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.

AU, Anglogold Ashanti, update

au march 7 2016

We show Ashanti once again because it is such a remarkably good example of what Elliot Wave is all about. There are only 13 patterns in total, either up or down. The thing is that they occur in a very repetitive sequence so if you can figure out where you are you can predict where you are going. Even if there is no absolute certainty, more often than not one can make an educated guess as to the next move, even in those cases where the entire picture might not be clear. This nine plus year “flat” correction, including the move up preceding it, conforms to almost all the rules and guidelines of EW. This makes it relatively easy to predict the future which we did precisely a year ago;

au march 8 2015

As it happens the stock followed the blue script, going down to slightly less than US$6. But from a trading point of view you had a clear roadmap of all three possibilities. From an investing perspective all three possibilities would lead, if correct, to sizeable gains from 50% to 100% to 300+%. Anyone of those would have been perfectly acceptable. We are presently at about US$13, having already reached US$14.31, a little more than 30% up in a year in the worst case, which is now negated, we think.

We would assume that this stock has now entered a new bull market. The initial target, set a year ago of $20 is therefore just a milestone on the way to higher levels. We will keep monitoring the stock as there are still bearish possibilities after $20, namely if we only just finished wave 3 of C and are still in 4 of C (not of 4 of 5 of C).

By the way, there is no difference between trading and investing other than an always arbitrary timeframe.

AU, Anglogold Ashanti update

AU june 16 2015 bau june 16 205 s

Last time, March 8th, we were still a little bit on the fence with regard to where this stock could go. Now we are prepared to take a stance in favour of going long at a price below the most recent low of $8.43 and above the December low of $7,45 Given the relative size of the last two down legs we must assume that they are both part of an a-b-c correction of the initial up wave in a new bull phase. In short, this is a buy at <$8. The initial target is at $13 and then at $20. If I was a good salesman , something nobody has yet accused me of, I would point out that your gain would be about 20% greater than this as this is in American Dollars!

AU update

au march 8 2015

In our previous blog we noted that it would clear things up quite a bit if this stock were to break $13. It did but not in a significant way and therefore neither of the two possibilities is eliminated. Nevertheless we are leaning towards the idea that we started a new uptrend last year at the low of $7.45. From there the stock almost doubled and it did so in what appears to be a fairly decent 5-wave move (which still could just be a c of an irregular a-b-c wave 4). If this is correct the stock should be a buy here or just a little lower, it has already retraced about 62%. All this is shown in red. The RSI is already oversold.

     The other possibility, which we do not favour, would be that of an expanding diagonal or wedge that needs to complete a 5th wave. Al that needs to be achieved is a new low. Either way (see big picture previous blog) the stock should bounce back to at least $20 someday in the not too distant future.

AU is, of course the symbol for the element gold (#79) on Niel Bohr’s periodic  table of elements just in case you were not paying attention in your chemistry class. It must have been quite a coup for this company to get that ticker symbol.