Year: 2014

XAU update, again.

Hamilton

xau july 7 2014

Here is that triangle again in the XAU. All the legs within the triangle should be three-wave structures and there should be 5 of them. With one exception, wave e, they all definitely are. e may not be over yet as it can still go higher provided it does not exceed the height of the c leg. The “mouth”of this triangle suggests a target at about 60 (or even lower). EWavers, the purists that is, take umbrage with using other technical indicators, it pollutes and distracts the thinking. I do not see why one would not use additional indicators if they simple corroborate the EW analysis. In this case the MACD has been dropping for nearly a year and the RSI is clearly overbought having been above the 70% line only once before in the previous 3 years (all I can get on ScharpCharts). By the time we get to 60, if indeed we do, gold stocks will have lost about 75% of their peak values and should then be a screaming buy at least for a very solid bounce. The XAU contains 13 gold stocks, mostly the big ones like ABX, Goldcorp Kinross etc. so what applies to this group of stocks does not necessarily apply to all gold stocks.  For examples, DGC, Detour Gold, no doubt, already made its low as we pointed out months ago.

STOXX600 update

Hamilton

stoxx600 july 7 2014 bstoxx600 july 7 2014s

Another potential c wave that is near completion. It has all the necessary attributes of a wedge, so perhaps it is one! Similar wedges are found in the IBEX and the banks within it of which we show only SAN, Santander below;

san july 7 2014

It is particularly interesting in that it has a perfect 2.618x advance from the low (where we recommended buying it!). This one probable already has a throw-over .

DOW update

Hamilton

INDU july 4 2014

Speaking of wedges, the DOW itself is displaying one that is almost as beautiful as the one on the CAC40. If there is a small triangle in the 4th wave position in this wedge, then it could be argued that one more minor leg would be required to complete the pattern, either with or without a slight throw-over. Again, as with the CAC the initial target would be the base of this structure, about 600 points lower. The charts below show how this wedge, always a 5th wave, fits in the big picture.

indu july 4 2014 mindu july 42014b

It would be the 5th wave of c of an a-b-c that is itself the larger B-wave. Interestingly, the low was at 6547 so the Dow has risen 10521 points so far or 160.7%. This is very close to an ideal Fibo number, which would suggest a top might occur at about 6547×2.618= 17140. That is only 66 points higher than yesterday’s high so this could be accomplished in less than a day. To read why this market might just be a little overvalued I recommend reading http://www.hussmanfunds.com/     ‘s latest article about delusions of the perpetual motion machine. Here is one person who does not quite agree with Janet Yellen’s view that this market is not overvalued!

CAC update (from yesterday)

Hamilton

cac july 3 2014

See also previous blogs! The CAC40 peaked right at the end of this “diagonal” wedge pattern. If it does what it should the index should drop at least to the base of the pattern, that is about 4050. As it peaked at about 4600 it will then have lost 550 points or roughly 9%. We will watch it closely to see how it does this if it does this. Stay tuned.