Then and now charts;
Nothing much has changed for almost two years. We remain bearish as for the last 13 years this stock has most probable been forming a B wave , shown in purple. Alternatively this could be counted as a 5th wave all though that is far less probable. Either way the outcome is ultimately the same, a drop to 200/50.
It is amazing that this company has not been featured in this blog earlier. It is a very “classy” conglomerate or oligarchy created by the Desmarais family, more specifically by the pater familias, the late Paul Desmarais. He was always very well connected in political circles and was highly regarded by everyone.
The chart is a textbook model of an EW pattern or cycle that is as yet not complete ;
The main assets are Great West Life and the Investors Group. Life insurance and wealth management. Both are under siege by the relentless determination of the Fed. to continue with a misplaced policy of ultra low interest rates. Life insurance because it has become next to impossible to invest policy premiums at rates that compensate for the risks taken, and wealth management because we are living in a world where everything is “macro” driven and binary. Given that fundamental backdrop it should not surprise anyone that this stock has been and will remain under pressure for the foreseeable future.
In EW terms we are no doubt looking at a large A-B-C correction that will erase a good part of the ten or so fabulous years going into 2007. The B wave is exceptionally clear having two equal components a and c and travelling right into the level of a previous b wave within wave A. Wave C started more than a year ago and wave 2 of C is already most likely complete. That means that we are starting wave 3 of C now. It targets about $10 in another year or two which, coincidentally, corresponds quite well with the wave 4 of previous degree ( or alternatively wave 4 of 3 on the way up).
Large chunks of stock have been sold over the past ten years or so, some of it for estate planning purposes whatever that means. We hope the family continues to do well. Having said that we also have it from good authority that generally speaking about 70% of the wealth is gone by the time the second generation “handles” it and an even larger 90% once the third generation gets a turn at managing it.
Then, Sept. 2014, and now charts, as usual;
Precisely two years ago when the stock was trading at about $70, our expectation was that it would trade to the other side of the channel in which it had been for most of our (working) lives. That blog is still available for you to see. The rational for this expectation, at least in EW terms, was that we had, or were about to complete a very large and irregular B wave. In reality the stock traded from a slightly higher level of about $75 down to $50, a drop of 30%! It failed to reach the other side by only a few dollars, but it did overlap with the all-time orthodox high of $55 set in 2007, potentially a very bad sign.
The B wave is on the border of what might be considered acceptable for the size of a B wave, i.e. 30% higher than the previous top. This leaves open the possibility that it wasn’t a B wave at all. Instead it could have been a 5th wave. Either way the next big move should take the stock down to about $25, alternatively the low of wave A, or the low of the 4th wave of previous degree. Depending on that the wave C down in the former case should start its third wave down any moment having finished wave 2, or, in the latter case it has just completed a wave b to be followed by a 5-wave (smaller) wave c.
For comparison purposes we show HCG and CWB below. These are small Canadian banks and consequently perhaps a bit more volatile. We expected HCG to go a little lower before closing the gap. It did not but the it did close the gap. But now we are close to the lows for both of these banks supporting the notion that lower levels for all banks may be in the cards,
Then, Sept. 2014, and now charts, as usual;
Precisely two years ago when the stock was trading at about $70, our expectation was that it would trade to the other side of the channel in which it had been for most of our (working) lives. That blog is still available for you to see. The rational for this expectation, at least in EW terms, was that we had, or were about to complete a very large and irregular B wave. In reality the stock traded from a slightly higher level of about $75 down to $50, a drop of 30%! It failed to reach the other side by only a few dollars, but it did overlap with the all-time orthodox high of $55 set in 2007, potentially a very bad sign.
The B wave is on the border of what might be considered acceptable for the size of a B wave, i.e. 30% higher than the previous top. This leaves open the possibility that it wasn’t a B wave at all. Instead it could have been a 5th wave. Either way the next big move should take the stock down to about $25, alternatively the low of wave A, or the low of the 4th wave of previous degree. Depending on that the wave C down in the former case should start its third wave down any moment having finished wave 2, or, in the latter case it has just completed a wave b to be followed by a 5-wave (smaller) wave c.
For comparison purposes we show HCG and CWB below. These are small Canadian banks and consequently perhaps a bit more volatile. We expected HCG to go a little lower before closing the gap. It did not but the it did close the gap. But now we are close to the lows for both of these banks supporting the notion that lower levels for all banks may be in the cards,