Year: 2016

RY update

Hamilton

ry may 26 2016ry aug 24 2016

In our May 26, 2015 blog we discussed the possibility of this stock exceeding the old high which was recorded according to some chart providers as $83.30.  Today we almost got there and as Yellen is talking again at Jackson Hole this Friday, that may just be enough for a last hurrah. We had expected a wedge diagonal to form but instead we seem to have gotten a simple 5-wave 5th wave (maybe). In the extreme this could even go as high as $86.

RY has been impervious to anything potentially negative, low interest rates or flat yield curve, the collapse of oil, the overextended borrowings by large segments of the Canadian population, the (continued) extreme valuations of  housing, the regulatory suffocation environment as in Basel 3, Dodd Frank etc. etc., the recent introduction (but not yet fully implemented ) CRM2 rules for investment dealers and their advisors and so on. Apparently all this is easily offset by quasi monopoly power, the lack of other investments and so on, but perhaps not much longer.

The RSI, at both tops and bottoms has shown its reliability in spades. Also from the lows of Feb. this thing is up almost 40%. A prudent person should sell.

WMT, Wal-Mart Stores Inc.

Hamilton

wmt aug 23 2016 bwmt aug 23 2016

Walmart has not been a great winner for us, this time around we hope it will be. This stock is a sell!

It has a very distinct triangle and even if it is not in fact a triangle, it is still a ten year congestion period which in the end was resolved to the upside. Typically, after that, it should return to the lower end of that range, about $43. Obviously it has not done so. Usually that simple means that it will still do that. As it happens that level is pretty well exactly where the stock would go if it is presently in an A-B-C correction. The B of that structure has now retraced 61.8% or so of the initial drop and even though that does not mean that it cannot go higher this is nevertheless a reasonable point to expect a drop.

Fundamentally, something we give very little weight, the bottom 50% of the US population is close to being penniless and these are typically their clientele. Things are getting worse. Dividends for the past 3 or 4 years have been increased to keep the 43 year run going, but only by the smallest of margins. Stock buy-backs are what has kept this stock suspended at these levels, not a very robust situation.

VRX update

Hamilton

vrx 22 aug 2016

You should have been able to buy this stock at $27 or less. Today it hit $40.41, exceeding our first target of $40 as mentioned in the previous blog. That is a return of more than 50% in slightly more than a month. Don’t forget that during this time there were a number of guru’s, including the Globe and Mail that professed to know that this stock was destined to go to zero, more or less in the same way Nortel once did. That prophecy may still come true but not before a rebound – which we may now have. However we do expect higher levels yet, to, say, $50 or so as that seems to be a 4th wave of sorts. If you want to participate in that potential outcome, and double your money, is entirely up to you or your risk tolerance.

   The human brain is built in such a way that it expects the past in the future, therefore we tend to extrapolate in a linear fashion. Most of the time this is a good thing. At or near turning points it is definitely not. EW as a methodology recognizes this and does the opposite, that is call turning points but at the risk of getting it wrong and not being in good company like that preeminent business paper, the Globe and Mail. We prefer it that way.

VRX, update

Hamilton

vrxaug 9 2016

We recommended buying this stock on the 23d of June when it was at about $27. Tentatively! It dropped almost to $24 so there were opportunities galore to buy it a little cheaper. Our outlook then was for this stock to go to , at least, $50, that is where the 4th wave of previous degree seems to be and a normal target fro either a bounce or an initial move in a new bull.

The average for 11 “analysts” is, by the way Us$37.5 which, once converted, is about $50 as well. At $40 you will have a gain of about 50%, not bad for a few weeks. $50 is definitely within reach. Considering that this stock peaked at around $350 a “conservative” target for a b-wave in a very large correction, would be around $151. The choice is yours.