TSX

TSX update

Hamilton

This brings us to the TSX;

tsx apr 30 2014

You will notice that at the bottom of the chart the TSX (or TSE) is trading at about 1000 points. Today it is at 14650 and rising everyday by roughly another 50/100 points. So it is about 14.6X as valuable as it was back in 1978. RDS.B was about $6 back then and is trading at $85 now, so that is 14.2X. The volatility of RDS is a little less than the TSE and the dividends are actually higher by a substantial margin. Furthermore the Dutch have managed their affaires much better than we have. If we have a dog like Nortel we hold on to it with our dear life and then loose our shirt. The Dutch with ABN-AMRO manage to get the Brits so excited that they get a bidding war going and buy the dog, right at the top, for almost 100% cash!

You can move the charts of RDS and the TSX next to each other and experience the similarities for all they are worth.

TSX

Hamilton

(1/2)^13= 0.000122070312

Should the TSX close today with a gain, and do it again tomorrow which would not be unusual given that it is a Friday, we will have 13 (a Fibonacci #) days with gains in a row, which looks like this;

TSX feb 20 2014

Again assuming a roughly 50-50 chance each day for winning or losing, the chances of this happening, at the outset, is 1/2 to the power of 13 or a little more than 1 chance in 10,000. As there are 220 working days this is equivalent to  once every 45+ years. According to BNN the last time this happened was in 1985, 29 years ago.

The TSX is metric, it loves tranches of about 1000 points. To do that we need to go to 14,450, another 250 points , give or take. The high on the 7th of March 2011 was 14,329 intraday, just 131 points away. As one commentator observed, even Pavlov could not have trained his dogs this well.

TRQ, TSX, Copper and so on

Hamilton

The other day there was this fellow on BNN that suggested that the TSX has broken lose from its correlation with copper. He is pretty good (Price?) despite sometimes looking like a hippie. Here is the argument:

tsx feb 15 2014Copper feb 15 2014

The InfoMine Copper chart is expressed in US dollar terms and the TSX in Canadian; both charts cover roughly the same time period. The correlation is not perfect but does get a little better if you make adjustments for the exchange rate (a low in 2001). Certainly for the past few years the correlation is pretty good, but notice that in the last year the two have parted company with the TSX going up and copper going down. Perhaps Canada is more a petro country than a copper country. In any event I have drawn a line through the TSX chart which is my best effort at finding the middle of the range for the past 25 years. If that line holds (on average) the TSX should be at about 15000 in 3 years time (starting where it is now, not where it is on the average line). That works out to about 10% for the whole period or roughly 3 % per annum. The question is “Why would you do that??”. Why not buy TRQ instead?;

TRQ feb 2014 bTRQ feb 15 s 2014

We thought (see previous blogs) that this stock was a screaming buy. It did go up about 30% but has settled down back to $3.25. A drop to $2  ( a wave 4 of prev. degr.) or so cannot be completely excluded but we prefer to think that the stock is already on the way up. The initial target regardless of the path it takes, is around $5.50 (the wave 4 of 5 of C triangle). The copper price is barely relevant and it has a lot of gold as well. In short , if you like the TSX because it correlates well with copper you have to like TRQ more. If you like the TSX because it has detached itself from copper, you should also like TRQ more as it is down 90% rather than about 10% for the TSX.  Buy low sell high, not buy high and sell low.

TSX, update

Hamilton

tsx jan 27 2013

The TSX seems to always want to do 1000 points and then some once it makes up its mind. We have done that this time again and for all we know it may go on just a little further. But we are reaching the 62% retracement level and are starting to see the RSI and MACD get a little overdone. In the meantime this index is where it was a year ago having served no other purpose than irritating both bulls and bears. The triangle, in light grey, did not pan out but this count is ultimately a lot more bearish as it would require a 3,4 and 5 down instead of just a C down! We will see, as usual.