Month: January 2011

ABX

Hamilton

abx 2011 2

Just a few weeks ago we recommended selling this stock when it was slightly over $53. It did, very briefly, shoot up to $56 but has dropped about $10 from there. That recommendation was based on a triple, multiyear top and the near perfect ,symmetric, A-B-C ( a larger B wave) that took us there. Of course having undone its hedging programme entirely was enticing the Gods a little too much.

More importantly, this buy gold craze that seems to be going around for some time now, is either based on the coming end of the world (which, if correct ,  makes trading the stuff pretty well pointless), or on the coming inflation. Everybody seems to know that the 2+ trillion of money created by the Fed. must lead to inflation. That, however , may not necessarily be so. With regard to that I would highly recommend reading an article (28 pages) by Vijay Boyapati, called “Why Credit Deflation is more likely than Mass Inflation”. Just Google the titel and it is available/downloadable as a pdf file. The article is readable and is not written using the usual esoteric math and formulas that tend to disengage the reader after the first paragraph.

Right or wrong ABX should drop further to about $35, regardless.

C

Hamilton

Citigroup is going up nicely. Updating the chart it could go ( relatively ) much higher.

c jan 2011 1 c 2011 2

It was first recommended at $3.95 or so on the “too big to fail” approach without much regard to the EW structure. Applying that approach now, we must confess not being entirely sure if the drop from $60 or so to ground level  was a C wave  (that is part of a correction that had started some ten years earlier, see previous blog for chart), or a first wave done (which would beg the question, how much lower can you really go from ground level? ) Nor is it clear from the short term chart whether or not the upwards move over the past 2 years or so , is itself a correction(a-b-c) or a real new beginning. Fortunately, for the time being at least, it does not matter! The stock should trade back to the 4th wave of previous degree at about $8, and at one higher degree at $22 or so. So if you feel lucky let your 30% profit , so far, run. However do keep a running stop! Going through $5 allows more buyers to enter the market , so perhaps that will help.

TSE

Hamilton

tsx jan 2011

Often we are wrong as this market is pushed up by forces that we do not understand, perhaps because they did not exist even a few years ago. Anyway , sticking to what we do understand , here  is the TSE. After 2500 or so points straight up we should get at least 800 points down. If it happens this may be the beginning of the next down leg. Remember that Japan also hit its highs at year end as many other indexes/ currencies did. Time will tell.