From our friends at the Globe & Mail. We got this one dead wrong. The top was in August 2005. The present top is a B-wave top as far as we can tell. It may not be quite complete but even so we would exit any long position. Cheque books, especially those with panoramic scenes on them may still be in vogue but it does have the same connotation as the buggy whip. A sell.
Just as with AMD (see previous blog) we made the exact same mistake with Canadian Tire in thinking that the stock was ripe for a fall in late 2010 at about $68 or so. It too did oblige by dropping about 30% but then it rebounded and made much higher, new highs above $90 by essentially double topping. Here is the chart;
We know that the move up from the ‘08 lows is most likely a B-wave. A 5-3-5 structure with both the A and C of approximately the same length. This leg could conceivable grow a little longer but it still would not be a 5th wave; that is impossible as there is already overlap between wave A and wave 4 and this entire structure seems a little off to be a diagonal. This one is ripe for a fall any moment now. The RSI and MACD tentatively support this view.
Back in early 2011 it looked like this stock had peaked at around $38 after tracing out a nice B-wave. Despite initially dropping quite a bit the stock regained it’s composure and has now spent almost 3 years to get to a slight new high. This is the nasty part about corrections. It is like boiling milk, if you look it seems to take forever and if you take your eye off it the milk is all over the stove in a nanosecond. On the positive side, thanks to the more complex correction, you are given a second chance to get out. We realize that the last C wave could still take the stock just a little higher, perhaps to $43 or so but given the symmetry hat is already there we would exit now.
What applies to ABX is not unique to that stock even if its problems may be somewhat unique. The entire gold mining complex listens to the same drummer. Judging by the XAU the group is up about 30% and both the c and a legs are more or less equal. We would step aside here. See all individual blogs. See also FNV which has the largest retracement.