Month: March 2016

AU, Anglogold Ashanti, update

Hamilton

au march 7 2016

We show Ashanti once again because it is such a remarkably good example of what Elliot Wave is all about. There are only 13 patterns in total, either up or down. The thing is that they occur in a very repetitive sequence so if you can figure out where you are you can predict where you are going. Even if there is no absolute certainty, more often than not one can make an educated guess as to the next move, even in those cases where the entire picture might not be clear. This nine plus year “flat” correction, including the move up preceding it, conforms to almost all the rules and guidelines of EW. This makes it relatively easy to predict the future which we did precisely a year ago;

au march 8 2015

As it happens the stock followed the blue script, going down to slightly less than US$6. But from a trading point of view you had a clear roadmap of all three possibilities. From an investing perspective all three possibilities would lead, if correct, to sizeable gains from 50% to 100% to 300+%. Anyone of those would have been perfectly acceptable. We are presently at about US$13, having already reached US$14.31, a little more than 30% up in a year in the worst case, which is now negated, we think.

We would assume that this stock has now entered a new bull market. The initial target, set a year ago of $20 is therefore just a milestone on the way to higher levels. We will keep monitoring the stock as there are still bearish possibilities after $20, namely if we only just finished wave 3 of C and are still in 4 of C (not of 4 of 5 of C).

By the way, there is no difference between trading and investing other than an always arbitrary timeframe.

HCG update

Hamilton

See our previous detailed report on this stock. We recommended a buy at the $23 level or slightly lower for a target where the gap would be closed, possible, that is at about $40. We did not go that little bit lower but it is, of course, not a good approach to forego buying for the sake of a dollar or two to miss the boat for $17 potentially. Anyway, here are the charts again;

HCG march 6 2016 lhcg march 6 2016

We were toying with the idea that the gap might be closed. In hindsight we are not so sure. All too often support on the way up becomes resistance on the way down. Here at $36.20 we are marginally into the gap but also at the trend line of the multi-year channel. You are up roughly 50% so this is the appropriate time to get out.

It is possible that from the peak we are doing an initial 5-wave sequence that is confined by the blue channel. A, in my view, better take would be that we are actually in the red channel and that the low of wave 1 or A down was made several months ago in August. From there a large irregular flat is almost complete to make wave B, which explains why we did not make a marginally lower low. This fits well with the notion that the gap, in green, is often in the middle (of the extremes, regardless of the count). The RSI and MACD are soon to roll-over and if wave C (next) would equal A then we are looking at a target of about $5, essentially the same as we calculated in our previous blog on this stock.

Mr. Soloway who started with the company when assets were at $51 mln. has announced his departure as CEO after 30 years. The company is now a $25 bln. outfit (growth of 490X). The soon to be new CEO joined the company in 2007. New brooms sweep clean but only the future will tell if this one does.

TCK.B update

Hamilton

About two weeks ago we recommended selling this stock at $11. To date it has not (yet) reached that level, but did trade at $10,95 last Friday.

tck mar 6 2016

You should be long this stock at a price of $5 or even better, so you are presently looking at a gain of, just shy of 120%. You should put in a market order and sell this coming Monday morning. The stock has done very well the past few months but has reached and exceeded the level of the 4th wave of previous degree. The RSI and MACD are close to peaking and a deep wave 2 down is a very real possibility from this point. This could retrace a good part or even almost all of the recent gains.

The buy-and-hold crowd never gives it any thought but the reality is that selling is the more important action, not buying. I have met a lot of poorer people that followed the buy-and-hold adage, but have yet to meet the person that became poorer taking a profit. Furthermore, with a little bit of luck you might be able to buy this back at $7.5 or lower!

And don’t forget to tell your neighbour that this blog is still for free!

Bayer AG

Hamilton

Bayer march 5 2016 bbayer march 5 2016 s

Occasionally EW, or if you prefer, I get it wrong. That is why we always recommend getting out after, say 10% or something in that order of size. It allows you to make the same mistake 10 times rather than only once!

We had identified the 4-year flat in the middle of the chart (see previous blogs), but, not fully grasping the central banks commitment to flooding the world with money, took the position that we were already on the way down in C. The stock, of course, kept rising for another three plus years and added roughly another $100 to the ADR. We do not have a longer term chart so just looking at this one it is easy to conclude that the whole thing is one very big B-wave! The alternative would be a 3, 4 and 5, with 5 and 3 vector equal.

From the short-term chart it is possible to conclude that an initial 5-wave, first wave down was completed at the $103 low (a 37% drop). Alternatively a number of variations in the form of a single a-b-c or double a-b-c X a-b-c could be in progress. In all cases a decent bounce should be expected in the near future, possible even to the $135 level. After that the target, as a minimum, is $50.

On the side I find it interesting that not that long ago the medical world recommended against the use of aspirin as this might cause ulcers. Today the story is that if you are over, say 50, you should eat the stuff like candy and at the very least keep a few at hand just in the event you get a heart attack. Take them before you dial 911 is the advice.