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CAT, update, then and now.

Hamilton

Cat apr 25 2018cat oct 25 2018

There are a few minor modifications from the April prediction. Essentially, as always, it took longer than expected but from the level then in April of about $160, the stock is down by almost $50 which is almost 30%. What is more, we just had a gap which often marks the middle of a third wave. We would be careful not to bet the farm on that as the RSI seems to suggest that we are, at least temporarily, starting to get oversold.

Critical points are around $97 and then $87 or so. The first number is where any pretense of a revival must be abandoned due to overlap. The second is the bottom of the last, extended up wave.

WMT update

Hamilton

We refer to are most recent take on WMT as of April 6, 2018. for the “big picture”.

wmt aug 17 2018

In our view what has transpired since is that we had a first wave down of about 28 points, from 109 to 81, followed by a second wave correction of about 76%. This happened on very high volume on supposedly excellent earnings and a 40% (anticipated!) growth in e-commerce. Actual earnings inclusive of all items were down almost 3 bln. year-over-year. Cremer’s Mad-money show, or whatever it is called, was quick to grasp the opportunity to call for a change from FANG to WANG, this while pressing the appropriate emotion buttons on his desk. Spin is everything!

This is , in our opinion, is another opportunity to get out while the going is good.

ISRG, Intuitive Surgical, Inc.

Hamilton

This folks make equipment for surgeons to do minimally invasive surgery by remote control. First developed by a non-profit foundation it quickly drew the attention of the military where its advantages were obvious. Sometime around 2004 or so it merged with a rival which ended a bitter dispute and it was blue skies ever since. Here is the chart, long and short term;

isrg july 12 2018 bisrg july 12 2018 s

At 1.7 million a piece of equipment like this must be very sophistic. Nevertheless the very basic essence is that it is architecturally little different from your RC (radio controlled) model airplane from 80 years , or more, ago and in most applications is not even remote, being hardwired instead. The intuitive part is a complete misnomer as one of the objectives must be to reduce the subjective elements as much as possible in favour of a more dogmatic approach. Originally the names for these “machine” were well chosen as they conjured up images of God. Zeus, and or unlimited inventiveness, da Vinci.

Today I think the stock is a sell, at least from an EW point of view, primarily because the fifth wave is, one way or another, a diagonal. This should result in a fast retracement back to the baseline which , in and of itself would constitute a drop of about 28%. Both RSI and MACD are very much in overbought territory and the stock is trading at around a P/E of 73X.

The company already is making more on the sale of accessories, a sign of maturity, and is becoming more vulnerable to competitors that may challenge the virtual monopoly it enjoys in this field of robotics. There are plenty potential competitors, Medtronic, J&J, Philips Medical Systems or Siemens just to name a few.

Dow, once again

Hamilton

dow july 10 2018

Just as things look to become clear they do not work out as expected. That would not be so bad if it was not for the annoying fact that this up and down has now been going on for a full five months. Again we can only work with our understanding of the pragmatic tenets of EW. It is possible that we are in wave 2 of 3, the triangle mentioned previously would have been a little b wave in an a-b-c wave 2 that should now be near completion given that we already have more than 62% retracement. Alternatively we have a large triangle B-wave covering the entire period of 5 months. Either way the next big move should be down and down a lot.

All the good stuff is on the menu. We have a president that seems to have adopted Machiavelli’s dictum of keeping your friends close and your enemies closer. In the mean time the British government seems to be falling apart. NATO is meeting and Helsinki will be the next focal point of two man summits. Maybe nothing will come of any of this but how much longer can this continue?