Month: July 2012

ABX, American Barrick

Hamilton

We have never been all too fond of this company and became downright negative after RBC put it on its focus list quite some time ago. Here is why;

ABX jul 26 2012 l

For a number of years during the late eighties this stock, and also Franco Nevada to mention but one other, was the darling of gold speculators expecting a repeat of the metals performance from roughly 1973 to 1981. Instead they got one of the best formed triangles ever, lasting a little over ten years, (I was focused on Hecla and never looked at ABX).

Triangles occur one leg before the last, which is , of course wave 4. The somewhat violent jump up is called a thrust. Typically it has an amplitude roughly equal (or 1.62X) to the mouth of the triangle, shown here in purple. It is a 5th impulse wave and as such should subdivide into 5 waves. It shows overlap but that is OK as it is a “diagonal” with a nice throw-over at the end. The A makes it right to the lowest level of the e-wave. The B-wave makes a new high and now the C is on its way down to about $17. Here is an old chart from Jan. 2011 showing the B-wave in detail and a chart of what to expect as of today.

abx jan 14 2011ABX jul 26 s 2012

Notice (click to enlarge) that the B-wave is also perfectly formed. After the top we get a rather messy 1-2 that consumes an entire year without going anywhere. Then wave 3 of C which took us to the low of $31.18, almost a drop of 50% just in the third wave, money you could have saved reading previous blogs. A pretty good rebound should now follow for wave 4 and it could again take a whole year! It cannot trade above $46 for this scenario to stay valid. $42 is a better guess for the rebound. After that wave 5 will take the stock to around $17 or so. What a hedge!

So it is a buy now for a gain of about 30% (from today’s low) , then neutral at $42 and a short above, say $44.

PS. Wave 2 is messy, I have used blue to show the composition. It is irregular and consequently I would expect wave 4 to be a sideways “flat” or again a “triangle”.

AVL , Avalon Rare Metals Inc. clarification

Hamilton

avl jul26 2012

There seems to be some misunderstanding as to where the triangle actually is. It is not somewhere in the bottom that we have been scratching for the past three months or so. It is the pattern that took seven months to form and that fluctuates between a high of $4 and a low of about $2.35. It  measures about 3.5 blocks or $1.75 which is roughly the distance in the minor 5th wave thrust. Nearly always, after the thrust, the stock reverses at least to the level of the top of e ($3), but equally often all the way to the highest point in the triangle, in this case $4.  These are minimum values as obviously a new bull market could take the stock much higher. By the way, there is no credible alternative. If one were to assume that this was not a 4th wave triangle but a b-wave triangle, then the stock would have to trade with a negative value!, accordingly that is not possible.

OSK, Osisko update

Hamilton

osk jul 25 2012osk jul 25 2012 alt

Here is another update on Osisko. Originally we suggested buying this at $6.25. Then we identified the drop from $9 to $7, which erased most of the gains as a b-wave. We do that in order to start off with a minimum expectation. Now our take on this is that it was a wave 2 implying that we are presently in a wave 3 to the upside.

Given that we had had overlap between waves 4 and 2, this has to be a “diagonal” triangle. A misnomer if there ever was one, read expanding/contracting wedge. They occur only as 5th, as an ending diagonal, or C waves. Given that this is definitely not a 5th it has to be a C, implying that there must be an A and B in front of it which is indeed the case. As these patterns occur when things have gone too far and too fast, the almost always retrace the entire move. The risk then is that the diagonal is not yet complete, shown as an alternative. The problem with that count is that the proportions become ridiculous so the chances of that being correct are miniscule. That is also the case with other possible alternatives. So stay with it but use a stop just under $7, just in case.

IVN, Ivanhoe update.

Hamilton

ivn july 25 2012

See our 19 previous blogs on this stock. In honour of its new name,  starting August but trading Aug 6, we did this all in turquoise . That has the added benefit that you probable cannot read it all that well and will not notice if this proves to be dead wrong.

We have a few problems with the count shown but are trying our best to get to out ideal target of $7.08. We can get there if we gloss over a few irregularities at the top and assume that we are forming a 4th wave triangle. That would solve the timing problem and get us to the target. Of course chances are that we will not get there at all and turn a lot sooner. If you do want to buy do not forget to put the order in with the correct ticker!

By the way, after a little Googling the name does make some sense. Turquoise, or the gemstone is hydrated hydroxyl phosphate of copper and IVN is, if anything, a copper mine! Also the gemstone is the stone of wisdom and spiritual journeys, and corresponds with the astrological Sagittarius sign. If that does not move you here is another, in depth description;

Turquoise helps to ground the wandering wayward spirit,  while keeping their connection to the infinite open. Many people who have a lot of energy avoid "grounding stones" because they think it will "clip their wings".  But Turquoise will allow that energy path to remain open.  In fact, some Native cultures held the belief that by wearing it the human mind becomes one with the universe. Those seeking a profound healing of the spirit and soul should wear turquoise.

How appropriate for the steppes of Mongolia, I may, for a change, buy some myself.