IVN, Ivanhoe

Hamilton

Just for completeness it may be constructive to add IVN to our analysis of TCK.B. This has been another favorite stock that has done quite well. It operates (not yet) from the barren steppes of Mongolia and is , supposedly , the largest single copper deposit in the world; moreover it is, arguable, within China. There could not be a more representative stock than this one to  signal where this market might go. Here is the chart (see also previous blogs);

ivn 2011 2 ivn 2011 1

Remember, you can click on the charts to enlarge them and then you can move them to make comparisons easier.

From the big chart we assume that the low on Nov. 21, 2008 was the end of an a-triangle b-c correction and that from there a new bull market began, or, alternatively a 5th wave which would then have to subdivide in 5 sub-waves.

Looking at the short-term chart 5-waves can be counted ( in blue). Waves 1 through 3 travel $15,74 from $2,06 to $17,80. A similar move for wave 5 from the low of 4 , a very common relationship, would have gotten the stock  to $29,17. In reality the stock overshoots by a little an reaches $30,28 on the 7th of Dec. 2010. This up-move can also be counted as a very large 3 wave B-wave, but that does not look that compelling. Either way the stock should now drop back to $13,43, the low of May 20th, 2010. It has already gone down $8 in a first, or a wave, and should very soon go down further in a 3d or c wave. If correct this certainly underscores the need for selling TCK.B very soon if not now.

Shanghai and Hang Seng index.

Hamilton

To get some idea of how this China Wirtschaftswunder is actually affecting their own stock exchanges a quick look at the Shanghai and Hang Seng (Hong Kong)makes you wonder where the disconnect is;

Shanghai Hang Seng

The Shanghai on the left looks pretty dismal, worse almost than any other market. (see previous blog). The Hang Seng looks remarkably similar to Copper and TCK.B. An a-b-c correction from the lows fits best and the pattern either was completed or has one more little leg up. Ergo we think it is time to get out of TCK.B Seebelow previous comments on Shanghai from exactly a year ago.

Shanghai DJ Index Jan10 2010

Copper and FCX , Freeport

Hamilton

To test,so to speak, the plausibility of TCK.B being close to an exit point, looking at Copper (the stuff) and FCX (presently the largest copper miner operating from Indonesia). Here are the charts;

copper 2011 fcx 2011

Copper and TCK.B are pretty well identical, suggesting that it is still possible for TCK.B to go a little higher, perhaps 10% or so. FCX is clearly the winner in this competition. The C=A and the stock is double topping having clearly risen in a 3-wave fashion, that is, corrective. Also the RSI and MACD are turning over so this one suggest we are well done right now.

TCK.A, Teck/Cominco.

Hamilton

2 years ago we opined that the stock had not yet completed 5 waves down and therefore could go lower. (see old blog). Even though that assessment proved to be correct,it did not help very much as we forgot to look at it again for too long a period of time. Today at almost $65, or $12.5 above the levels attained at the triple top in 2007/2008 we would sell the stock.

Fundamentally, if you agree that buying low and selling high is the way to go about investing , the question how high is high must have presented itself. Could this be high? Like a phoenix this thing rose out of the ashes and here it is well above the old highs, mostly due to the China’s insatiable appetite for iron ore, copper and what not. So the stock could be vulnerable should China’s Wirtschaftswunder come to an end, that is level off.

Apart from that the charts suggest 2 alternative possibilities, here they are;

tck 2011 1 tck 2011 2

Apart from clearly showing that this stock, should it regress back to the mean, is overvalued by at least $20. More importantly, in my view, there are now two possibilities in EW terms. The first , on the left, is that the orthodox top in this formation occurred sometime in 2007/8. As there are actually 3 tops at about the same level (not shown well in these charts, anyone could have been the top. It matters little except that the drop into the lows is consequently clearly not a 5-wave move; perhaps an a-b-c. On the right we assume that the whole upward cycle was not yet complete and needed a 5th wave. That both possibilities can be reconciled with the structure of the up move is pretty clear from the detailed chart below;

tck 2011 3

This leg can clearly be counted as either a 5th wave (with 5 subdivisions) or a large B wave (with 3 subdivisions) that rises above the orthodox top. At this moment one cannot say with absolute certainty that this stock cannot go up another $10 or so , but what can be said with a good deal of certainty is that the next big move will be down to $3, or $32 or anywhere in between, depending on which chart you believe. Time to say thank you and move on.

See also Copper, above.