EWN

EWN. Double Dutch?

Hamilton

ewn b 0ct 2011

In the big picture the EWN ETF is very clear, the A-B-C  B-wave retraces a predictable 62% after completing a nice wedge for C, here it is in more detail;

ewn oct s 2011

In the mean time we have managed to drop below the B-wave level and so far at least a case could be made that we are in a 4th wave;

ewn oct vs 2011

The best fit here is to assume that we are in wave 4. The EWG, Germany is very similar. The tops is the top , no ambiguity, and no double Dutch at all. By the way, should wave 5 extend as is so often the case, it often travels about the same distance as waves 1 and 3 combined or about 8 points which would suggest 7.

Another look at Germany, Bayer and EWG

Hamilton

Bayer june 2011 EWG june 2011

On the left we have Bayer. English people cannot pronounce that and consequently they call it “bear”. As it happens the chart is very bearish. This company is the inventor and manufacturer of the aspirin among many other pharmaceutical and chemical products. In many ways it is comparable in importance for the German economy to GE for that of the US.

On the right we have EWG which is the German ETF. Both top out at around the same time with Bayer once again underlining the importance of big numbers like $100. After the top Bayer crashes in an A-B-C whereas the ETF follows a very nice 5-wave pattern. (the former suggests a “flat” is in the making and the latter is indicative of a “zig-zag”, the difference is immaterial for the moment).

Both charts are stylized, and if the outcome is as expected, the trapeze shown tells us where things might go. As always, time will tell but one thing is certain, stocking up on aspirins is not going to help.

Just for the sake of completeness, we add the Dutch i-shares EWN. Not that the Dutch economy is that important in and of itself, but, as it happens, it is probable the most open economy and its index contains a disproportionate number of large multinationals (Phillips, Unilever, Shell etc.) and it has its finger on Europe’s pulse – oil or the Rhine. It should therefore reflect the effects of a globalized economy best. Here is the chart;

ewn june 2011

The story is the same, if anything more bearish , as this one wasn’t even able to retrace more than the Fibo 61.8% . Here too it is unclear if the first leg down is 5 waves or an a-b-c. 5-waves fits better given the anemic counter- trend.

EWG & EWN , Germany and Holland

Hamilton

 

ewg may 2011 s ewg 2011 may

Germany and Holland have a lot of differences but economically they are attached in a way similar to Canada and the United States. Their economies are so intertwined that neither one can make policy without the other, granted obviously that the elephant always appears to get his way. Unbeknown to the world at large, Holland was once the largest energy producer in the world, relatively speaking ( it still is on a put-through basis ).  Gas in Friesland’s cow pastures propelled Holland into the  luxurious position of being able to run very large budget deficits with little concern; now known as the Dutch Disease. Canada is following the script pretty well and soon it will be known as the Canadian Disease. i.e. Alberta does well and Ontario suffers.

The above charts are of Germany’s EWG ETF. Clear, to me at least , is the A-B-C pattern of a wave 2, or at least some “corrective” move. For some reason, not sure what it is, the EWG differs markedly from the DAX. It has exceeded the 62% retracement, but barely. Below is Holland’s EWN (the AEX or Amsterdam Exchange is still far away from its top). You can click on the charts and out them beside each other. ;

ewn may 2011

The correlation between the two ETFs is rather obvious. The EWN is even more precise in it’s retracement level, pretty well a perfect  62%. It could go higher in the event C equals A but there is no need for it to do so. For the moment I would prefer to be on the side lines!