DJIA update

December 6, 2012December 6, 2012 Hamilton

This is little more than a wild , but educated, guess. I am assuming we are in a second wave and that that second wave will be the usual a-b-c. Also, as we lately have so many wedges , I would guess that the c is also going to be a wedge. The whole thing would end up looking like this. Note that the correction has already travelled about 50% of the drop in wave 1 and that 60% is around 13250. These Fibo ratios are useful for making guesses when there is nothing else to go buy, otherwise there is no compelling reason why these levels should be met exactly. Moreover if the experiences of the past are any guide at all, this index will try to get back up as far as possible. The only thing it may not do for this interpretation to stay valid, is move above 13662. As always, we will see.

The DAX has already made a new high as of today!

TRQ update

December 5, 2012December 6, 2012 Hamilton

We had an ideal target for this stock at $7.08 based on Fibo ratios. Impatience got the better of us and consequently we thought it might be a buy already at $7.70. In the mean time the stock has made a marginal new low at $6.91, close to our target and has spent almost a half year doing so. The RSI and MACD are not confirming the new low.

As far as a count is concerned we not at all sure but the best fit would seem to be a 5-3-5 A-B-C with C almost vector equal to A. Any rebound from here could be substantial. This is a big mine that could, by itself, upset the balance of supply without being effected much because of its low cost of production. Below is just one example of the machinery used.

P.S. Sometimes rougher charts appear to be more accurate,here is the same from MSN showing the top as the second top!

Copper, the stuff update and FCX, Freeport

December 5, 2012December 5, 2012 Hamilton

The then (29th of Oct.) and now charts. This is a bona fide triangle, an E-Waver’s dream as these things are highly predictive and accurate. This triangle is in a B-wave position, not a fourth, therefore the expectation is for a C-leg to start any moment now and travel, perhaps, the same distance as the A-leg. That would bring copper to about $2.20 a pound and , yes, we are aware that the Chinese will do more to stimulate but for the moment their Shanghai index recorded a 3 year low. Stocks like FCX, Freeport will not fare well under such circumstances.

Here are the Freeport McMoran Copper and Gold then (Jan) and now charts for a comparison;

We recommended a sell at the time (at $45) even if it might go a little higher. At today’s level of , give or take $31 that is a tidy saving. The company decided to go into the oil business presumable to diversify. Presently it may be tracing out a similar triangle to the metal itself, even if it is running behind just a bit. The e–leg is missing but these can be awfully short so it wont take much to get the two realigned. Sell all copper related stocks, except perhaps Ivanhoe, TRQ see next..

RDS.B Royal Dutch

December 5, 2012December 5, 2012 Hamilton

On the left is Royal Dutch, one of the larger integrated oil companies, just like Chevron which we think is a sell because it has so out performed all the others and is totally uncorrelated to the stuff (oil) itself. Both are shown on a relative basis (relative to the chosen starting point!) in the chart on the right. Royal Dutch appears to have completed a triangle but unlike Chevron would still have to make the thrust upwards to complete a 5-wave sequence. So why does one look like it is ready to go down and the other ready to go up? As always the answer is in the details;

Triangles must consist of 3-wave legs (not 5!) All legs could be said to meet this requirement except the first which is better viewed as a 5-wave leg, despite a single tick failure.(Also the c-leg from the beginning of 2012 to June is probable a “diagonal”, so despite the overlap it still should be viewed as 5 waves). That then becomes wave 1 down followed by a rather clumsy a-b-c correction back up as wave 2. If correct we are presently in wave 3 (at the beginning) and both stocks are aligned. The RSI and MACD seem to be supporting this outlook.

A nice, market-neutral, trade would be to sell Chevron and buy Royal on a 1 for 2 basis, roughly (see spread below). Just don’t use warrants or other option-like instruments as that does not always work out that neutral as the guys at Sprott & Flatiron can attest to.

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