ABX, XAU and HUI, again

March 16, 2015 Hamilton

This weekend all of a sudden you could get 5 year charts from Stockcharts.com. Perhaps this is only a temporary expansion of their free product line but it is welcome in any event. ABX is starting to become extremely annoying as it simple will not show its hand conclusively. It has almost been 1/2 year without either confirming or negating a particular scenario , count or outlook. That is not helpful.

However, on the positive side we have at least the possibility of a completed EW pattern if we make a sharp wedge of wave 5. The $11.67 low would be the low and now it is just a matter of time. Both the RSI and the MACD have improved over time and suggest a decent bull run could be in the cards. Symmetry, a frequent occurrence, would suggest a low just above $12 (see red line); we have already gone a little beyond that. The long and short of it is that we think it is a good buy here once again but we cannot exclude the possibility of a spike down to $9 in the worst case.

Both the XAU and HUI have similar patterns except that they are sporting triangles which makes it more certain. But both start of with a mess which could be a series of 1-2’s so you could expect 4-5’s at the bottom.

The XAU came to within a dollar of our longstanding target. It’s top is earlier than the HUI and it is messy sugesting a series of 1-2’s. The HUI is much cleaner but also seems ton have a wave too much at the top. All should be a buy here given that a 40% retracement – the standard minimum – should outweigh any further drop should it occur.

HLF, Herbalife update

March 15, 2015March 15, 2015 Hamilton

We made a pretty astute call on this stock quite some time ago and are going to give it another try now that it is in the limelight again. Once upon a time in the late eighties or so there was a company that was called Nulife or something like that. A good friend of mine told me I should get into it because it would make us both rich beyond our dreams. If you could only see it in your mind’s eye it would become reality, so his thinking went*. Unmoved by his arguments I responded by explaining what a ponzi scheme was etc.etc. and quickly found out how ferocious the cult like thinking and conviction can be in these circumstances. End of friendship. So let’s look at it from an EW perspective only.

On the left, the Bigchart, the 5-waves up into the top is straightforward, arguable there is even alternation between 2 and 4, there is an extended wave 3 of 3, the whole thing fits into a channel and 0 to $85 is a real bull market. Next a correction should occur wiping out at least 62% but often a lot more. All corrections should take the form of an a-b-c (or multiples of that). Our best (educated) guess here is that we are looking at an a down, a b back up, and now a c down which seems to take on the appearance of a diagonal or wedge. Legs 2 and 4 usually touch or overlap a little bit and all legs are subdivided in threes, not fives. Should this indeed happen then $15 is a reasonable target.

* See Bob Proctor (not Prechter), as in The Secret etc.

PHX, update

March 15, 2015March 15, 2015 Hamilton

We remain constructive on this stock. Not only does it have a neat 5-wave initial wave up followed by a 62% correction, but now the Department of Energy has decided to weigh in on the matter by announcing,last Friday, the purchase of 5 mln. barrels to replace the sale of an equivalent amount precisely a year ago, supposedly because the stuff is relatively cheap now. 5 mln. is about 1% of the amount in storage (above ground!) so negligible by any standard but not in the context of market manipulation. The timing is bound to boost the narrative around oil if only for a little while, perhaps soon we can expand the Fed’s mandate to include stable mileage. It has a good ring to it, stable prices, full employment and even mileage. With regard to oil we remain of the opinion that another leg up should occur before oil drops to new lows ( see chart below), as is now also predicted by the Maestro, Alan Greenspan , himself. This should provide support to PHX.

We did not get the triangle wave b, instead we got a clear a-b-c down for b (we think) so c up should get back up to , perhaps, $60.

By the way, if you suspect something nefarious is going on here you are barking up the wrong tree. The US is obliged, so they say, to buy back what was sold previously, within a year! So they are just fulfilling their obligations. How crucial that is becomes obvious when one considers that there are 4.1 BILLION barrels of oil salted away, so a drop of 5 MLN. barrels could easily jeopardize the US’ military and other capabilities.

Elsewhere the strategic reserves are estimated at 727 mlm. barels. Eitherway 5mln. matters little.

RDS.B , HAL updates

March 13, 2015 Hamilton

Then – December 14th , 2014 – and now charts, as usual.

Roughly 3 months ago we anticipated a drop to about $59 and even anticipated the possibility of a triangle forming which would cause some big movements with little net result. We did get that but it remains unclear if there was a triangle. We are at the $59 level now and if the triangle was there it would most likely be a 4th wave triangle as opposed to a B-wave. This is easily accomplished by adjusting the count to start with two 1-2’s. This then completes wave A down with a B and C to follow. This is tradable as the B could easily go as high as $75 and in the meantime you are earning a 6.1% dividend in the , now hard, US$ currency (on the ADR’s).

In the alternative it was a B-wave triangle and the second part of this correction has already started. That could take the stock down to $45 or even lower in a jiffy. For the moment we do not expect that. Using HAL, Halliburton (and SLB, not shown) it would seem that a time to pause is just around the corner;

Note, first of all, that HAL already dropped 36.47%, a lot more than Royal Dutch. Next it did not have the big swings recently and has essentially gone sideways supporting the notion that it was one single 5-wave leg down. The RSI will soon be oversold (it is already with Shell) which also suggest a period of pause for the next little while (defined just like with the Fed. as when I change my mind, but data based!).

Shell is one of the few true blue chips left. It is the go to stock for widows and orphans and has been that for a very long time. At 6% your money doubles in 12 years which is a lot better than what you get on a ten year note, with, arguable, a substantially lower risk.

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