Month: April 2011

K, Kinross , Kwtc , Gold, FX etc.etc.

Hamilton

K aprl 2011 k.wt.c

Lets suppose you like gold and more than anything else you like Kinross simple because it has been going down for the better part of two years , and now , appears to provide you with that missed opportunity. For the sake of argument, lets suppose you are absolutely correct. The next question would be why would you buy Kinross stock (left) if the warrants (right) provide a much better return? (see also previous blogs).

The argument to buy Kinross is a good one. The stock is down from $25 to $15 or, give or take 40% while gold is up by about;

GLD apr 2011 Can $ apr 2011

45% or so , as the Can $ rose by about 15%, for a net of about 30% (notice that I do not take the math too seriously) So, if Kinross was ever attractive, would it not be more so now that the stock is down 40% and the “stuff” up by about 30% , a net discrepancy of 70% (again, never mind the math)

  So, to get to the point, DO NOT EVER (at this time) buy Kinross , buy the warrant instead! You will lose a lot less if you are wrong, and make a lot more if you are right; and that is what investing nowadays is all about.

HL, Hecla

Hamilton

hl apr 2011 hl apr 2011s

Back in 2001 I just loved this stock. In the “team” that I worked in at the time, the unilateral message was that we do not buy this stuff, period. The stock went from less than $1 to over $8 in a relatively short time (3 years). We missed the boat. Now , of course precious stuff is what you should buy, simple because  Jim Rogers from Asia and every other investment advisor is saying so! Interestingly, this stock is about where it was 10 years ago. Which brings me to K.WT.C, see below;

k.wt.c

This requires a little more thought than usual, this is not a stock but a warrant ! Ask your broker, he will probable not know it exists. The point here is the pattern , no thought required, do they look alike?? If you answer in the affirmative , you may want to read on about gold , silver , FX and so on, next.

Russell 2000 index, DJIA

Hamilton

 

 

This is the Russell 2000 small cap index. It is a very broad index and as such it should probable “represent” the US economy the best, assuming of course that stocks actually represent anything at all. I have left the chart blank as it illustrates very well how the recovery rally from the March 2009 lows is, at least to date, clearly and unequivocally a 3-wave affair and therefore a correction. What is equally clear is that the correction did not stop (as expected) at 50/62% and instead, like the energy bunny just kept going and going and is now at the double top level. A count could look like this;

Rus apr 2011

In this count the actual top would have been in early 2008 from where the index started a huge “flat”, A-B-C where the A was the great recession, the B the even greater recovery and the C has yet to come , but most certainly promises to be the greatest disappointment as it should drop below the March 2009 lows. This interpretation assumes that the tech drop in 2000 is unrelated to the recent calamity.

A different count has been offered by another practitioner of EW as per the chart below;

RUT april 2011

In this particular approach the last 10+ years were spent tracing out a single pattern, variously called the “Jaws of death” a “megaphone” and other descriptive  names. The only pattern within the EW orthodox repertoire that remotely resembles this one , would be the expanding triangle wave 4. At a later stage concessions were made by some (Neely) to allow for an upward sloping lower boundary as in a running triangle. What argues against this is the clear B-wave, which is clearly NOT a 5th wave!. In any case the difference is academic for the next big move. In both cases we could, but do not need to, go higher to the upper trend-line at about 900 and then we should drop like a stone.

These , and two other counts are compressed in the chart of the DJIA below. With only one unlikely exception (if we are in a new bull market) every count points down even if there is a little room for more upside.

DJIA Apr 2011

IVN , Ivanhoe

Hamilton

 ivn sept 24 2010 ivn apr 2011

We have liked this stock a lot (see previous blogs) over the past few years, that is until Sept.  last year when it looked as if the stock might have completed a 5 wave move up (see chart on the left). However, the stock did not proceed down, rather it consolidated over an extended period of time suggesting that it may, just like copper, be forming a triangle which is now all but complete. If correct the stock could climb another $8 or so. The 5 wave must be wrong but this could be accommodated by assuming a set of 1-2, 1-2 at the bottom. A stop at about $22 is highly recommended as a break-down remains a distinct possibility. Oddly enough this company may ultimately become its own undoing as its size is such that it could swamp the market with copper once it is on stream.

Both the RSI and MACD continue in negative territory.

We first recommended the stock at $6/7, see below;

IVN March 31