Just a quick update. It is an educated guess more than anything else. Looking at the bigger picture the overlap that clearly occurred suggests that we started this (wave 3 of C ) with a series of 1-2’s. Today , with 250 points down at this time we could be in a 5th with of 3 , implying a rebound in the next few days. Overall there is still a long way down and consequently any early attempt at counting this thing is mostly academic.
For the first ten or so years this stock did nothing but drop in value un till it hit a low in ‘99. It lost quite a bit, 80+%. Then all of a sudden, for no apparent reason, the stock behaves like a moon rocket and gains 50X in about 5 years. The question now should really be, “What would happen if it regressed back to the mean”? For the fun of it I have draw a line where the “mean” is. So far the stock has done as expected (see previous blogs). Should it continue to do so the C wave could end up becoming a double or even triple zig-zag.
On the left the blog from December 1, last year and on the right the present. The a-b-c rebound fell a fraction of a dollar short of the ideal target ($42, level of 4th wave & 62%) but the c part was a textbook diagonal that confirmed the turn to the downside. So far we have reached about $31, but the ultimate low target is in the low teens ($12 or so, see that blog) so there is still a ways to go. Wave 1 down was about $22, if wave 3 equals wave 1 that would take the stock to about $19, then there is still 4 and 5 to go. The outrageous prediction then, repeated below for ease of reading, is possible no longer that far-fetched.
This is not today’s chart, it is 5 months old!
The earlier suggested target (see previous blog) may be too low. The stock is still dropping but equality between the C and A legs of this structure looks to be more imminent . The two charts are identical except that the one on the left is on a semi-log scale. When stocks move a lot sometimes equality means equality in proportional and not absolute terms. When this might be so is very much a matter of taste and subjective judgement more than anything else but in this case it may apply. Vector wise the C is almost equal to the A, with perhaps only a few cents to go. This, by the way, has nothing to do with gold stocks in general. The idiosyncratic properties of many of these stocks are such that one does not necessarily represent the whole. As always click on the charts to enlarge or move them around.
To add to the confusion I have added a “big picture” Bigchart below;
A good prediction should be like a horoscope. It should contain elements of all possible scenarios so the reader can recognize those parts that conform with his/her own thinking. All three are here. The super bull case, in blue, would have the above described structure as a wave 4, which should not overlap (cross the thin blue line). We are close. Alternatively a very large scale wedge is forming that would allow some overlap. The bear case is that a sequence of 5 waves was complete and the present correction should correct the bull move of the past 11 years or so. This may be enough (does not show well on log chart) and then again it may not be enough. The last possibility is that the last 11 years was not a bull move at all and instead was a corrective A-B-C counter trend move (shown in purple). For a while minor moves may run in the same direction, but the ultimate outcome is very different.