TCK.B, update

February 22, 2016February 22, 2016 Hamilton

The usual, then 23d. Aug. 2015, and now charts.

In the text we said that normally a new low should be made. That low was, as far as we can ascertain at $4.25. The new low was actually at $3.65, so let us assume that you followed the blog and bought at $4.25 or even $5. Today you will have doubled your money (almost) but in the next few days this stock should go to about $11 (wave 4 of previous degree). There it would be good to exit as a wave 2 can retrace an awfully large part of W1.

Here are our comments made in July 2012,including that chart;

When you look closely and apply a little common sense, it is all of a sudden not that hard to see how this stock could go to $15 if the pendulum swings through it’s equilibrium as it invariable does. If you like the H&S approach the target is lower at around $10. The true EW target is actually below $5.

and from 2011;

MCD update

February 22, 2016February 22, 2016 Hamilton

The usual, December 2015 and now charts;

The “thrust” corresponds to the size of the mouth of this, four year, triangle. Whatever the count (see previous blog) the first move should be back to the low point of the triangle which is about $80. That would represent a $40 drop, or around 30%. It should not take much longer than a year, the same time it took for the thrust to develop. A good short by way of options. For instance, a 100 Jan. 2017 put, which can be bought for about $4, should be worth >$20 if this happens. That is 5X. Call your broker and see how that goes over! He or she will resist and try to talk you out of it. Just explain that it is actually a lot safer to buy a put for relatively little money than to either own, or short, the full amount of the stock. This is because the outlay for the option in this example is just a little over 3%.

Here is the bigger picture;

ECA, update

February 21, 2016February 21, 2016 Hamilton

Then , June 2013 and July 2015, and now charts as usual;

and now, that is today;

Different chart suppliers use different ways of coping with stock splits and other wonderful things. As you can see the Bigcharts have a peak at around $53 or so, whereas the G&M chart peaks closer to $96. There is no right or wrong way of doing this but, when Cenovus , CVE, was split out of ECA at the end of 2009 obviously the ECA stock drops by the value of CVE plus or minus the beneficial immediate impact of the split, here that is roughly from $66 to $29. If this is not worked backwards and forwards into the chart it becomes quite meaningless. Some may not notice!

In any event (see the text in the blogs) the target was originally as low as $5. Then there was the possibility that the drop might stop at a little above $6. Today we will stop EWaving and switch to the Head and Shoulder method, as I understand it. That tells me we are at the exact low.

If the wedge is correct than we could get a violent reversal and, by the way, the 5th leg in this wedge does not have to, and most often does not, go all the way to the trend line.

LLY, Eli Lilly & Co.

February 21, 2016February 21, 2016 Hamilton

Eli Lilly is, of course, in the business of making pharmaceuticals. Among many other things it makes Cialis, which, if you haven’t gathered that yet from the constant stream of commercials on your TV, is intended to help get the investors’ hopes up.

Elliot Wave, like pharmacy, is easy to understand. The cycle is five up, three down, repeated ad infinitum. There are a number of things that we have five of (fingers, toes) but nothing comes in threes, so five is good, three is bad. That is it. Given this simplicity, it is little wonder that every Tom, Dick and Harry openly use EW or are “closet” practitioners. The Bank Credit Analyst loves the stuff, Credit Suisse, Barclays and virtually every financial institution, including even RBC, use it somewhere in their research, albeit for the most part incorrectly.

Lilly is a good example. There are a lot of ambiguities. Looking at the larger chart the stock seems to have behaved in line with most other stocks except that it peaks with technology in 2000 rather than in 2007 or so. Otherwise the count , in blue , is straightforward. Presently we should be under the peak of a big B-wave and on our way down in C – like the rest of the universe except for pharmaceuticals. However, looking at the short-term chart, we get (potentially) a decidedly different picture. This thing looks like a simple a-b-c, three wave correction! There are a number of excuses that can be brought forward to explain this contradiction but none are very elegant. So we will wait for the future to become the past and then we will predict what happened. Stay tuned. Just to be clear, we are leaning to the sell side!

For comparison we show MRK (see recent blog) again. Because size matters to some, we have tried to calibrate the two charts so they can be put side by side;

also, for completeness, we show Pfizer;

With PFE it is plausible, at least there are two different counts, to assume that the 2009 low completes an entire correction as the stock is down 75+%. With MRK that is not that obvious as the stock has not even reached the 4th wave of previous degree.

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