Month: January 2015

SMI, Swiss Market Index

Hamilton

smi jan 15 2015

Overnight the Swiss market dropped from 9277 to 7932 or about 14.4%, but that is in Swiss Francs so the only investors that are caught with their pants down, so to speak, are the Swiss themselves. Foreign investors get roughly the same amount back as a result of the appreciation of the Swiss Franc. For them nothing much changes other than that a vacation to St. Moritz will cost an even bigger fortune.

Was this all predictable from an EW perspective. Yes and no, see our previous blogs. But with hindsight it all fits pretty well. What we are looking at (in Swiss Francs) is a, give or take, 10+ year flat. Appropriately called that because in the end you end up where you were after the first down leg. The structure is basically a 3-3-5 A-B-C. We started the C overnight. C’s are always 5-wave moves.

The intervening up-leg , the B-wave, subdivides in 3 waves, an a-b-c. Often the c is 1.618x the a and in order to be flat it should end approximately at the double top level. It does all that! Furthermore the 5th wave of c of B is very often a “diagonal” (in English a wedge). In this case it is an expanding wedge as the amplitude increases as it nears the end (see our earlier blog on this aspect). Notice also the overlaps that can only occur in this pattern.

All this does not bode well for the Swiss, and with it , other markets. There are few reasonable alternative counts. The most obvious one would be that we are in a 5th large up wave from the lows of the great recession. In that scenario the overnight drop is the beginning of a 4th wave which might go to 7400 but not below 7000. Then the 5th of the 5th would take us to new highs around 11000 or so. This might be a possibility but it is not a good basis to be long this index.

HXU update

Hamilton

HXU jan 14 2015

Hard to believe but here it is. Wave e does not have to reach the trend line and it may exceed it provided it does not go beyond the low of wave c. We struggle to believe the implications but there can be little question that this could indeed be a triangle.

GPRO, GoPro those little cameras.

Hamilton

GPRO jan 14 2015

Gopro makes those little cameras that you wear when you engage in extreme sports. They are really neat and fun for things like sky diving, mountain climbing and other things that require your hands to be free. The camera remote controlled or has a fixed setting. It is essentially a video recorder.

The IPO was in June at $24, way too low but for that reason, oddly, a roaring success. If somehow you are well connected and got an allocation, you quickly quadrupled your money as the stock did its Mount Everest climb to near $100, with or without camera.

Due to the lack of a full cycle it is only possible to guess what the wave count should be. The last five dollar drop is blamed on Apple obtaining a patent that would allow it to enter this line of business. That does not explain the previous drop of about 45% and is probable another case of “after this, therefore because of this” logic. In any event the stock comes out of lock-up on Feb. 17 at which time all the lucky insiders get to take profit if they want to. That is still a month away. In the mean time things will get a lot clearer if overlap occurs. Any break of the present lows would negate the possibility that the recent 50% drop is a 4th wave and would allow for lower values. However if the low holds it is still possible that a 5th wave would take the stock to a new high. It would need to rise above $65 to give any confidence to this 5th wave scenario. For the moment the RSI and MACD seem to suggest at least some bounce.

Alternatively the move to $100 could be all of wave 1, the drop to $49 wave 2 and we are ready for take-off. At $200 to $500 maybe not.