Month: January 2015

ATG, Athens index

Hamilton

ATG jan 25 2015

Tomorrow there are elections in Greece. It would be nice to have an advance look at what might be in store. The stock index for Athens/Greece comes from about 5000 plus so clearly it has not done very well. More importantly the rise over the past, nearly two years take the shape of an a-b-c, one that is perfectly symmetric. These are corrective, counter-trend structures so the next big move should be to new lows. So far we clearly have a 1-2, 1-2 situation so a continuation of the downtrend is the most likely outcome. Having said that, we have no clear idea in what part of a wave 3 we are in right now, and therefore it is not possible to say anything about the immediate future other than that it is not likely to trade above 900 and very likely to trade below 500 soon.

AEX, Amsterdam, update, MIB

Hamilton

aex m jan25 2015aex s jan 25 2015

The AEX , being the oldest,  should be the wisest, and tell us where we are.  Most of the others, as for instance the CAC, DAX etc. have similar patterns except for the FTSE and MIB. We do not think that with all the ups and downs anybody can claim to be able to count this chart in a serious way, but with the benefit of hindsight it is possible to come up with something plausible. In this particular case a rather ugly looking expanding diagonal (read wedge) seems to fit the bill. It is a 5-wave structure with each and every leg consisting of 3 waves, whether up or down, and having an increasing amplitude (see beige lines). This one is really ugly.

     If that is the case than the triangles we have seen just about everywhere may be b-waves rather than waves 4. Assuming equality between waves a and c of this last leg up 465 looks to be a reasonable target, not including the always possible “throw-over”. That, by the way, would constitute a 30% increase , more or less, in three months. Paradoxically, Draghi who should get full credit for making this possible was less successful in his own country, see chart below of the Milan index.  Looking at the RSI and MACD the overall conclusion must be that we are awfully close to a top.

MIB jan 25 2015

DAX, 25-year anniversary

Hamilton

dax jan 24 2015

Now that Stockcharts is updated we can show the DAX properly. Apparently it was also the 25-year birthday of its existence, what a fitting moment to peak. The chart below shows the performance over that period;

dax 25 year chart

It should not be forgotten that the Dax is a total-return index and includes dividends etc.

CSU, Constellation Software

Hamilton

csu jan 23 2015csu jan 23 big

This software company has done extraordinarily well and may even continue to do so, after all it goes up by about $100 per year. Last April we thought it might be a sell but it definitely was not. Now, once again we think it should be sold. It was a great investment but that is the whole point. If you do not take it, it does not count.

Our call today is based in the last few months of trading that very much resembles a wedge, these are ending structures. Beyond that the P/E is at a ridiculous level, the MACD has turned months ago and the RSI is about to go into overbought territory.