Month: March 2016

DSG, The Descartes System Group.

Hamilton

This company was one of the highflyers in the 2000 tech bubble. It is involved in making software for logistics. As far as I can tell there is no compelling reason to involve the French philosopher unless they too subscribe to the belief that everything should be discarded unless it is absolutely certain. Whatever, here are the charts;

dsg march 5 2016 mdsg mar 5 2016 s

I will happily yield to any other wave mapping than the ones shown in the charts. Even so I do expect a sizable correction to roughly $15 or so, the 4th wave of wave 3 on the way up. If this is a new bull market from the lows of 2004, than I would expect a much deeper correction, more along the the lines of the tech crash. Below is that chart;

dsg march 5 2016 b

ERF, Enerplus update

Hamilton

erf mar 3 2016

In previous blogs I never went back in time far enough. Hopefully this chart does. We are looking at one huge A-B-C flat. Presently we have gone slightly below the ideal target and got there a little early. But in all other respects this looks like a completed structure. A new bull should be starting now.

With a low at $2.66 there is little room left so , in a sense, the wave count becomes irrelevant. The question is simple will this company survive and as far as I can tell it will.

TRQ, Turquoise Hill Resources, update

Hamilton

TRQ march 2016trq mar 3 2016 s

See also our earlier blogs. Our big picture take on this stock has not changed at all. However, in the small picture we may have anticipated the low one single minor wave too early, that is the one dollar plus dive at the beginning of this year. We do not have charts that have high enough resolution to actually count minute waves properly. The $2.30 intraday stacks up quite nicely with the closing low of $2.28 eight years ago.

Note that this stock is correcting from the high near $30 in one , single A-B-C, 3-3-5, zig-zag, correction. This has been the case with most commodity related stocks as opposed to others that often follow the “flat” pattern. As far a I can ascertain the stock has fulfilled all the required subdivisions that one would expect and therefore should be in a new bull phase. The only alternative, given the proximity to zero, is that the company goes bust. This is extremely unlikely given the combination of a Mongolian government and Rio Tinto.

We never anticipated that copper, the metal itself, would trade below $2. It did early in this year but very briefly and also appears to have made a bottom. So, given all that things look pretty constructive. By the way, this is an absolutely huge project with most of the infrastructure already in place.

copper march 3 2016

See also previous blogs on copper.

VRX update

Hamilton

vrx march 3 2016

Our target was always around $50. This is based on bubbles bursting and returning to a level below the starting point. A few things have happened since our last blog.

Hillary Clinton angrily denounced the company for its predatory pricing, mentioning a very specific senior citizen who essentially could no longer afford the medication. The price had gone from $180 to $18,000 for a certain dosis.

The CEO is back in the saddle after a short leave of absence for medical reasons, hopefully without having to use any of the company’s medications.

The company is now under investigation by the SEC for bad behaviour.

RBC Capital Markets analyst Douglas Miehm , yesterday March 1, downgraded the company and lowered the target by US$100 to US$85 (about C$115), still about 30% above the present price. The stock is now “sector  perform” down from “outperform”. But if you are wondering if you should perhaps sell now that the stock has lost 78% from the peak, you may find it heartening to know that this analyst still things the company has a bright future.

From an EW perspective it is most likely that the stock completed a 4th wave triangle (which may have started a little earlier than you think) and is now thrusting down. The $50 target is reasonable in this context. For those that speculate, this stock should be a buy at about that level of $50 for an upside target of , possible, $150.

As a practical point, one should not forget that investment advisors, certainly if they are working on a discretionary basis, are seriously conflicted if their own research departments go negative on a stock they hold for their accounts. Essentially they have to find the courage to sell the stock , or are forced to, and face the music. This usually takes a little time as these advisors are mostly tone deaf when it comes to losses. Deutsche Bank “suspended” their rating, Scotia is reviewing and no doubt there are hundreds more that are going to the same thing amplifying the swings in the market.