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CAT update

Hamilton

cat april 25 2018 bCat apr 25 2018

There are other possibilities. As shown in my Dow blogs of April 2 and 5, there could be a “running correction”, essentially a flat that drops down. CAT, which is all geared to building more machines to make the great and beautiful wall between the US and Mexico, went for a $16 ride from open to close, 10% of its value, by the way, which could be the start of a wave 3 – or C – down. The stock is up 300% in 2 years so a little correction should not come as a big surprise. The open question is whether they will be paid in pesos or dollars.

SLV, another triangle

Hamilton

slv apr 24 2018

Here is another triangle. It suggest that this iShare should go down further which contradicts any notion of the stock market going down. Once again, triangles are usually 4h waves or B-waves, This would be a B. They normally have 5 waves but they are known to extend by increments of 3 waves as in a-b-c-d-e-f-g. This one has lasted a full year and seems to be complete as of the start of February.

For info only, no idea what it means.

S&P 500, SOX semi-conductor index and Alphabet GOOG

Hamilton

We showed the S&P triangle give or take ten days ago. First it went a little higher than expected but then it did start going down again and now even looks better than ever before;

s&p april 24 2018

Not only does it look good, but waves b, c and d are clearly 3-wave structures as they should all be. Wave a is a little less clear and d has yet to be completed. In any event it could definitely be a triangle. To my knowledge triangles are 4th wave structures that are continuation patterns and ALWAYS continue in the same direction as the triangle was entered! The only exception would be when the triangle was misdiagnosed in the first place (as in 1-2, 1-2 etc.) which proves the rule anyway.

The SOX or semi-conductor index is great for playing with options. It moves relatively fast and for no discernable sensible reason. The large fluctuations are evident in the following chart;

sox april 24 2018

This is essentially an unstable situation. The swings get bigger over time and here it is very easy to conflate different parts of different structures to come up with the desired result. Some even go so far as to refer to this pattern, incorrectly, as the jaws of death. Whatever the case, this one looks to be near perfect and just like the contracting triangle this expanding triangle should be resolved by a spurt up ( and very fast) to more or less meet the upper extended line (about 1550, almost 30%). Wave e, by the way, need not travel all the way to the lower line.

That brings us to some of the tech stocks. Alphabet – what an idiotic name – or Google (GOOG) is a perfect example of the previously discussed “flat” only this one is absolutely perfect and beyond reproach;

goog april 24 2018goog april 24 2018 b

A flat is called a flat because, in its perfect iteration, it is exactly that, flat. The c tends to be equal to the a and the intervening a-b-c is often well proportioned. It too is a correction so once it is complete the stock should go to a new high. It has a 5-3-5 structure. We have added a longer chart going back beyond the lows of 2009. I have used a semi-log setting as that results in a straight line if the rate of growth is constant. I do not recall ever seeing a nine year long trend continuing so precisely. If we do indeed have a flat, and all indications are that we do, then we should make at least one more high. My guess would be around 1270 where the upper line resides. I am not sure what the little triangle in wave 1 up is doing.

One of the other “problems” with the bear case is that gold and silver are not reacting as they should and show no signs of moving up.

INTC update

Hamilton

intc april 22 2018

Just a quick update from the 16th. Looks like the diagonal may be complete, that is if you exclude the outlier of wave 3 in the diagonal. In any event this should drop to the $42/$41 level as diagonals are mostly completely retraced AND because that would close a previous gap which is also a common occurrence. In the end we expect a lot more than that. It should take about 2 months.