Year: 2014

WBQ, IShares MSCI Sweden Index.

Hamilton

wbq, sweden july 20 2014

We use the WBQ as a proxy for the Swedish stock index (simple because we could not find a good chart of the OMX). The nice thing about EW is that there are only a handful of individual patterns, so even if you have no idea where you are in a sequence you still have a good chance of calling the next move correctly. What we have here is a classic example of a “diagonal” which is a wedge in plain English. Unlike most impulsive E-waves this pattern consists of a 3-3-3-3-3 structure, no 5’s at all. Another exception is that overlap between waves 4 and 2 is common whereas elsewhere it is an absolute no no. Otherwise wave 3 cannot be the shortest. With eight points at the top line and 5 at the bottom this is  a classic specimen.  Sometimes these structures seem to go on forever but in this case there is not much time left and we already have a clear break of the bottom line. If our analysis is correct the target, as a minimum, should be the base of the structure, that is 21.42 or down another 37.5% This should happen rather violently and could be done in about a year. The CAC and quite a few other indexes sport the same pattern.

TRQ, Turquoise Hill Resources update.

Hamilton

trq july 2014 btrq july 17 2014 s

In many respects TRQ, the old Ivanhoe, resembles AA. The big difference is that it has done very little so far. As we have no reason to change our analysis we continue to like this stock’s potential. At the low of $3.20 on the 3d of January 2014, this stock had, just like AA lost 90+% of the peak value and was sitting right on the long-term support line. Perhaps this is what the Fed. means with “psychological trauma”, the new economic term added to the lexicon of Fedspeak, the other day. Click on the graphs and move them side by side to get a greater appreciation of the similarities.

AA, Alcoa update

Hamilton

aa july 17 2014AA july 17 2014 s

See also previous blogs. We first recommended this stock on July 7th, slightly more than a year ago, when it had traded at a low of $7.54 a few days earlier. The pattern is that of a large, 13 year long, A-B-C correction that does absolutely all that it should except that the 5th wave of C did not establish a new low. It seems to have been supported by the 40+ year bottom support line. In any event we were fortunately not looking for perfection. Here again we are not. The stock could go a tad higher to just above $18 where the 4th of C resides but we would nevertheless sell now for an easy double in one year. For those that find math a challenge, that is equal to a 100% gain.

My laptop is on its last legs so some interruption to this blog is unavoidable. Stay tuned.

CAC again

Hamilton

cac july 9 2014

The CAC briefly reached a level where it had last traded in November of 2013, some 8 months ago. The loss, from the peak, is now about 5% and this index is sitting on the 200 day moving average. From an EW perspective the interesting thing is that this initial drop can be viewed as a 5-wave affair which itself may be an initial first wave down. Time will tell.