Year: 2016

AU, Ashanti Gold update

Hamilton

As usual the then, March 7, 2015 and the now and tomorrow chart;

au march 8 2015AU oct 22 2016

Be careful when reading these two charts. The scales are not the same! On the left we show the two possibilities. In blue we need one more low to complete a diagonal 5th wave of 5, and, in red, we have already seen the low and are on our way up. As it quickly turned out, the drop was not yet complete and the stock followed the blue lines, rather precisely!  It climbs back up rapidly to $23, well above the top of the diagonal at $19. This stock comes from a peak of about $60 and has taken the past 10 years or so to come down (see March, 2015 blog). It is therefore highly unlikely that this one year rise would be the entire correction and one should assume that at worst, this is only the A wave of an A-B-C. That implies that another wave up is coming once the B is done, which it probable is as it retraced a perfect 62%. Equality between the upcoming C and A from this point would suggest $29. Using Fibo ratios $33 might be achievable.

The only conceivable error in this EW analysis is that the low has not yet been established and that the move from $6 to $23 is. in fact, a complete correction – incidentally it can be subdivided in two equal parts of about $10 each – but of a lesser degree than thought. This is highly improbable as it contradicts the big picture as per the XAU etc.

CCO revisited

Hamilton

cco oct 22 2016 lcco oct 22 2016 s

A few blogs ago we had this as an A-B-C with a 4th wave triangle developing and a target of about $10. That did not work so we upped the target to about $14. That proved to be too high and now we reached $10 ($9.88 to be precise).

With hindsight we are changing our count to an a-b-c X a-b-c, that is a double zig-zag. As is so often the case, the two a-b-c’s are vector equal, which they are at about $10. The only fly in the ointment is that the second c, shown in the detailed chart, should subdivide into a nice 5-wave sequence. It does as shown but not without torturing this c wave. The 5th wave is very long (normal for commodity stocks!), and wave 1 is relatively small.  Otherwise the RSI and MACD do support the notion that this stock is a buy.

In any event, fundamentally (and normally we do not give much weight to this factor) it would seem to be appropriate to assume that in the future more nuclear power will be needed, despite the knee-jerk reactions in Germany and Japan. Also in a world that seems to be becoming less civil and more belligerent by the day , perhaps more of this stuff is needed.

RY, Royal Bank update

Hamilton

ry oct 20 2016

In our previous most recent blog on this stock it was suggested that it could possible go as high as $86. Looking at it more closely now that would appear to be just a little too high. $85 is a more reasonable target.

The stock is making a very nice wedge and there is little room to maneuver left. The RSI, always a good indicator, is starting to move into overbought territory and the MACD has been down for half a year. Fundamentally Yellen is brooding about creating a hot economy, sort of like an incubator while Poloz is lowering his sights once again, this time acknowledging that there might actually be a housing bubble. In the mean time our market is almost back at its previous peak despite the fact that oil is still at half the price it was then and after a rerun of the Nortel movie in the form of Valeant. Caution is the better part of valour, so we would exit on the next tiny move up.

Below is a more refined picture including this morning’s action;

ry oct 20 2016 s

XAU update

Hamilton

As usual the then, Dec.23, 2015 and now charts;

xau dec 24 2015xau oct 19 2016

Once again we are amazed at how accurate our EW calls often are! Back then it was relatively easy as there was a very clear wedge in stocks like ABX, which after a triangle truly anchors the count perfectly. No such luck this time as the different stocks show different paths to where we are now. Some have clearly completed a correction recently, implying an upmove directly ahead. AEM, FVI, PAA, AU and, perhaps, DGC are good examples. Others such as ABX itself is not.

Roughly speaking we are not sure if the correction of the 5-waves? down from the peak at the start of this year is over or if this is just half of it, or if we are in a real new bull.  All we can say at this juncture is that both interpretations call for higher levels immediately ahead. Furthermore there is an event that could trigger a flight to safety (at least according to some) into gold stocks, which is tonight‘s3d debate. If you are not already thoroughly sick of this sordid spectacle you probable will be soon! Also it is not true that what happens in Las Vegas stays in Las Vegas. This time will definitely be different.