IVN

IVN, Ivanhoe

Hamilton

IVN dec 15 2011

Even though the exact count on Ivanhoe has eluded us, it was quite clear that the recent rise from $13 to about $23 was corrective and therefore probable not sustainable (see ou previous blog where we specifically warn about the $23 level). Today Rio won a court suit that confirmed it’s entitlement to acquiring an additional equity position in Ivanhoe. The stock has dropped about 15% on that news and has now overlapped the $16-$19 range, the b-wave and consequently chances are now better for the stock to trade below $13 than above $23. There still is , however, an outside chance that the corrective action from the lows was only a wave A of a more complex correction. The odds are fairly low so , once again,  we suggest getting out on a rebound.

IVN, Ivanhoe, update

Hamilton

Back on Oct. 6 we commented that we were fundamentally bullish on this stock but were not sure about the count. $23 was mentioned as a “critical” level . Here is that chart;

ivn oct 6 2011

The stock has obliged so far, moving up a lot faster than expected but otherwise following the script. Here is today’s chart;

ivn nov 2011

The problem is that the move from $13 to $23 is pretty well a clean a-b-c, in other words corrective. This could still become a 5-wave move over time , but right now  it does not look as if it will. Stepping aside or using a tight stop is advisable. By the way , even if this becomes a 5-wave initial bull wave, you will probable revisit the $23 to $19 range in any case!

IMN, Inmet Mining, FCX , Freeport, IVN, Ivanhoe and Copper.

Hamilton

The common thread between these four items is, of course, copper the metal. What I will try to do is come up with an average so to speak as there are a number of conflicting elements here. First IMN, several times in the past we called for a drop to around $47.5 or so long before it was even close. The basis for this was an apparent triangle forming. Here are the then and now charts;

IMN June 2011  IMN oct 2011

Triangles are always either waves 4 or B. Well before we got here I had to conclude that the triangle was probable wrong, but I maintained the target (see previous blogs). The stock dropped nicely to $40, in hindsight the proper target as it represents the pause area on the way up. Of course the $40 level would have been a buy but i was not paying attention. Since then, Oct.4 the stock has bounced an incredible $22.50, well over 50%. This causes overlap for a number of counts that are not shown and leaves us with a simple A-B-C. These can be repeated 3x so this is not necessarily bullish long-term.

I got FCX wrong thinking that it could drop further. It did not. Just like Inmet and the others the stock rebounded from that same pause level;

fcx oct 2011 fcx oct d 2011

Freeport does much the same as Inmet but clearly there definitely is no triangle. This leaves a 1-2-3 and now 4, or a 1-2, 1-2 , 3 , and now 4, or a simple A-B-C. Overlap occurs at $45 for the first two counts. It looks like the stock wants to go to $48 (causing overlap). The rebound looks like an a-b-c but the c wave already has two gaps in it. If this happens the A-B-C interpretation will prevail as the most credible.

Copper, the metal has behaved in a similar fashion except that it was relatively stronger than the stocks,it did not fall as much;

copper oct 2011 Copper oct 28 d 2011

On the left the Oct 4 expectation, proven to be wrong immediately as that day was the low. Overlap will occur at about 3.85 and 4.11 respectively. Copper is up 25% from the lows, obviously lagging the stocks by a wide margin. Here again the count is anything but clear even if all possibilities are still open.

IVN oct 28 2011 ivn oct 28 2011 d

Ivanhoe  has a virtually identical pattern , dropping precisely to the pause level of $13 which I thought of as an extreme. Where it differs is that it has two tops which makes things rather messy. Starting from the February top the patterns are pretty much the same. I am fundamentally bullish on IVN but the rebound from the lows of Oct 4 looks decidedly corrective just like all the other ones. Overlap occurs at first $23 and then $24, but neither excludes a continuation of the bear if this turns out to be an A-B-C X A-B-C Y A-B-C. Therefore stop-loss levels should be used un till this clears up. The stock is already up from $13 to almost $21, more than 50%.

IVN, Ivanhoe

Hamilton

ivn oct 2011

This one certainly did not stick to the script as tightly as one might expect, but not too many alternatives are available. It went right down to the max. of $13 but now seems poised to go higher with new agreements between the Chinese ( Mongolian) government, Rio Tinto etc. etc. See previous blogs. To some extent this mine should be quite insensitive to the price of copper itself, it is that big and the costs are that low.

The alternative,with low probability, would be consistent with the TSX as a whole and would consist of a series of 1-2 (with irregular corrections as wave 2). In that scenario the stock should not trade above $23 (overlap).