Fortuna got pretty close to the target of $3.50 (4th wave of prev. deg.), and, not coincidentally a 50+% retracement from the highs of $7.50 or so. It could be a buy here around these levels for a trade as both the RSI and MACD are at 3 year lows. Should the stock at least close the gap it could climb to $5.30 easily. Thereafter we remain disinterested in the precious metals.
Back in December we warned that IVN could fall out of bed a lot more before regaining its composure, the reason was that the rebound from about $13 to $23 was clearly corrective, implying a new low in the future.
Today we are well on our way to making a new low and then some. My best guess is that we are in a third wave of C (or 5) but the picture is by no means clear. The stock is down about 50% from the $23 high and about 60+% from the all time high of $30. From a valuation point of view this stock should be a buy, certainly at around $8 to $3, if it manages to get there. Fundamentally, and I do not follow that, there are all sorts of games being played between the company and Rio Tinto, the Mongolian government, and of course China that is or is not in a “soft landing”. The infrastructure for the mine itself is on schedule and production should begin later this year. There are some concerns with regard to water supplies. Note that the RSI and MACD are already pointing upwards.
The anticipated triangle is still possible but not very plausible. Even so the direction may still be the correct one. A lot of noise in the markets very little is clear. India lowered it’s rates, Canada may raise them earlier than expected. GS earnings were good, then again they are a lot lower than they used to be. Mr Carney is going to Threadneedle Street and Spain borrowed another 1/2 trillion from the ECB but yesterday’s 4 bln. new issue went well. Obama is going so stop the bad oil speculators and natural gas keeps making new lows, but is hardly used for transportation this side of the pond.
In 1895 Gustave le Bon published a book “Psychologie des foules” (The Crowd, a study of the popular mind) in which he, rather convincingly, argues that groupthink as we call it today is essentially a contradiction in terms as groups, crowds, assembles etc.etc. do not think and instead descend to the lowest possible denominator of emotional impulsive action. Both Hitler and Mussolini apparently kept a copy at their bedside in order to read up on how to manipulate the crowds to their advantage. Interestingly both “prestige” and “contagion”, some of the factors identified by le Bon, are clearly dominant in the brokerage business, particularly in operations that used to be referred to as “boiler-rooms”. They , of course, displace rational thinking. The book is a good read as a whole, but for the moment what interests me is a footnote on page 121 that reads as follows;
This is from the Economist and it is about how expenditures, in this case on railways, are voted on. More interestingly le Bon goes on to mention specifically Portugal, Greece, Spain and Turkey as bankrupt countries that used the 4/5 reduction in the payment of interest on bonds as a means to again balance their budgets. Today, 152 years later, nothing has changed except that Turkey, then the Ottoman Empire, is not yet on the list.
For those that prefer English, below is a rough translation.The book is available on the internet;
