Author: Hamilton

SBUX update?

Hamilton

sbux-b-jan-28-2019_thumb2sbux-b-jan-28-2019_thumb5

A friend recently sent me stuff on the markets from Harry Dent. He now thinks that the Dow will rise this year to 30000 or higher before dropping to 3800. As you may know this fellow has a different methodology and relies to a great extent on such factors as population growth (or shrinkage) and similar things. I have no idea what to make of it but being very gullible I do try to keep an open mind and search for things that may support his views (and negate the immediate bear view). Starbucks is such a stock.

Looking at the long-term chart of SBUX, it is possible to discern a fairly straightforward 5 wave sequence going all the way back to 1992 when it went public (at $17 but there have been stock splits). The only thing that is not clear is if the sequence is complete. Wave 4 in the Bigchart is without any doubt a 4th wave, an A, triangle? B and C structure where the waves A and C are equal, but despite already being about as large as wave 1, could nevertheless rise further to about $80 or more. Dent’s argument is basically that in the last year of a long-term uptrend the increases are normally rather explosive. If so such a scenario would be quite reasonable. We would now be in wave 4 of 5 or already in wave 5 of 5.

So one could short this stock with a stop at around $68, and do it again at, say $78 if that does not work right away. Or you can wait and only the the second trade or whatever iteration of it that you prefer. Put options may be an even better choice.

Dow again

Hamilton

dow dec 24 2018

My educated guess is that we are today at the midpoint of wave 3 of 3 which means that we are also at the midpoint of the whole thing, that is what will probable shape out to be wave A of a large A-B-C  correction or just wave A of a large triangle that itself starts with an A-B-C.  We closed at 21792 and started from a peak of, I believe, 26952 on Oct the 3d. so 5160 points so far. If this is the midpoint we should get about the same number of points below today’s level.  21792-5160=16632 which does not take into account a possible gap!

All the Trump gains in the stock market are now gone and I have no doubt that he and Mnuchin will be able to erase much of the rest as well.

 

Note ; wave 4 of A is more likely to be a zig-zag that goes much higher than the triangle shown. This because of alternation between waves 2 and 4. @ is a flat so 4 might become a zig-zag.

Dow, why 16000?

Hamilton

Dow dec 22 2018 b

EW has many little and big rules or guidelines. The practitioner is tasked with applying these, sometimes almost blindly and not question the result.

When you peak you drop back to the 4th wave of previous degree. If you are not sure what previous means in this context just go for the simpler 4th wave in the past. That, in this case, is just below 16000. The real 4th wave of previous degree is, of course, much lower at about 6666 set at the low in May 2009.

Roughly the 5th wave channelled above goes from 7000 to 27000 or 20000 points. A , more or less MINIMUM retracement would be about 38% of that or almost 8000 points. That is where the bottom channel line runs today, 19000. However a more “normal” retracement would be 62%, or 12000+ points to about 15000.

5th waves are the last wave in a 5 wave sequence. Normally the entire 5th wave is retraced which targets somewhere slightly below 7000. But this whole sequence starts somewhere with the South Sea bubble in 1711 or a little earlier. Of the 300 plus years of history we only show a miniscule portion. The real 4th wave of previous degree is at the low of 41 in the wake of the Great depression of 1929 etc. People will think I am an idiot if I were to seriously suggest that, so I don’t. It is like road signs. If you go South you do not see a sign “Rio, Brazil”, instead it will say “Detroit”. Same principle.

Dow update

Hamilton

Merry X-mas everyone!

dow dec 20 2018

The Dow is behaving as expected. Except wave 3 so far has already travelled 3000 points (from 26000, top of wave c of 2) and we have not reached the mid point it seems so the 5000 points estimate may be too low. In our modest opinion 16000 for this whole wave, Wave A or 1, is achievable so don’t buy the bottom yet!