Year: 2011

Can $$$

Hamilton

Can $$$ mar 2011

Currencies are always a little trickier than stocks. First of all they are not expected to climb forever (as stocks essentially are), and secondly the 5 up 3 down sequence in EW cannot possible apply as one currency up is another currency down, exactly the inverse so one cannot be 5 and the other 3! Nevertheless often, patterns reveal themselves that can have a great deal of predictive value. We recently saw the Yen and now the Can $ has a very clear wedge.

This pattern has a 3-3-3-3-3 pattern (for this purpose a triangle is viewed as an elongated flat and also counted as a 3), making higher highs and higher lows with , perhaps, a throw-over at the end. They only occur in 5th (that is just before the end), and C positions. Typically the individual legs look like they are falling like dominos in reverse. Wave 3 may not be the shortest.     This one is a gem. They invariable retrace right down to the base or lower, in this case about 92. Perhaps time to buy a few US dollars!

ABX Barrick

Hamilton

Abx mar 2011

The golds are behaving rather badly. Goldcorp , unexpectedly made a new high albeit with a miniscule fraction and American Barrick certainly wants to take its time. In this case the wedge is pretty clear (wave 3 is longer than 5 , by the way) and consequently the target remains the same, $36.

FM , First Quantum Minerals

Hamilton

My attention was drawn to this company by chance, as I do not know anything about them , but after having confirmed that they operate in Africa , are in the mining business and prefer Latin to Afrikaans , no doubt to add a little veneer of sophistication to their name , I am just a wee bit suspicious. Looking at the chart I would sell NOW, at this very moment without the slightest hesitation. Here is that chart;

FM2011

This is a very rare example of a near perfect B-wave, an irregular B-wave to be a bit more precise. This is the ONLY correction within the EW approach that is allowed to rise above its starting point. This is counter-intuitive as one might argue that it is then not a correction, but in this case EW looks more at the nature (it is way more bullish than a bull market and therefore must be a bear) of the thing than the distance travelled. In any case these B-waves, like all others must consist of 3-waves and should not go much more than 30% or so above the preceding top. Typically they constitute the mid-wave of a “flat” (but can ,occasionally, become irregular triangles), having essentially a 3-3-5 structure where the first 3 is the A, the second 3 the B-wave, and the last 5 the C wave to follow and complete this whole thing.

fm22011

Notice that the construct of the B-wave is balanced and symmetric. These pretty ones are fairly rare. Loewen, the funeral home guys had a real beauty just before it got pulverized by a Mississippi  court judge ; Merck had one right in the peak of 1999. They do not occur often but when they do they are highly reliable. This one is going to a new low.