Month: August 2015

KSS, Kohls Corp.

Hamilton

kss aug 13 2015

Here is a schematic depiction of this apparel retailer. We show it for two reasons, neither of which have anything to do with you owning this stock, which we do not expect that you do. This is a great example of why you should, always as a matter of course, sell on a double top. Twice you had the opportunity to sell at around $80 and saved yourself a lot of grief. So far only around 30% the second time – it dropped 10% today alone – but if the EW labelling is anywhere near correct that will soon become 70% or more.

Secondly, it is clear that it took a disproportionate amount of time to complete the b and c waves of the B wave relative to the previous low of wave 4. Everything is moving in slow motion and this is primarily because investors are no longer looking at the particulars of individual stocks. They prefer to be guided by macro economic factors such as the Fed’s next move , the dollar’s value and so on. This only delays the inevitable.

Below we show an alternative which is only of academic value now as all this has passed. It is in red. In this alternative wave A is deemed to have started in 2002. Wave B in that scenario is exactly the same length. C is starting now. I have no idea if this is a valid interpretation nor how useful it would have been in real time, as you would be looking for a 5th wave from the 2008/9 low. That could theoretically still happen all though overlap seems to have already occurred.

kss aug 13 2015 alt

RBA, Ritchie Brothers, Auctioneers Inc.

Hamilton

rba aug 12 2015

To keep it simple, we would sell here. The triangle is not perfect but the stock has gone a long way. A better triangle emerges when you look at a longer time frame.

rba aug 12 2015 b

The risk of being right about this triangle is too big to be wrong.

AMZN update

Hamilton

Then July 24, 2015 and now charts.

amzn july 26 2015 sAMZN aug 12 2015

The high was $580 on the exact date of the previous blog. Today we hit $513 so that is a loss of $67, or 11.55% in 18 days. How did we guess? First EW but secondly the very simple fact that RBCDS put this stock on their list as the top pick. We expect $300 soon as that is the base of the triangle in the chart. In case you are confused, when RBC designates a stock as a top pick it means that they like it a lot, it does not mean that they think it just topped. A month or two from now it will quietly be removed and replaced with another momentum stock that happens to be in the limelight, without an explanation of what went wrong.

GMCR, Keurig Green Mountain Inc.

Hamilton

gmcr aug 10 2015

GMCR stands for Green Mountain Coffee Roasters. They joined forces with Keurig, the guys or gals that make coffee machines that use very specific cartridges to make coffee by the cup. It is a little bit like the printers and the ink cartridges. It is not always easy to keep full control of the cartridges as you get into trouble with monopolistic behaviour sooner or later

Keurig is Dutch and means neat, tidy, arranged and perhaps even preppy. There is nothing about coffee that is either neat or tidy. There never really was. The Dutch East India Company, the first in the history of mankind to operate as a limited liability company based on shares, spent a lot of time importing things like nutmeg but also an awful lot of coffee from Indonesia and tea from Ceylon. So much so that one of Dutch literature’s high points is Multatuli’s Max Havelaar which is entirely about the coffee trade and how badly the locals were treated. However, coffee is an acquired taste and once acquired is almost irresistible as is evidenced by that other work of American literature “Coffee, tea, or me”

Coffee, Tea or Me

This politically incorrect book is the product of an overactive imagination even at that time ,1966. I can attest to that having worked as cabin crew with KLM. There is, unfortunately,  nothing true in this book but what is interesting is the order in which things are presented in this bestseller. Coffee is right at the top! So with coffee in such a prominent first place what did these guys do to deserve a 2/3 drop in little over half a year ? In my opinion they priced themselves out of the market. They are essentially selling convenience under the guise of coffee. Once clients and competitors caught on it was game over and quite abruptly. It is now trading around $52. The only significant resistance occurs around $30. That should be the end of 3 of C. 4 and 5 still to go after that.

The math is simple. You can buy a bag of coffee beans for $8 and brew for about 15 days at 12 cups a go. That works out to 800/ 180= 4.4 cents. A single cartridge is about $16/30=53 cents, more than 10x as much. Of course you can go to Starbucks and pay $4.75 for a latte.