This was our canary-in-the-mine stock and we got out a while ago around $19 or so. So far the little bird has not regained its composure and things could get ugly quite rapidly All waves since the lows of March ‘09 appear to be 3-wave affaires indicative of a triangle (potentially at least). If that is the case, the stock will be pulverized. The triangle measures conservatively $15 at the mouth. Now suppose the e-wave of the triangle were to start at around $16/$17 , then the target would be $2 at best! Before that does happen arrangements will be made for a merger or take-over. After all , the address on Bloor street with its immaculately  kept lawn is probable a prize asset for any predator.

On the left the old chart, indicating what should happen if MFC was an indicator for a bull market. We did get the bull market but MFC itself did not participate as much as it should have. By now it should have been trading at or near the old high of $26 so it is about $8 short of that. In the mean time SLF and POW are much closer to those levels. Seems to me that ……

The stock may be tracing out a small triangle that would , perhaps , give it a bounce to $20+ but I would abandon the stock now or , at the very least use a very tight stop. The real question now is should this approach be applied to the entire market as a whole. Buy some HXD just to play it safe.

Back in August when the stock was around $11 we recommended it for , at least, a $5 up move. On Jan 6, just a few weeks ago, we recommended taking the $5 and stepping aside while fully acknowledging that the stock could go a lot further. So far it has not.

For the past month or more the stock has been hugging the upper trend-line (in purple, right chart) of what could be an expanding diagonal wave C, or even a 5th wave. If so the next big move would be to the downside, to a new low below $9.

If the markets overall are OK, a bit of a stretch at this point , then the stock could climb , gradually, into the high twenties, above the old high of $26. At the very least I would use a tight stop on this stock.

Just to clarify, the Nikkei appears to be in a similar position, only on a much larger scale. But the pattern is the same. Here it is for illustration purposes.

You would presently be at the (purple) 4 if this happens.

Looking at SunLife (SLF) and Great West (GWO) does not add much to the equation;

Both have done (relatively) better than MFC and both seem to favour the upside more than the downside. But then neither have the same degree of exposure to the stock markets. MFC has done some hedging but I believe it is only about 25% of the book, and it is now very expensive to do.

Manulife is one of my favorite stocks, not only did 3 of my predictions come true pretty accurately, I can also claim a slight advantage of having worked with these guys. This is not a small company, supposedly they are the largest insurer in North America and one of the few companies well positioned for business in such hotbed economies as China and India. In Canada they are best known for their meticulously manicured front lawn on Bloorstreet and their “performax” – one size fits all – life insurance product. As mentioned before, all this went to their head and they became so cock-sure of their own marketing nonsense that they made the cardinal mistake of actually believing it. Their biggest sin was that they applied the near certainty of mortality tables to the not at all certain economic statistics, particularly the one that says stocks never go down over 10-year periods. This delusion quickly moved the company from a boring and staid insures to a bell-weather of the stock market itself, albeit with a much larger amplitude in its volatility (why we recommended it at $11.25).

In our last few comments we recommended the stock as a buy for a $3-$5 minimum rally. It has done that and more. We would sell it today, it could go higher yet but that is where the probabilities change rapidly, furthermore a +- 40% profit is not a bad thing to take.  The company is mending its ways, now it has cut 25% of its exposure by shorting 5bln notional equity futures and a few other things. These “hedges”now cost a lot more than they would have 2/3 years ago! They hope to do more and be “hedged” up to 60% in a year or so. They are damned if they do and damned if they don’t. The costs are going to eat away at their profitability. For some odd reason the market just loves these guy after hating them 5 months ago. EW wise the stock could easily rise further to say $20 but , unless you use a tight trailing stop-loss this is not the time to stick around.