X

X, TMX Group

Hamilton

x feb 12 2016

This is the TMX Group, and yes we would have sold it earlier at $45 four years ago. But that was then and now is today. Briefly we were at least 40% below the peak, but typically when you have a big B-wave (see also FFH) the C should take the stock down as far as the A leg,$25 and most often to below the A’s low, $20. It should do so in a clean 5-wave sequence.

So how does one know that it is a B-wave in a large A_B_C flat? Symmetry. B-waves are 3-wave structures. If you can find perfect symmetry you can bet your bottom dollar that that is what it is. Here you have that. If you were to put a mirror where the blue line is, both sides would be perfect and opposite reflections of each other.

TMX is an exchange, they make money selling information, charging for trades and listings etc., the more business the more income. They did not make any in the last quarter. Not good so early in the game!

X, TMX update.

Hamilton

Dead wrong on this one. Last bit of regulatory approval was given by BC and Alberta the other day, so it is looking like a done deal, valued at $50. Needless to say , I am surprised that this deal is getting the go ahead. In the end the exchange will control some 90% of all trading in stocks in Canada and will, essentially, be owned by the financial industry or ,at least, a good part of it. In any event stockholders should tender their shares as without this bid the stock would probable not be anywhere near these levels. Below are the stocks of a few different exchanges as well as the TMX;

x jul 2012nyx jul 2012

db1 jul 2012lse jul 2012

The time frames are not all synchronous but the thrust of the argument, that is that the TMX stands alone, is pretty obvious. The best comparison, arguable would be with the New York stock exchange, but despite initially being reasonable well correlated that came to an abrupt halt in 2009. Clearly all exchanges other than the TMX continue to move more or less in the same direction. Apart from the London Stock Exchange all are close to the lows of the Great Recession. The TMX is close to the highs reached before that. Why? Are there monopoly rents waiting to be harvested?

A good example might be the Canadian Securities Institute, which used to be part of the regulatory environment. Back in 1992 the CSC, Can. Sec. Course, the exam required among others to qualify to become a broker, cost $400. Now, 20 years later, the same course costs $1280. In the mean time, of course, ownership changed to private, very commercial, hands.

NDAQ , Nasdaq Exchange, DB and X, TMX group.

Hamilton

NDAQ MAY 2012

This is the Nasdaq Exchange. Lately they have been accused, among many others, of bungling the Facebook IPO. The top for this stock (and most other exchanges) was back in 2007. To date it has retraced just 42% and appears to be ready to go down again. The pattern is a  simple A-B-C (in blue) or a little more complicated one with a triangle in the B-wave position. Either way the stock should go down further, perhaps even to about $5. If that sounds a tad extreme, have a quick peek at the Deutsche Börse (Frankfurt);

DB may 2012

Despite the fact that the DAX retraced much of their losses from the Great Recession , this exchange is still only trading at 1/5 of its peak value. On a comparative basis that would put the NDAQ at $10.

The big exception to this theme is. of course, our own X, TMX group or Toronto Exchange. Caught up in the bidding war the stock has been suspended in thin air for the last year.x may 2012

We would have sold it quite a while ago and would still do so today. It is not yet clear that the deal will pas scrutiny with the two dozen or so agencies, committees and so on that have a say in the matter. Should the deal pass, then at least the stock will cease to exist, a fate it would then share with a whole slew of other companies that did not consider the unintended consequences of demutualization . If it does not pass the stock will probable crater and join the other exchanges at the bottom of the charts instead of the top.

X , TMX Toronto Stock Exchange.

Hamilton

x aug 30

The Exchange presently trades a little under $40, against a bid of $50 by Maple. Clearly expectations are not high that this will best regulatory approval. If combined with Alpha, as is the intention , the new entity would control upwards of 80% of all trading , a level that will be seen to be monopolistic and uncompetitive . The big surprise is that not everybody believes this. We have consistently advised getting out of the stock. The a-b-c pattern does not bode well for the immediate future. Looking at some of the others, the LSE the first suitor, and Deutsche Börse, itself involved with a failed bid, is not promising either.;

lse aug 30 2011 db aug 30 2011

Whereas X trades at about 70% of it’s peak value, the LSE is at about 40% and the DB at less than 25%. In the event of a merger these fractions presumable will also merge leaving only downside for the TMX.