Month: December 2015

AAPL update

Hamilton

The usual, then April 28 and July 22, and now charts;

aapl july 21-22 2015aapl dec 20 2015

Our first sell recommendation was on February the 21ste when the stock went above $130 for the first time. At the time that was enough for one or two of my readers to call in and wonder aloud if I had taken leave of my senses, after all this company only traded at 9x future earnings, had more cash than most countries and would soon be coming out with a completely new i-whatever that would be absolutely irresistible to even the most discerning purchaser.

But then we got a clean triangle that is always a dead giveaway that you are close to the end of something and even the Gainsville boys came out with an identical conclusion. Then late August we got some sort of flash-crash which does not really count as it was over in a blink of an eye (for the record, the stock was down $42 from its peak!). The subsequent a-b-c correction brought the stock back up to about $123 just to show how persistent optimism surrounding this stock is. Now we are in some sort of a third wave, back to $106 and in a very steep part of the “rounding top”.

Institutional ownership is running at about 60% of the total float, that is Vanguard, State Street, Northern Trust, Blackrock and so on. Even the Swiss National Bank reportedly has a little more than 1 bln. worth of the stuff, its largest single foreign stock position. This is taken to be conclusive proof that the stock must go up as all these smart investors cannot be wrong. In other circles this is known as herding.

We will continue with the rounding top concept. It will get steeper so things will happen faster. As a minimum we should drop back to the $92 level and after that to about $50.

FCX, are we there?

Hamilton

Here are the usual then, Jan. 19 2012, and now charts;

FCX jan 2012FCX dec 18 2015

Freeport is our favourite copper (and the largest goldmine by reserves) mining stock. Back in 2012 (see the blogs) we had a rough target of $10 or lower. This was not based on any particular prescient view on the price of copper in the future, nor was it based on the prospects of the housing market in China. Also we were blissfully unaware of huge copper finds like Ivanhoe in Mongolia or one or two others in Chile. Also as they were tearing out copper piping all over North America we did not know that copper would essentially cease to be used for home construction. What we did know was that there was an absolutely perfect example of a B wave in the chart. They are followed by a C wave down to, usually, a new low. That is exactly what we got.

So are we there? Judging by copper the stuff we are certainly close (see recent blog). Looking at the chart in more detail it is safe to assume that the drop from $38 or so over the past year and a bit is all a 5th wave. (C waves must be 5-waves!), either a straightforward one or a wedge of sorts;

fcx dec 18 2015 scopper dec 18 2015

As you can readily see, we are less than $1 away from the trendline (this is log-scale!), in fact we may already have done enough. Copper hit the $2 precisely. The RSI and the MACD on the stock are already acting positively. Somewhere here, soon, this should be a buy. Below is a picture showing the size of this thing; Sorry, it does not fit, see next blog.

COS, Canadian Oil Sands update

Hamilton

The usual then, Nov. 2010, five years ago, and now charts;

cos nov 2010cos dec 15 2015

On the left our expectation back in Nov. of 2010, bases on EW and supported by the fundamental view that there might be “stranded costs”. On the right what actually happened with that same expectation in a schematic form entered into the chart in green. Interestingly time was where things went wrong but this is known to be the Achilles heel of EW. All in all it took 4 years longer than expected but who could have known that the Fed. would run such a completely misguided, bull-headed zero interest policy for so long.

We are not there yet and with the takeover we may never get there. However if the shareholders/management persist in not wanting to face reality, it may happen yet.