Month: November 2012

SNC update

Hamilton

snc nov 10 2012

See also our April previous blog. We were expecting a rebound to $43 and then a drop to about $32. The former has happened, albeit slightly late, and the latter will take a little longer as well. $32 is on its way if the pattern is that of a double zig-zag. A more bearish target emerges if one assumes that the top in 2008 was not THE top but just the top of wave 3. That would put the real top in 2011 and would allow this correction that we are in to unfold as an a-b-c. Cs are often much larger than the a so much lower targets can be obtained. The chart below shows that possibility;

snc nov 9 2012 b

The stock, by the way, is trading at a p/e of about 21 so it is definitely not undervalued which is pretty obvious from a superficial glance at the chart.

It is somewhat ironic that the Spanish, who are now in so much trouble with their real estate , were a 1/3 partner through Cintra in the consortium led by SNC that bought the  407 highway from the Ontario (Harris) government for a song ($3.1 bln). So the last shall be first, and the first last. Where was the “net benefit” then??

AAPL update

Hamilton

AAPL nov 9 2012

AAPL probable completed a 5 wave sequence at the $700 level. The drop has been breath taking as is usual with momentum stocks as there was no reason to be up there in the first place. We are now about to re-enter the channel that in our estimation was wave 3 (see previous blogs). Things are pretty oversold as is, so a rebound could start any moment but preferable from the bottom of the channel. Corrections are always 3 waves or combinations thereof and here we have only one so expect a b and c to follow.

DJIA update

Hamilton

djia nov 7 2012 mdjia nov 7 2012 s

So we clearly broke out of the wedge to the downside. Actually today’s action was the worst in a year which just tells you how subdued this market has actually been. We now have 5 waves down, possible for an initial wave 1 down. Next should be a rebound, more or less to that same trend line after which the serious action should start in wave 3. This rebound the next day or so should be your last chance to get out . We will see.

PWT, Penn West Petroleum Ltd.

Hamilton

pwt nov 2012 bpwt nov 2012 s

A few bigwigs resigned yesterday. Why exactly is not completely clear but, as is usual, the stock took a bit of a hit touching $11. This might just be an intermediate low of wave 2.

The stock topped in 2006 at almost $50, after a clean 5 wave move in which the 5th is extended. Typically the extension is completely retraced as the stock falls back to the lower level of a triangle wave 4. It does so in a pretty symmetric A-B-C. This may have been all of the correction, after all the stock loses about 80% of its value.

From there a 5-wave wave 1 starts a new bull market, followed by a wave 2 correction which retraces all but a dollar of that move. This is all textbook EW. The RSI is already oversold. Buy at these levels but use a stop loss at just under $10.