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GE new take

Hamilton

ge april 21 2018

We thought GE might have hit bottom a little while ago. That might have been incorrect but it does not matter as you could get out of the trade breaking even, which I would not recommend under $16 to $19 or so.

There is something wrong with the count last time but I may be over-thinking this. There are a number of reasons why this may not be the bottom. The low back in 2009 was around $5 so this stock has risen $31-5=$26. It is “normal” for second wave corrections to retrace as much as 78% or even more of wave 1. In this case that would suggest a low of around $11. Next the count does not add up. My educated guess here is that we just completed waves 1,2 and 3 and therefore need to add a 4 and 5 before hitting bottom. Alternation here would favour a flat or triangle, which is an elongated flat, as shown. The third argument is the gap in the middle theory. There is no gap in this chart but the “thinnest” point is at about the $21 mark, or $10 from the top. A similar distance down again would bring us to $11 as well. Then wave 3 up can start.

Fundamentally GE cannot go bankrupt. It is at least as important as GM which did go bankrupt but was bailed out. It is too important militarily and it just will not happen. Which does not mean that you cannot lose a lot of money but it does mean that things are ok at the other side of the valley. Good luck.

Dow on the edge

Hamilton

dow april 18 2018

It has taken almost two months, longer than we would have thought, but now it certainly looks like this index is ready to go. Today we overlapped in such a way that we have to assume that this last corrective move is over. This implies that we are in the third wave which is normally the most exciting part. Given that wave one was roughly 3000 points we would expect wave 3 to travel more than that. We will see what happens.

DAX

Hamilton

dax apr 2018 1dax april 2018 2

This is the Dax, that is Frankfurt, Germany index.  It is a total return index and consequently is not directly comparable to others that do not include the dividend. These two are the big picture. Below is the small picture;

dax apr 2018 3dax apr 2018 4

This is time consuming stuff and I do not have the right charting equipment, but nevertheless this may add some confidence that we are, or were, at a top of sorts. Furthermore,  I am not at all confident that there actually was a triangle so using the channel I start it in 2009 rather than 2012. By the way , this index from the 2000 peak to the recent peak is up roughly 77% by my calculation. Take away a 2% dividend over 18 years would leave a capital appreciation of just 41% or a little more than 2% per annum. A lot less than the Dow etc.

It now looks like we completed an initial first wave down – either a wave 1 or A – followed by an irregular a-b-c correction back up. It should be complete soon. Then wave 3 or c should start. At this time I would very much favour a wave 3, etc,etc. Ultimately there would be little to stop this before the entire uptrend from 2009 is reversed. Time will tell.

INTC, Intel.

Hamilton

intc april 16 2018 bintc april 16 2018 s

We all remember the “Intel inside, PENTIUM” logo that used to be stuck on the outside of every computer, lap-top and so on. Not sure if it is still inside today but clearly the stock is reaching a significant point in its life.

It has, or is about to, retrace a Fibo 61.8% of its drop from the highs of the tech bubble. Some of the more pedestrian technical indicators have been lagging the price and may be signalling a turn ahead. Most importantly there appears to be a diagonal forming this year. It may not be entirely complete – think throw-over and so on – but it is getting very close.  The pattern calls for a drop to about $42 which is roughly 20%. That is a minimum expectation.