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ABX update

Hamilton

abx may 27 2016

We have been very lucky with our predictions for ABX. All though not absolutely perfect we did manage to capture the main moves and draw a tradable map. What is next?

First of all, the drop from the highs in mid 2011 is undoubtedly either a single 5-wave leg down followed by a single 5-wave corrective up move, OR a complete A-B-C correction that retraced about 85% of the value of the rise from 2001 to 2011, give or take. We preferred the former interpretation but are not at all confident about that. If the latter interpretation is in fact the correct one, then we have completed an initial wave 1 up and are presently in wave 2 (see the beige annotations). In either case we are confident that an initial wave (one or a) is complete. This is because the diagonal wave 5 or C is completely retraced plus a bit in a rather violent manner.

    Furthermore, looking at the technical indicators, it is interesting to note that the RSI peaked out more than a month ago. More interesting than that is that this has happened 7 times before during the time of the above chart, and that in every instance without a single exception, the RSI would move from the overbought extreme to the oversold extreme. This is the 8th time and it has not done so yet. We therefore still believe that this wave b or 2 has further to go, perhaps to about $14.50 or so (about where the 200 day moving average will be at that time). At that point it would be a screaming buy under BOTH scenarios! From there wave c or 3 should take us to roughly $32 or so, again under either scenario. The beauty of this forecast is that you do not have to go to the edge as it does not matter all that much whether you buy at $17 or at $14, if it gets there, because you will make a very healthy return in any event.

   As a word of caution we want to make it clear that this is an unadulterated EW analysis without ANY fundamental inputs. If you see how fast the fundamentals changed two or three months ago, you must conclude that they are irrelevant in terms of predictive value. Like a herd of buffalo the gurus will run over a cliff without batting an eye, or alternatively, they always have only one outcome in mind at all times and that is straight up.

RY update

Hamilton

The usual then, Sept. 4, 2015, and now charts;

ry sept 8 2015ry may 26 2016

Generally speaking we have been bearish on the Canadian banks, but occasionally we have nevertheless shown the bullish side as well. Last September we did just that with the Royal Bank by pointing out that the ups and downs of the past year or so might just be part of a large corrective structure despite the fact that the stock could not break out to new highs for about eighteen months. New highs just did not seem to be right but here we are.

So now, with the benefit of hindsight, we have to assume that the analysis back in Sept. was correct. That must have been the elongated a-b-c wave 4 followed by, what certainly looks a lot like a wedge. These normally retrace in full so once wave 5 is done, which could be any moment now, we drop back down to $64 and perhaps a lot lower this time. There is still a little room for a throw-over but the technical indicators are already screaming sell. Particularly the RSI is always very accurate as a timing tool and it needs just a little push up to get overbought. We would sell right here, right now.

Note that the b wave within the larger B wave moves one step to the right making the whole correction about  5 or 6 months longer than first anticipated. I do not have an explanation for why the stock was trading at about $81 in Dec. 2015 and only at $79 in today’s chart. In fact, looking at a G & M chart the high at that time was more like $83.33. To then make a new high we would need more that just a dollar more!

BCE again

Hamilton

bce feb 15 2016 b

We are simple repeating the same chart we did on Feb. 15th, about two months ago. It took that long to add 17 cents to a new high the other day of $60.37. This is exactly as expected and with a chart of this size, time wise, we cannot get too exercised about a dollar or two. So a little higher is still a distinct possibility but waiting for it is probable not a very smart thing to do. A sell here and now.

OIL, update

Hamilton

oil may 16 2016

This is the light crude oil future on the CME. Futures change all the time and when going backward, there is a lot of distortion as you are not necessarily looking at the same thing. Still ,even with that caveat it can be a good exercise (see our prescient previous blog).

Now that we are up close to 50% from the lows (of $26, on the then current contract) it is useful to have another look. Could this be an A-B-C correction, or part of a correction? If it is then we have a nice diagonal, C will equal A at about $48/49 and will terminate close to a 4th wave of previous degree. This may just be as good as it gets for a while.

Rumours have it that at the university of Delft (where the blue china comes from) they are working on a prototype engine that will be able to burn water which might have  a disruptive effect on the supply and demand balance. One of the few remaining technical issues is if this only works with Rhine water, or any water. Of course, the city of Rotterdam, the largest fuel transfer station in the world and  not that far away from Delft, is doing all it can to suppress word about this project getting out to the world at large, which is probable why you have not heard this before.