Month: February 2013

KBH, KB Home and XHB ETF

Hamilton

kbh feb 9 2013kbh feb 9 2013 s

Looking at the big picture it is not all that hard to assume that the bear market in the home builders stocks is over and that there are only blue skies ahead. Perhaps. Perhaps not. Looking at the more detailed chart it is very difficult to escape the notion that this is a diagonal, read wedge. These ONLY occur in 5th or C waves. They should retrace entirely to their base and beyond, so below $5. This diagonal is an absolute beauty in all respects. It has the brief overlap, the throw-over and it is well proportioned. Consequently we would expect a drop of at least $6 first and then we shall see what prevails. Do not buy and do put in a stop-loss!

The home-builder index etf supports this analysis. We thought this was a sell at about $26 back in Sept. As usual it went a little further but now sports a distinctly negative pattern.

xhb feb 9 2013

CLC, CLM Healthcare update (by request)

Hamilton

clc feb 2013

For more than a year I have not updated this stock. The reason is quite simple this – I have no idea where it is going. The beauty of EW is that you focus on those things that are clear and ignore everything else. This approach obviously contradicts that of the average research analyst.

Anyway this stock dropped from $17 to $6, roughly the normal 2/3 that one might expect so on that basis is might be a buy. Also the pattern could be counted as an a-b-c X a-b-c which is a completed correction so the next move should also be up. But , if there should be a 5-wave sequence down (a different count) then there are only 7 or 8 legs so far so one more leg down should be forthcoming. I have personally never understood how you determine what is correct , so I avoid it.

Best guess would be back to the other side of the channel and then down again. I am not sure that it can go that far though. $8 or so “looks” toppish.

SFF, Seafield Resources update

Hamilton

sff feb 8 2013 bsff feb 8 2013 s

As of Jan. 1 2013, the company reported cash on hand at 3mln. A month and a bit have passed and at their burn rate of about 8.mln a year, the cash should now be in the order of  2.25 mln. to 2.5 mln. As there are 191 mln shares outstanding (248 mln. fully diluted), the enterprise value based on the cash alone should be about 10+ cents which is where the stock trades. This implies that no value is put on the exploratory activities to date! Not a heart warming sign given very recent drilling results.

The EW take is that we are on this ski slope that can stop anywhere. The gyrations over the past few months suggest some form of triangle forming This is very tentative given the proximity already to zero. Taking the smallest possible degree for this triangle a price of about 6 cents would be indicated.

AOI, Africa Oil Corp. update

Hamilton

Then, about a month ago, and now charts as usual;

aoi.v jan 15 2013aoi feb 7 2013 b

and in detail we are now;

aoi feb 7 2013 s 

So we remain of the opinion that wave 4 of a 5-wave up sequence ended recently and therefore wave 5 should take us to new highs. We have not yet completed wave 1 of 5, it seems to need another leg up but this is somewhat tentative as it is possible to count the first up leg of 5 as complete. In any event we should go higher. A drop below $6.75 would cast some doubt on this interpretation. The target would be about $15 if the channel holds.