Year: 2014

RGR, Sturm Ruger & Co.

Hamilton

rgr feb 21 2014

This is somewhat counter-intuitive. Pres. Obama does not like hand guns and would like to restrict them so people in the US decided to make hay while the sun still shined by buying 26 mln. during his first term. Just last year they added another 8.5 mln. This is completely contrary to the president’s intentions. In economics this is a phenomenon that is referred to as the J-curve. If it is a J-curve, things will soon go the other way. A drop to the low point of the triangle ($35) is a first target.

PCLN, Priceline update

Hamilton

pcln feb 21 2014 b

At $1000 this looked pretty well done, clearly not so. According to the Fed. this must be one of those stocks that is not overvalued, just trading where it should. In EW terms things look differently. Wave 5 is now about equal to wave 3 (or wave 1 and 3 combined). With the exception of commodities this is often as good as it gets. The high today was 1333 where it trades at a p/e of 37x. The RSI and MACD both suggest a reversal is right around the corner. First target is $600.

PAA, Pan American Silver

Hamilton

PAA feb 2014 bpaa feb 21 2014 s

See previous blogs, we got this one nailed perfectly from the $42 high to the $10 low (at which time we did not bother to look). The big picture shows how these structures should develop, they are not always perfect and indeed this one could have gone a little lower. In any event a 5 wave wave C appears to be complete at the Oct. low around $10,. We had the breakout and the stock is just rocketing up with one or two gaps. It is up 70% in four months and looks a bit overbought at this point but the first target is still a lot higher at $22.50 wave 4 of prev. degr. We do not know if a wave 2 to about $13.5 comes first.

CNQ, Can. Nat. Resources update

Hamilton

 

CNQ feb 21 2014

See previous blogs- some things we got right , most we didn’t. What stands out is the B-wave. In EW terms that could imply that we are presently in a large C wave down that is taking its time. This is shown in blue. We are already going up vertically and we are close to a “logical” upper trend line level of roughly $44. The stock is trading at a p/e >20x (compared to about 13x for XOM or RDS) and technical indicators are getting overbought. On the bullish side, (we do not believe it!) the stock could be tracing out a large triangle wave 4, with A,B,C and D complete and E still to go. Ultimately this bullish scenario should take the stock to the vicinity of $60+. Again, we do not believe it but, for the moment that is not relevant us under both scenarios the next move is down almost $15 or 30%. To put things in a historical perspective, this company had a capitalization of $1 million in 1989, compared to the $40 billion now, so it has been a stellar performer. We would sell here or use a close trailing stop-loss.