Year: 2017

LULU, update

Hamilton

lulu jan 12 2017 blulu jan 12 2017

We caught some of these moves in real time, some we missed. Essentially it took longer than we expected for the pattern to develop.

Looking at the short-term chart on the right, there is a very clear, near perfect, a-b-c move upward into a perfect double top. This is a 3-wave structure and therefore corrective in nature. For that to be so there has to be a bigger wave A down in front of it. There is if you put the top  at the very first top AND view the first a-b-c as one single structure, wave A. If correct we are presently in wave C which should unfold in a clearly subdividable 5-wave structure, similar to the first c of A. The whole thing should become a large “flat”.

As a minimum we would look at the level of the 4th wave of previous degree and then the 62% retracement which is at about $33. That is not a great stretch considering the company is very much exposed to China for both its product manufacturing and sales, is trading at wishful p/e of 33 and is seeing more and more competitors entering this space. A sell.

Nasdaq

Hamilton

NASDAQ JAN 10 2017NASDAQ jan 10 2017 s

Here we have the Nasdaq Composite Index in a three year and one year timeframe. In the first chart we see a very clear a-b-c corrective move which we assume is a wave 4. That is then followed, obviously, by a wave 5. Even though it does not necessarily matter, wave 5 looks a lot like a wedge in both charts. If that is indeed the case we are almost guaranteed a return to the base of the wedge, regardless of where the ultimate high might be. That is a loss of about 25%, well worth avoiding.

The big picture looks like this;

Nasdaq jan 10 2017 l

We are not the least bit confident whether or not we are looking at a big B wave from the 2003, or simple a 5th wave from 2009. It does not matter all that much. Suffice it to say that we are reaching the top of this channel which we started in 1987 but probable in realty would have started earlier, perhaps even in 1975  when Xerox and Polaroid etc made their lows. This would flatten the channel considerable so we would be closer to the top than this chart shows. Similarly we have already exceeded the upper boundary of the (pink) channel starting in 2009.

    Wave B or 5 is now getting close in size to the third wave. Most often the 5th wave is smaller than the third except, perhaps, for commodities but Nasdaq is not about commodities.

     Typically markets peak around the time of inauguration, this is even the case when the president elect is a relatively normal person. Then during the first year the markets go down. Should the myth of Trump as the saviour of the US economy, as he seems to be regarded by some, prove to be wrong then they could go down a lot.

It is a small World.

Hamilton

These are photos of the “Lido” going back at least to 1953. It is in the village of Ortakoy, a “suburb” of Istanbul. As a very young boy I, and my sister, grew up here. For many, formative, years we would spend the summers around this pool while my mother played bridge. In a manner of speaking, we grew up in this place.

Today it looks a bit different;

Reina nightclub.reina nightclub 2

In the meantime a bridge was built (there are now 3, plus a tunnel ) and somewhere along the way the name was changed and the pool retired. It is now the Reina Nightclub, where last week’s terrorist attack occurred. Nothing has changed, I think I could still find my way around here blindfolded, but isn’t it a small world?

NVDA, Nvidia.

Hamilton

NVDA jan 1 2017 bNVDA jan 1 2017 s

Nvidia caught our eye the other day as it was about to become the best performing stock in 2016. Its Q4 earnings were good (up by about 50%), so the stock “shoots up” as the investing community is amazed and surprised. The chart on the left is semi-log and the one on the right arithmetic. They do visual stuff, whatever that means.

We see a triangle in the semi-log chart and an almost vertical rise in the normal chart, leaving behind a gap at around $ 70 or so. Triangles lead to a thrust which is then fully retraced and gaps that want to be closed. That gives a target between about $10 and $70. Either way sticking around for a few extra bucks is not worth it!

Note; There is a slight overlap between the top of wave 1 and the end of the triangle wave 4, that is, strictly speaking a no no. But even so there is an eight year congestion period and this would result in performance similar to a triangle.