Unfortunately we do not have tick charts any longer than 10 days, so we are looking at an incomplete picture. Today Draghi, Bernanky and Pan Gongshen came out with a joint communiqué in which they expressed their unreserved conviction that Niko should close the gap at $21.21 and they promised to do whatever was needed to get it there. Just kidding.
This looks like the start of a third wave (starting from around $13), you are already up 30% or so, why not enjoy the ride. It may go a lot higher!
See Febr. 7 and 17 blog. Here is big picture, very much like ABC but a lot more volatile;
Notice that over the past ten years or more this stock followed the pattern of ABX. We do not see the triangle as clearly but one could imagine one. In any case this stock is probable in wave 4 (which we anticipated back in Febr. of this year). By the way if you are still long the stock from $35 you may get a second chance to sell at about $45. On a proportional basis Agnico is well ahead of ABX having already lost 2/3 of its value which would be around $18 for ABX.
We have never been all too fond of this company and became downright negative after RBC put it on its focus list quite some time ago. Here is why;
For a number of years during the late eighties this stock, and also Franco Nevada to mention but one other, was the darling of gold speculators expecting a repeat of the metals performance from roughly 1973 to 1981. Instead they got one of the best formed triangles ever, lasting a little over ten years, (I was focused on Hecla and never looked at ABX).
Triangles occur one leg before the last, which is , of course wave 4. The somewhat violent jump up is called a thrust. Typically it has an amplitude roughly equal (or 1.62X) to the mouth of the triangle, shown here in purple. It is a 5th impulse wave and as such should subdivide into 5 waves. It shows overlap but that is OK as it is a “diagonal” with a nice throw-over at the end. The A makes it right to the lowest level of the e-wave. The B-wave makes a new high and now the C is on its way down to about $17. Here is an old chart from Jan. 2011 showing the B-wave in detail and a chart of what to expect as of today.
Notice (click to enlarge) that the B-wave is also perfectly formed. After the top we get a rather messy 1-2 that consumes an entire year without going anywhere. Then wave 3 of C which took us to the low of $31.18, almost a drop of 50% just in the third wave, money you could have saved reading previous blogs. A pretty good rebound should now follow for wave 4 and it could again take a whole year! It cannot trade above $46 for this scenario to stay valid. $42 is a better guess for the rebound. After that wave 5 will take the stock to around $17 or so. What a hedge!
So it is a buy now for a gain of about 30% (from today’s low) , then neutral at $42 and a short above, say $44.
PS. Wave 2 is messy, I have used blue to show the composition. It is irregular and consequently I would expect wave 4 to be a sideways “flat” or again a “triangle”.
There seems to be some misunderstanding as to where the triangle actually is. It is not somewhere in the bottom that we have been scratching for the past three months or so. It is the pattern that took seven months to form and that fluctuates between a high of $4 and a low of about $2.35. It measures about 3.5 blocks or $1.75 which is roughly the distance in the minor 5th wave thrust. Nearly always, after the thrust, the stock reverses at least to the level of the top of e ($3), but equally often all the way to the highest point in the triangle, in this case $4. These are minimum values as obviously a new bull market could take the stock much higher. By the way, there is no credible alternative. If one were to assume that this was not a 4th wave triangle but a b-wave triangle, then the stock would have to trade with a negative value!, accordingly that is not possible.