Month: April 2018

DAX

Hamilton

dax apr 2018 1dax april 2018 2

This is the Dax, that is Frankfurt, Germany index.  It is a total return index and consequently is not directly comparable to others that do not include the dividend. These two are the big picture. Below is the small picture;

dax apr 2018 3dax apr 2018 4

This is time consuming stuff and I do not have the right charting equipment, but nevertheless this may add some confidence that we are, or were, at a top of sorts. Furthermore,  I am not at all confident that there actually was a triangle so using the channel I start it in 2009 rather than 2012. By the way , this index from the 2000 peak to the recent peak is up roughly 77% by my calculation. Take away a 2% dividend over 18 years would leave a capital appreciation of just 41% or a little more than 2% per annum. A lot less than the Dow etc.

It now looks like we completed an initial first wave down – either a wave 1 or A – followed by an irregular a-b-c correction back up. It should be complete soon. Then wave 3 or c should start. At this time I would very much favour a wave 3, etc,etc. Ultimately there would be little to stop this before the entire uptrend from 2009 is reversed. Time will tell.

INTC, Intel.

Hamilton

intc april 16 2018 bintc april 16 2018 s

We all remember the “Intel inside, PENTIUM” logo that used to be stuck on the outside of every computer, lap-top and so on. Not sure if it is still inside today but clearly the stock is reaching a significant point in its life.

It has, or is about to, retrace a Fibo 61.8% of its drop from the highs of the tech bubble. Some of the more pedestrian technical indicators have been lagging the price and may be signalling a turn ahead. Most importantly there appears to be a diagonal forming this year. It may not be entirely complete – think throw-over and so on – but it is getting very close.  The pattern calls for a drop to about $42 which is roughly 20%. That is a minimum expectation.

Nasdaq

Hamilton

nasdaq apr 13 2018

Just to complete the parade of indices, here is the Nasdaq. We have a picture here of two vector equal downward legs in a row with an intervening a-b-c . One could be wrong but the conclusion of least resistance is that this is a running flat, 5-3-5, running because it is slightly upward sloping. This alone gives us cause to be very careful in wholeheartedly embracing the bear scenario at this point in time. This is particular so because the moves in the Nasdaq are pretty large and not just marginal increments. Each down leg constitutes roughly 12% so there is still a long way before a new high will be reached, if at all. The bounce from the second low looks to be corrective for now, arguing the opposite!

As usual time will tell.

An example of this structure can be found in RDS.B Royal Dutch to mention just one. This one is downward sloping. MS is another;

rds.b april 13 2018

RUT 2000

Hamilton

rut april 12 2018 brut april 12 2018 s

The last month or two have, if anything, been most annoying. The degree of ambiguity is stunning and the ultimate resolution is probable still a few weeks away.

What we have here is the Russell 2000, one of the broader indexes in the U.S.  In the left chart the move from about 1000 to 1600 – nice Fibo ratio, by the way – makes it plausible to presume that this is a 5th wave from the lows of March 2009 of roughly 350, see below;

RUT april 12 2018 vb

Then the chart on the left displays, at first blush, what looks a hell of a lot like a triangle. Today we seem to be completing wave d of that triangle. So all that is left is a small e and we could get a thrust up of about 200 points.

All legs within a triangle must be 3-wave affaires. To me it is not perfectly clear that they are. Superficially waves a and c “look” like 5-wave affairs  but there may be a small wave at the top too many. The waves b and c are unequivocally 3-waves. So it is still possible to count this as a series of 1-2s, in which case we will accelerate downward fast.

Given this uncertainty only a fool would hold a long position if you look at the big picture. There is a lot more downside than upside so you will have to be very nimble in an environment where, for all we know, Stormy Daniels may become the next attorney general.