. These guys are from Alberta, the no nonsense plainspoken cowboy types as one can readily tell from their admirable mission statement;

ala mission

They choose their words carefully even if that cannot be said for their ticker symbol. They are very circumspect in this exercise , distinguishing between wanting and needing and expecting  and deserving. Notice that the most dour of the four verbs is reserved for the shareholders, you will not get what you want, what you need or what you expect, just what you deserve! Could it be that they can see into the future??

Put in a stop-loss at $28 and sell at $34 and you will get what you expect.

RSX, Market Vectors Russia ETF, update

Hamilton

Back in Febr. of 2011, a little more than a year ago, we made the point that this ETF would go down and that en passant, this had a predictive value in terms of oil prices, considering that Russia is the largest producer (see the blog). A little reverse engineering if you wish. The ETF was at about 40 at the time. Here we are today;

RSX jul 2012RSX jul 2012 s

Only down about 40%, roughly, but a lot more to come. For those not completely infatuated with the EW methodology I have thrown in the more traditional Head & Shoulders analysis . Both call for far lower levels even if the count itself is definitely questionable. The B-wave is not, so < $10 is virtually a given.

Oil is perhaps not the only factor in this decline. Economics has always maintained that concentration of wealth (or initially inequality of incomes) leads to a situation where overall demand falls short of what is required to keep the economy going. A form of under-consumption, if you will, induced by the lower propensity to spend (relatively, of course ) by the wealthy. Economics is little more than a list of equations that are, for the most part tautologies; they are true by definition and therefore prove nothing. Ruchir Sharma recently wrote “Breakout Nations; In Pursuit of the Next Economic Miracles”, in which he sheds some new light on this old concept, explaining why China is a better bet than Russia. Here are some figures to mull over (from the Star);

Billionaires                                            Russia     96        China     95

Wealth that represents                          377.3 Bln.         ——-

Percentage of National GDP                     20%                  2.9%

Percentage of non-productive industries  80%                 ——-

In both cases most of the riches were obtained in the usual manner but that is a moral issue. In pure economic terms Russia has a big problem, which might only be resolved the way it was back in 1917. In varying degrees this applies to the world at large, the US included.

DJIEU, Dow Jones Islamic Market Europe Index

Hamilton

Do not confuse this one with the French “Dieu”. It is the Dow Jones Islamic Market Europe Index.  Turkey is the only European country that has an  original Islamic population, but , of course , at one point in time the Ottoman empire stretched all the way to Vienna and the area around  Malaga was  also Islamic. Much has changed but with the “spring” in the Middle Eastern Islamic countries one would have expected these countries to do well, that is relative to the rest of the World. Not really , unfortunately;

Islamic jul 2012ortakoy mosque

On the right is the church/mosque in the village where I grew up as a kid. The foundations of the bridge over the Bosporus, in the background, were actually built next to the site of my home, a long time ago.

Anyway looking at the chart it is immediately apparent that the “spring” has, unfortunately, not resulted in a clear upward move in the stocks of Islamic European enterprises. In fact, if anything, the conclusion seems to have to be that everything is going in the same direction. But then if you look at Turkey itself, it is actually one of the few to be trading higher than before the “great recession”. Here is the ALL Cap Index;

turkey

Most of Turkey is of course not Europe, technically speaking, but the performance is definitely above par. Could it possible be that the Lira is a buy? And, by the way, that house I used to live in as a kid, is now beyond the reach of all but the 1 per centers, make that the 0.25 %%%%%.