Month: December 2012

ATH, Athabasca Oil Sands Corp., update

Hamilton

There are a total of 13 different patterns that are recognized by EW. Some are a bit problematic as it seems that the stock movements can be counted in so many different ways that the whole EW approach appears almost arbitrary and not always testable in real time. True, no doubt, but even so there are some extremely accurate and predictive patterns. The “diagonal triangle” is one of the best. It is easy to recognize due to overlap that does not occur anywhere else. It is always in a 5th wave  (leaving the question 5th of what open) or c wave position. The stock almost always returns to the start of the pattern. ATH had one of these diagonals and here are the then and now charts;

ath m 2012ath dec 16 2012

ath 2012ath dec 16 2012 b

It does precisely what it should do, returning right to the start of the pattern. The trick, as always is to recognize this in advance so that it becomes tradable. Notice that the pattern can also be broken into two parts, a triangle followed by a thrust down; combined “diagonal”is therefore an appropriate name.

In this particular case the diagonal occurred as the 5th wave of 3 (it actually failed by a very small margin). Presently we are in the 5th of this 5 wave sequence so a buying opportunity should present itself soon. This 5th wave may , in fact, already be complete but to be safe we are assuming that we are in wave 4 and have one more push to go to the downside. A buy at any new low!

K, Kellogg update

Hamilton

"A handful of patience is worth more than a bushel of brains." – Dutch Proverb

Then (June 2011) and now charts:

K ellog June 2011k ellog dec 16 2012

If you read the text in that June blog , it says that the next big move should be down but that it may first have to complete the double topping process by going to $58. Well we are almost there and it has taken more than a year longer than expected. I cannot remember ever hearing the quoted Dutch proverb, it is probable one of thousands that father Cats or someone like that used to liberally sprinkle Dutch literature, but it certainly seems to fit this situation. A sell now.

JOY Global.

Hamilton

Joy dec 12 2012joy dec 14 2012 s

JOY is in the business of supplying above and below ground mining machinery. It is comparable to companies like Finning, Cummings, Cat. etc. etc. It did quite well the most recent quarter but it also “guided” down for what is coming next, citing oversupply in the mining industry. The stock, together with the others mentioned,  has done extraordinarily well due to the commodities bubble that we have had or are having. Another factor that may have played a role is that as of today, precisely in fact, we have had 4 full years of interest rates essentially at zero. On top of that 100% accelerated depreciation for corporate tax purposes makes buying capital equipment relatively very attractive, more so than hiring labor. Other than in such wonderful places as the Congo, more machines and less people are used than ever before. (This is an economic phenomenon that every first year economist is aware of, except , it seems, the Fed.) This all caused the euphoria that pushed this stock into a Mnt. Everest high of $100+ in what is clearly a B-wave. So far the stock has only lost 50% or so. More will come.

Below is Finning for comparison purposes;

ftt dec 14 2012