Hamilton's E-Wave Analysis

ABX update

ABX sept 6 2013

SFF.VjcABX could go anywhere from here, we suspect it will be down but , frankly, we couldn’ care less. The idea that one has to ALWAYS be invested fully, on the grounds that you might miss more up than down opportunities, is complete and total nonsense which serves more to hide the brokers incompetence than help the client/investor. The same applies equally to being diversified. Our philosophy is that you should not be invested at all (save for T-bills or something similar) un till such time that you actually have an idea and then go for it wholeheartedly by using perhaps as much as 1/4 of one’s assets. ABX is a good example. From $15 to $21 we made 40% in two months, or, if you prefer, 240% per annum not counting compounding.

In the case of ABX the hardest part is determining where to enter the trade. If done too early the gains will be dramatically eroded but oddly enough, the ultimate outcome does not change all that much. Suppose you bought at $15 but the stock went to $12, provided you held on you would still make the same amount. Why $21/22 to get out? 1. That is where c=a if you get the minimum a-b-c correction. 2. That is where the 4th wave of previous degree lies. 3. That is where the RSI goes to 70 or above. 4. That is where the MACD peaks. 5. That is when we have an acceptable EW structure for a rebound. 6. There were at least 20 other miners displaying the exact same pattern. 7. The mood was pretty negative, some even predicting the total demise of this company. There are more reasons but this should suffice. None of them apply NOW so why hold the stock. All this , by the way, is not that difficult. There are at least 20 stocks just this past 1/2 year or so that were presented in this blog for, essentially the same reasons, DELL, Nokia, Best Buy, TRQ , JCP maybe etc.etc. are just a few examples