Month: February 2016

DGC update

Hamilton

DGC feb 10 2016

We have made some good calls on this stock. Right now we are not at all sure what to make of it. We think it is ahead of itself big time. The recent low was around $4 and we got to $21 which is a fivefold increase. Were we to apply that to ABX we should have that stock around $40. Goldcorp went from a low of around $13 to $21 but should have gone to $65, which would have been a new all time high. DGC is new and big and is not making money. Recently they came out with a new LOM, a Life of Mine plan, a little bit like getting a facelift. This is the first time that this was done by DGC’s own technical team!

There is something missing in the equation. Perhaps this is the new darling of the goldmines but we just cannot escape the feeling that this one is a tad ahead of itself.

In EW terms, as said, it is not clear but one possibility is a double zig-zag, that is an a-b-c X a-b-c. If you like head & shoulder stuff , that would be pretty scary too. Time to sell.

I looked at my previous blogs and notice that the low was actually more like $3, which makes the above math even worse. Our target then, exactly a year ago, was actually $28. The problem is that they are doing it alone.

If wrong this stock could go straight up, as in a series of 1-2’s. We would now be in 3 of 3.

SLF, Sunlife

Hamilton

The not so usual part 1 and part 2 charts;

           slf part 1 feb 2016    slf part 22 feb 2016               

On the left are the guys that bring your fat cheque right to where you happen to be on the beach in the Caribbean or on the golf course. They are the wealth managers of the future and do life insurance on top of that.

They demutualized in 2000 and basically took off by tripling, peaking in 2008. Had I told you then that the stock would almost return to that starting point, that is lose 2/3 of its value you would not have believed me.

Just for fun I brought up another chart. At first blush you must agree that they look pretty similar. So if now I would suggest to you that this stock might lose 2/3 of its value, you would, again, not believe me.

So here is what we are looking at;

slf 10 feb 2016

There is a small difference between the 2008 drop and the one that is coming. The first drop was an A wave in a “flat” which consists of an a-b-c all though the b is often barely recognizable. The coming C wave should be a straightforward 5 wave sequence without any b or pause. It should, if anything , go down faster. Why we do not know but China may be part of it.

DIS, Disney update

Hamilton

dis aug 6 2015dis feb 9 2016

See no hands, no EW either. Just plain luck hitting the top within weeks and now we are down about 25%. A buying opportunity? Definitely not, not untill you get into the regression-to-the-mean zone, the pinkish bar, at about $45. That is another 50% drop. At least you do not own Viacom (VIAB), that did this in a mere 5 days starting from two thirds as high.

AGU , Agrium update

Hamilton

agu feb 9 2016

In 2012 this stock looked ripe for a drop. All the others did but not this one, which is plain to see from the relative performances.

pot feb 9 2016 pot and mos

So Agrium did not  behave as expected and went on up for about three years, making a new high in early 2015. This move from the 2009 lows is messy and has a lot of overlap, but if you break it down you have two distinct, almost equal, legs up. In the middle there is a pause which has all the characteristics of a running correction. The whole thing is quite symmetrical which is why we prefer the B-wave scenario to that of a 5th wave. Both, by the way, would have the same target around $25, by they would differ in how you get there. (a single 5 wave sequence or an a-b-c ).

Ultimately AGU should join the others once again somewhere near the 2006 levels. This would make an interesting pairs trade, long 5 POT(or MOS) against short one AGU.