Month: November 2014

SMI, Swiss Market Index.

Hamilton

Remember the fabled gnomes of Zurich? The country with the highest possible level of probity has undoubtedly been Switzerland, right from the days of Wilhelm Tell – the straight-shooting archer -  to this very day. That may change before this day is out. The Swiss referendum vote on the return to some form of watered down gold-standard appears to have failed. This will have some impact on the gold markets tomorrow. Conversely the SMI should do very well as the Swiss central bank will not be constrained by gold from manipulating the exchange rate and with that the stock markets. Here is what the SMI looks like today;

smi b nov 30 2014smi s nov 30

Both charts are the same Bigcharts except that the one on the left covers a longer period. The EW patterns shown are not necessarily the only ones possible but they are, in my view, the most probable or plausible. For those that are not particularly fond of EW, that is the vast majority, I have also added a standard Head & Shoulders pattern, which, by the way, calls for a downside target below 4000 in much the same way as the EW interpretation does. So when the kids ask are we there yet ?, the answer is yes, close enough. You have a few hundred points to the upside and 5000 to the downside and an index that has done very little for the past 17 years but moved by about 29% in the last two months (see below).

smi vs nov 30 2014

Petrobras and BTU

Hamilton

Petroleo Brasileiro SA Ord, BRPETR3 Advanced Chart - (SAO) BRPETR3, Petroleo _2014-11-30_07-29-11btu nov 30 2014

See a resemblance? On the left Petroleo Brasileiro SA and on the right BTU. BTU has a much nicer B-wave but otherwise both charts tell the same story and that story does not appear to be over yet. For a brief moment we thought BTU might already be a buy but it just kept going down. It is clear that both these stocks are a buy relative to where the stock price was a few years ago, after all that is what “sell high, buy low” is all about. However we may not be there yet. Stocks cannot trade at negative values but that does not mean that the companies involved may not have a negative value. This occurs , typically , when the costs of borrowings start to exceed the income generated. Before that actually happens the governments and or competitors step in to pick up the pieces. Looks like that day is not that far off.

TAN, Guggenheim Solar ETF

Hamilton

tan nov 27 2014Tan nov 27 b

All eyes were on OPEC, that is Saudi Arabia but in the mean time, over many years, solar technology has improved dramatically. So much so that in the US in at least 10 States solar power is already at parity with normally (read coal) generated electricity. In most jurisdictions the subsidy mandated by the respective governments is hardly needed anymore and soon this stuff can operate on a free-market basis. As you can see from the Bigchart on the right, the process has been very painful but now that we are here the future is looking quite bright.

The efficiency of solar electricity is a function of technology, labour costs, and sunshine. Sunshine is more or less a constant and very dependent on location. Technology goes hand in hand with labour costs for an installation. Soon we will have flexible panels that can be put anywhere just like a rug without the need for rails and bolts. Inverters are also improving in leaps and bounds. For these reasons it is not at all farfetched that this ETF is at the start of a new bull market. The minimum upside, given where the triangle is, is at around 120 which would suggest a tripling from these levels. Use a stop at <$32.50

TET, Trilogy Energy

Hamilton

tet nov 26 2014

This oil/gas producer just announced its dividend, but the stock just kept sliding. It is oversold here but nevertheless it looks like the stock could go to about $8 from where it started (in its present form). In EW terms it appears to be doing a large a-b-c correction which has a little left to go to reach equality between the c and a legs. The triangle looks just fine even though the e leg is aborted and much smaller than usual. A buy at $8 or lower but not a short here at these levels. RSI and MACD are both oversold.