On an arithmetic scale at least, our target of $9.60 or so was pretty good. That was based on an A-B-C where C equals A. Assuming the top was in Nov. it is also possible to count the downward move as 5 waves with an extended 5th wave. Both scenarios would allow for a pop back to the $17/$18 high point of the triangle B or 4th wave. That seems to be a bit high but the speed at which the gold stocks are going back up is quite impressive ( look at G and BRK). The move up from the lows seems to have traced out 5 minor waves, promising more to come. In the big picture people are now once again absolutely sure that QE3 , 4 and 5 are still to come but gold itself may still be doing a 1-2, 1-2. Only a clear break above $1650 would negate that possibility. It is hard to tell but the outcome is not as obvious as the market would have you think.

Ten days ago we showed this stock using both an arithmetic and semi-log scale. We leaned towards the semi-log to determine the best entry point. As is invariable the case in these markets if there are two to choose from, you will pick the wrong one. The “target” for the arithmetic chart was about $9.60 (see that blog). Give or take a few cents we are at that target. The RSI is clearly oversold and the MACD turned 4 months ago. Perhaps this is it. If you take out the B-wave triangle – it certainly is not a text-book example – wave C would have a clear 5 waves down as well as the equality with A.

The earlier suggested target (see previous blog) may be too low. The stock is still dropping but equality between the C and A legs of this structure  looks to be more imminent . The two charts are identical except that the one on the left is on a semi-log scale. When stocks move a lot sometimes equality  means equality in proportional and not absolute terms. When this might be so is very much a matter of taste and subjective judgement more than anything else but in this case it may apply. Vector wise the C is almost equal to the A, with perhaps only a few cents to go.  This, by the way, has nothing to do with gold stocks in general. The idiosyncratic properties of many of these stocks are such that one does not necessarily represent the whole. As always click on the charts to enlarge or move them around.

To add to the confusion I have added a “big picture” Bigchart below;

A good prediction should be like a horoscope. It should contain elements of all possible scenarios so the reader can recognize those parts that conform with his/her own thinking. All three are here. The super bull case, in blue, would have the above described structure as a wave 4, which should not overlap (cross the thin blue line). We are close. Alternatively a very large scale wedge is forming that would allow some overlap. The bear case is that a sequence of 5 waves was complete and the present correction should correct the bull move of the past 11 years or so. This may be enough (does not show well on log chart) and then again it may not be enough. The last possibility is that the last 11 years was not a bull move at all and instead was a corrective A-B-C counter trend move (shown in purple). For a while minor moves may run in the same direction, but the ultimate outcome is very different.

IMG has not, so far at least, shown a clear count. Previously a triangle was a distinct possibility despite wave b looking more like 5 waves than 3. Right now the lower trend-line of the entire structure coincides with the lower trend-line of the triangle itself. Normally that line should be broken briefly so if that does not happen I would assume that the uptrend started from $13 and has completed a 1-2, 1-2

Looking at the XAU a very distinct triangle occurred, see below;

This triangle measures about 60 points which would yield a high of about 230 for the XAU, which is actually not that far above  a double top. Further evidence that the gold stocks may go up a little further comes from Kinross , not just the stock but the warrants K.WB;By comparison there is a chart showing what Hecla , HL, did  back in 2001.

Goldcorp G actually has the best triangle structure of all of them. Here it is together with the warrants (as mentioned earlier a long time ago, the warrants provide a bigger bang for the buck).It desperately wants to at least double top. (click to enlarge).