NWC, North West Co. update

Once again the usual then, 24th March 2016, and now charts;

NWC oct 25 2016

From the peak this stock had lost about 21% and is presently rebounding in, what we think is wave 4 of 3. Whatever, the target for this round is at about $20 so we are not done yet by any means! Actually the drop so far has occurred at a much slower pace than one might have expected given the wedge-like structure over the two years or so going into this drop.       Perhaps Canadians are encouraged by our CB Governor Poloz’s latest comments about another 18 months of the same, that is wait and see what happens. We thought that was the policy all along.

OGC, OceanaGold

Back in March, when this stock was at $4, the question was asked where it would go. My best guess, at the time, was $5.50. Here is why;

ogc oct 22 2016

This stock only came into existence in 2007, so there was not much of a history or, for that matter, much of an EW pattern to work with. Fortunately sometimes all you need is one minor pattern to be able to anticipate the very next move even though everything beyond that remains inscrutable. In this case there is a triangle, or perhaps even two, as shown in pink (the larger one) and blue the smaller one). Both measure $3.75 at the mouth and as the low of the e wave is the same for both, they both suggest a high of $5.50. Furthermore, if this is indeed a triangle it would have to be a B-wave and not a 4th wave given the proportions. In other words one could reasonable expect a large A-B-C structure as shown in green. This is corrective and calls for a drop back to $1.75 or lower. More often than not the C legs tend towards simple or vector equality, again suggesting $5.50 for a top.

As far as timing is concerned, the extreme is frequently reached more or less perpendicularly above the apex.  This would be dead on for the blue triangle but not for the pink one which could allow for a peak much later. So where do we go from here?

ogc oct 22 2016 s

The “thrust” can easily be counted as a 5 wave move so that part is OK. The almost 40% drop from the extreme is now beginning to look very much like a correction, an a-b-c again but on a much smaller scale. That could mean that the high is not yet in and is still to come, albeit perhaps close to the $5.50 level but a little above it. Only after that will the stock drop back to $1.75 or lower.

Given the contradicting message from the longer and shorter term pictures, it might be advisable not to take additional positions as it is entirely possible, despite the very prescient call last May, that the whole idea of triangles is completely wrong and that we are presently only just starting wave 5 of 3 of 3 of a larger bull move which would have the potential to go much higher. I do not think so, but EW and thinking do not mix.

AU, Ashanti Gold update

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

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.