Month: January 2013

RIM update

Hamilton

We repeat the fractal shown in a blog back in Oct. 2012;

RIM oct 2012

The accompanying calculation was that the stock would trade in the $7 range if it were to drop a proportionate amount and I compared it to buying Apple at $6, a second opportunity so to speak to step to the plate. Now that we have reached $18 where does it go? The Nov. 22nd blog, shown below in both frames, is probable the most accurate in describing the trajectory, so far at least;

rim nov 22 2012 brim nov 22 2012 l

If this prediction continues to work, we should soon get a breakdown in a wave B or wave 2, the latter obviously fits the new bull scenario the best. This should take the stock back to about $12/10 ( After that the stock could rise to about $30 which is where the first bump in the chart is on the way down (a 4th wave of sorts). If any of this will actually happen remains to be seen. What definitely supports this scenario are the shorts. Apparently there are now more shorts than at the lows. Canadian exchanges cannot figure out how big the short position is, or prefer to keep us in the dark. However, in the US the shorts are now reported to be at about 137 mln. shares, which at the average daily turnover for the last 200 days of 28 mln. shares, would take 5 full days of trading. This should keep a pretty healthy bid under the stock. An updated chart is shown below.

rim jan 25 2013

The Dow and the NYSE, NYA update

Hamilton

DJIA jan 25 2013NYA jan 25 2013

Maybe just flogging a dead horse but here is the Dow’s wedge once again, and also a similar wedge for the NYA. We are intrigued by the NYSE index because, as is clear to see particularly if you enlarge the picture, wave 1 travels a greater distance than wave 3. Now wave 3 can never be the shortest. Ergo wave 5 must be shorter than 3 which implies that the index cannot go more than about 150 points higher. As throw-overs go, it is already ridiculous.

EWG , Germany, update

Hamilton

Predicting markets has become rather easy, all you need to do is count the number of days and multiply that by 50 points or whatever and you will know where the market will be at that time. Any problems along the way will be swept under the rug, legislated out of existence or simple ignored by the markets spin machine. But , here is Germany , then and now;

ewg june 17 2011ewg jan 25 2013

The then is from June of 2011, so about a year and a half ago. Now is now.  These charts show the very essence of Elliott wave. Sequences of 5 waves are always pointing in the then prevailing direction of the market. 3 waves, on the other hand, are always against the prevailing direction or counter-trend. Both the drops in 2008 and 2011 are 5 wave sequences and as such they define the prevailing direction as down. Both A-B-C’s in 2009/10 and 2011 , roughly, are counter-trend, in this case up. The logic behind this is that the human brain is wired in such a way that if we do something we like we take our time doing it. When we are doing something we don’t like we are guided by our “flight or fight” instinct, which is far more crude and abrupt (not necessarily in time but in the complexity of the structure!). So what we have is a main trend down, twice confirmed , followed by two big bounces.

Furthermore the EWG demonstrates the concept of “fractals” very well. This is when similar patterns recur in different sizes (degrees). Here you will notice that the big drop and rebound, from 36 to 12 back to 29, is repeated pretty well in an identical way in the next one from 29 to 17 back to 25. (See also blog on RIM for fractals). Right at this moment we are right on the downward sloping line connecting the three tops; next big move should be down. By the way, on shorter term charts both the RSI and MACD are also pointing down.