Year: 2014

LUN, Lundin Mining Corp. update

Hamilton

lun apr 30 2014lun apr 30 2014 m

Our original take on this stock was that it had traced out a clear B-wave from the lows at the bottom of the great recession. Despite the passage of two whole years – this is what QE does for you – that still seems to be the correct take. Since the lows of late 2012 this zinc and copper miner has moved sideways tracing out an a-b-c which would then have to be wave 2 of C down in a multi-year A-B-C down. Here is the c part of wave 2 in more detail;

Lun apr 30 2014 s

This is unequivocally a “diagonal triangle” in EW lingo. In normal English that is a rising wedge. It is a bearish pattern as invariable it is followed by  a drop back to the baseline or more, in this case roughly 50% or so. Given that prospect we would sell. By the way, this wedge is a classic, meeting all the requirements so our confidence is high. The only possible error would be that the wedge is not yet complete and still needs a 4 and 5. Not very likely given the time that has already passed.

CMG Chipotle Mexican Grill Inc.

Hamilton

cmg apr 17 2014

Originally we thought that wave 4 was a 5-wave move down to be followed by another after a rebound intermission. Now we have to assume that it was not 5 waves but a full a-b-c instead. Having no particular predilection for Mexican food, we have no idea what the secret sauce that they use is. But in any event it is very rare that financial Nirvana is reached through the taste buds. This thing now trades at a p/e of 55X and, more importantly, the chart sports a relatively clear 5-wave sequence over its existence. If our count is correct the next major target, albeit perhaps a year down the road, is around $240 which , coincidentally, also happens to be a 61% retracement!

IBB Biotech iShares update

Hamilton

Last month, Febr. 18th we warned that given the vertical rise in this ETF it might be advisable to get out. It actually peaked a week later. Here are the charts, then and now;

ibb feb 2014ibb april 17 2014

So far it has dropped $68 in less than a month, on $274 that is just shy of 25%. We have no idea what the count down is, just as we did not have one on the way up. It is too messy and looks a lot like Don Cox’s cascading waterfalls. Whatever it is, it is probable not over. Closer to $200 you may try your hand at a quick long trade for a 30+% rebound, but do not outstay your welcome. This one should go a lot lower over time.