Month: May 2017

TSX update

Hamilton

tsx may 16 2017 btsx may 16 2017

Here we have the TSX once again, big and small. We have absolutely no idea where the wave count presently sits over the past decades or more. The only thing that we do note, and this is with some clarity and confidence, is that we have managed to gain roughly 1/2 in just one year coming into the year 2017. We are basically double topping and the market is hesitating to advance further. This is an amazing performance considering that oil is still trading at less than 1/2 of its peak level just a few years ago and Canada’s position in relation to its neighbour to the South is clearly more precarious than it was pre Trump.

However the old formula that price= earnings/interest rate is still in play and at its extreme everything is priced at otherwise idiotic levels as interest rates are at, or are approaching zero. So one must remain alert to the possibility of yet another move up.

In the shorter term chart there appears to be a distinct possibility of a triangle forming. If so we are just about completing wave d of that triangle. For the purist EW among you, the readers, I point out that wave a can be counted either as a 3-wave structure or a 5-wave one. In the latter case that would negate the triangle! Assuming there is one anyway, the thrust  that should start in June should reach roughly 16200 (700 points above the low of e, yet to come).

Such a spurt up to that level still leaves open what the upleg from the early 2016 level actually is, a wave B or a wave 5. We show both counts. Fundamentally we cannot imagine what could possible move this market higher again but that has been the case now for years and certainly has not been a good reliable thing to hang your hat on.

By the way, do not bet on any of this!

Below is a Bigcharts showing at least 2 valid interpretations other than the one above. Not shown is a series of 4-5s. Note also the triple top formation and that for the past 10 and even 17 years the returns have been little more than the dividends. ;

tsx may 16 2017 bb

HUM, Humana and AET, Aetna

Hamilton

hum may 9 2017aet may 9,2017

Here we have two of the larger healthcare providers in the US. Up to about Feb. of this year there was talk, and a lot more than just talk, about a merger between the two. The talks fell through but the objective of such a merger would undoubtedly have been to solidify regional monopoly advantages.

      With all the ups and downs with the “repeal and replace” of Obamacare it is as plain as daylight that both these stocks have , or almost have, completed fairly clear 5-wave sequences right into their present peaks. All of this on declining volume.

     Without looking at the very big picture, this 5-wave sequence is probable a 5th with in a larger sequence, but if it is not it would be a first wave in a new bull market. In both those cases we should expect a very deep retracement before the trend continues. Also in both cases we are close to the upper trend line, if not already there, and the last leg up, at least in the case of AET, looks very much like a wedge which confirms it as a 5th wave.

     In terms of the fundamentals it is worth pointing out or explaining that insurance is always about spreading the good and the bad, which is essentially why almost the whole world deals with this by opting for a single-payer model, except of course the US. In maritime law this is best explained by the concept of “general averaging”. In the event that a ship is in danger and cargo is jettisoned off the deck in order to save it, the loss is spread over all the cargo evenly so that the lucky and unlucky owners are dealt with proportionately.  Without that no insurance will ever work and any plan without it is doomed to fail. That is what these charts are telling us. Time to get out. Alternatively have a look at ETFs like RXD, inverse and 2x leverage. As always talk to your broker.

P.S. We would also refer to our blog and analysis on IBB, of about a half year ago. To date this ETF has not managed to get above the level it had then. Furthermore the initial drop is a clear 5-waves or a-b-c and all the subsequent action is going nowhere, suggesting a correction for wave 2.