Author: Hamilton

HXU update

Hamilton

hxu jan 22 2015 up 1HXU Jan 22 2015 up 2HXU jan 22 2015 d

We pointed out not too long ago that there was, perhaps, a triangle forming in the HXU and if there was, it would almost certainly have to be a 4th wave. We did say that we would be at a loss to explain what would cause such a move. Well we know now as the governor explained that this was the time to move (first time since Sept. 2010) to lower interest rates by a quarter to 75 basis points. Ostensible this was because the increased risk resulting from the oil price collapse. No sane person understands how 1/4% will realistically change anything and when asked, neither the governor or the deputy cared to concede that this action might have the opposite effect as the message clearly is that things are a lot worse than they were thought to be any time over the preceding 3 to 4 years. Apparently market psychology in Canada is irrelevant.

    Then Draghi comes through with his trillion and a half Euro purchase of bonds from the member states. He was no doubt moved by events in Canada that showed that expecting unexpected events is an art in its infancy, at least among economists, not a single one of which had anticipated anything of the sort. Whatever, these two circumstances are good for about 500 points on the TSX.

   The HXU moved as expected. The question now is, 1. are we in the thrust up. 2. Is the triangle not yet complete, or 3. could we be looking at a series of 1-2’s that are the beginnings of a big bear market. We have absolutely no idea but at least you can tell from the above 3 charts when these 3 possibilities will be eliminated.

ABX again

Hamilton

abx jan 19 2019 mabx jan 19 2015 s

It is a little like flogging a dead horse but nevertheless we continue to look at ABX frequently in the hope that it may give a clue as to whether or not we are already in the anticipated bull leg for gold.

Looking at the medium term chart, on the left, it would be entirely possible that a wedge had been completed at the Oct. lows. The problem with that is that the 5th wave is disproportionately small, both in time and size. And the 5th wave does not reach or exceed the trend line which, in this kind of wedge, is relatively unusual. The question then becomes what is this. Since wave 2 is a zig-zag we would expect 4 to be a  sideways move, typically a triangle or a flat, or an irregular triangle or flat. The flat should not go beyond $15. In this case the flat is skewed to the downside and is already at an ideal point. If the structure morphs into a triangle from here we should get waves d and e still, in some cases it can get even longer.

Having said all that it still remains a fact that the target is not that far from $10 but could be deeper. On the bounce the stock could easily reach about $23. So on a risk/reward basis you might want to continue to hold if you bought with an $11 handle. This is not the case with short options as time decay can be considerable.

Below is the Big picture once again as a refresher;

abx jan19 2019 b

DAX update

Hamilton

dax jan 19 2015

This morning the DAX shot up again to around 10253. A fairly clean triangle had developed over the past two months, now we are getting the “thrust”. This thrust should be good for about 1000 points given the size of the mouth of the triangle. As e bottomed at about 9600 that suggests about 10600 for a target. The apex is a month away at the most so a few more up days could do the trick.

By the way, EWG is not following the same pattern and is not even close to the peak.