We would sell here. The rumour is no more and reality should soon set in. More importantly we can tentatively suggest that a 5-wave move was in fact completed at today’s high. On top of that both the RSI and the MACD are off the chart! The $94 max. that may be paid is extremely generous particularly when the stated reason for this move is not tax-inversion but global growth. Mr. Buffet’s involvement as financier, by way of $3 bln. preferred shares supposedly yielding 9+%, scares us for the clear predatory objective here by lending his name to the deal. That this deal could lead to greater growth internationally is nonsensical given that outside of Canada there are few people who have ever heard of Tim Hortens. As always the risk now is that the deal might not go through. Deal risk now is not imaginary. Our government may think that this is just the beginning of a surreptitious attempt to annex Canada.
Our gap-in-the-middle theory also suggest this is as good as it gets. A sell now and here.