TSX update

Hamilton

tsx june 2012

Un till there is a convincing argument to expect otherwise we will stick to the basic EW model A-B-C correction. The target is about 7500 and perhaps a lot lower. When is hard to say but it is obviously a function of the forces that are working against this happening. These take time to exhaust themselves. Amusing things happen in the mean time. Who would have thought that the Americans would blame the Europeans for the most recent problems, conveniently forgetting that their economic situation is about twice as bad (at least in terms of debt). It is unreasonable to expect the Greeks and Germans to fall in love all of a sudden, but the chances of the Republicans and Democrats agreeing on taxation being part of civilization is even more remote, despite three years now with above a trillion deficits. Anyway the best guess would be between now and 2016. How is easier, see below;

tsx june 2012 s

This is just a tentative picture. C waves are always 5-wave structures and should develop more or less along the above path. It may not be Europe in the end, perhaps it will be the USA. Elections are only a few months away and the “back-burner” status that the US has enjoyed while Europe blows up, may soon be over.

ZJG , BMO junior gold companies ETF

Hamilton

ZJG june 2012ZJG s 2012

ZJG is the Bank of Montreal junior gold miners ETF. It has the charm of some degree of diversification so instead of trying to figure out if PAA, FVI, IMG etc etc are the right one for you , you get the group. You do get a slightly different perspective. On this chart it looks like the rebound is taking the form of an a-b-c where the c is about to equal the a at around $16. The really critical point, however is at $17 as that is where overlap would occur. If that happens the bull looks a lot better. Wait till it does and sell in advance. You can always re-enter.

PAA,Pan American Silver Corp.

Hamilton

Just two weeks ago we suggested that this stock was a buy at $15, even if the count was incorrect as in that event the downside was still limited to, perhaps $13, an insignificant difference considering the minimum expectation for a rebound to $20 under both scenarios. We are up almost 30% and would expect this stock to go further to $25 and perhaps higher. Here is the chart;

paa june 2012

On closer inspection the objection to one count was that there was no alternation but there actually is ; wave 2 is an irregular flat and 4 a normal flat. The only remaining question is whether or not the drop from $40 to $15 was the entire move, and therefore we would be in a bull market, or just waves 1,2 and 3 with 4 and 5 still to go.  If you want to play it safe, take the $5, if you are a little more entrepreneurial go for the $25 target (see also previous blogs). By the way, IMG, IAMGold is possible in the exact same position.