IMN, Inmet Mining Corp.

IMN jul 2012 bimn jul 2012 s

See previous blogs on this one. The big picture has served us well and we are not about to change that. In fact, over and above the EW count, a head & shoulder pattern can be seen that adds considerable credibility to the general direction. What we did get wrong is the size of the a-b-c rebound from the Oct. lows. It runs from about $40 to $70 and could have been complete at $62.5 but wasn’t. Swings of $30 or 75% of the value at that time are completely unwarranted in terms of the need for copper in China or elsewhere. This swings would appear to be the collateral of Central Bank interference combined with a black/white investor community, or risk on / risk off if you prefer. In any event the $40 rebound was taken back rapidly in the next 5 months.

Right now , from the big picture , we have to assume that this stock will go lower. However, from the more detailed chart this outcome, at this time, is not a given. The leg we are presently in should be wave 3 of C, usually the longest (with commodities it is often wave 5). If that is the case than the count in blue might be applicable. Otherwise the count in black might apply. In short it would be a good time to stand aside. Notice that we are right on the “neckline” and some resistance should be expected as a result. The problem here is that if the stock goes up now there would be overlap. This could only be if we are in the process of developing a diagonal, read wedge, wave C. Stand aside for now.

IMN. Inmet Mining, the meaning of regression to the mean.

IMN may 6

For the first ten or so years this stock did nothing but drop in value un till it hit a low in ‘99. It lost quite a bit, 80+%. Then all of a sudden, for no apparent reason, the stock behaves like a moon rocket and gains 50X in about 5 years. The question now should really be, “What would happen if it regressed back to the mean”? For the fun of it I have draw a line where the “mean” is. So far the stock has done as expected (see previous blogs). Should it continue to do so the C wave could end up becoming a double or even triple zig-zag.

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

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%.

IMN, Inmet update

Then (June 7th) , and now charts;

IMN June 2011 imn aug 2011

A month ago it was pretty clear that IMN had pretty well completed a triangle and consequently the stock should fall. Not only did it look like one but it fit the bigger picture equally well.  Turns out that technically, if that is the word, this could not be a triangle as the e-leg cannot exceed the height of the c-leg. Whatever it is, it may simple be an input error by the vendor, it is a consolidation pattern and these are normally pauses in a move that is then continued in the same direction. In the meantime the stock is down some 18%.