Interest rates are not a homogenous group. As we pointed out some two years or so ago, we believe the 32 or 33 year cycle is over except that it takes a little while for this to roll through the different maturities and credit qualities. This chart represents the Lehman ( yes it still exists) long bond ETF. This is a diagonal, unmistakenly. Today Carney failed to oblige the CB clique by not lowering rates. RBC went out on a limb to recommend gold, normally a kiss of death. Perhaps we are there!
In an earlier blog we tentatively suggested that this stock might be a buy at about $14. We just now noticed that it had traded at about $13,45 or so just a few days ago. So we took another look and even though we tweaked the EW count a little bit, it does look as though this may actually be the bottom you are looking for.
The whole descent from $80 or so is a double zig-zag, that is an A-B-C X A-B-C. What you are looking at is the second C that is most likely taking the form of a diagonal (the same construct that we encountered with ABX) which, if correct, should lead to a very violent retracement right back to $27. The red arrows stylize this concept. The RSI is confirming something is up.
The 3 showing the end of wave 3 should be one notch to the left!
See also all previous blogs. This is one of our best calls, however there was one big mistake and that is that we expected a much deeper pullback for wave B. It just did not happen, perhaps because the world was in a hurry to get back into what they had sold only a few months ago. We are now just a few dollars shy of our target and would be inclined to sell if we still owned this stock.
Wave C is now equal to A and has taken on the shape of a diagonal, a pattern that is usually reversed to its starting point or below. There is no rational reason why this stock should have appreciated almost 4-fold with gold at about $1360 or so. At this price gold should be well above $1500 or higher particularly in an environment where the US$ is rising. A sell.
See our blog of exactly a month ago. In our estimation this 5th wave, which is a thrust from a triangle, should be complete at todays high. There is a throw-over, of about $3 already if you look at the action at about 12.30 pm. Similar peaks are forming on , for instance, Fortuna (FVI) , Detour (DGC) and above all Barrick which is now trading a hair shy of $29. See also FNV.WT, the warrants on this stock which are now going vertical.
All of this is a little odd now that the whole world seems to think that Brexit is just a minor bump in the road, perhaps even a beneficial bump for both the UK and Europe. Perhaps this was just a fraternity prank that went a bit too far, but one that will not have consequences as papa, or his money, will bail out the boys. See Bullingdon club on the internet.