Smart Investment - mexicomike.ca

[gching]

Hi Sam,

By the way, I would like to share my strategy. You comment is appreciated.

My portfolio has basically 2 stocks (looking for 2 to 3 more): YNG and MMY. My strategy is to invest into junior gold producing companies in early stage. That reduces the risk of permitting, technical, and management problems, plus they are still cheap relatively. These juniors generate cash/income from gold selling and their chance to”Zero” is low. YNG and MMY fit into this category.

Once they make profit, I’ll stay longer for bigger gain.

YNG: Turn around company. I have taken profit from its 1st round rally, plus I have gained some free shares. Looking for re-entry because I believe there shall be 2nd rally. Watch for the production cost/oz Au (don’t know yet).

MMY: Producing gold. Recently obtain the necessary financing and fix the production problem. I’m optimistic that they can carry out their business plan with these problems solved. Share price has up a bit. Also, watch for the production cost/oz Au (don’t know yet).

I am also looking into the following juniors (don’t have shares yet): CRU, ATN (production cost too high; have to wait), AVR, CRK, CMM, and OYM.

All above is my opinion only.

Cheers
Gilbert

[gching]

Hi Sam,

Your charts and explanations have been helping me a lot in my strategy. Thank you.

Hope you have a wonderful break in these months! Enjoy!

Cheers
Gilbert

[samxxli]

My children are busy packaging; we are driving them to university in London Ontario this Sunday (tomorrow). I recently found out a new bullish count for gold markets that I must share before I take a break.

Elliott wave is a flexible tool, a set of price pattern can have various counts as long as they obey the rules, and the key is to select the count to best reflect the prices actions. In the beginning of this year, I was actually looking for triangular (abcde) consolidation since December highs for gold markets to be finished by September/October, but prices actions did not fall deep enough to me to qualify for c waves down of the triangles (my bias and was a mistake) , and time was running out such that I changed the count to abc flat correction since December highs and looked for deeper c wave down of the flat.

Recent strong advance for gold markets especially silver convinced me that the advance has legs and the decline will be shallow and short, I was also convinced that the consolidation should start from December 2009 high as can be seen from shares prices of HL, AUY and KGC. It finally came to me the beginning of last week that I should still count the consolidations as abcde triangles since December 2009 highs for gold markets.

I include detailed counts for the midway X triangles for silver and HUI and long term counts for major wave II corrections for silver and HUI.

Midway X Triangles.





The triangle since December high for silver is a rising triangle while that for HUI is a contracting triangle. Each triangle has 5 waves of abcde (orange) and each wave has 3 legs labeled either wxy (3-3-3) or abc (3-3-5 or 5-3-5) in pink.

I believe silver and HUI (also gold) are currently in wave d (orange) up of the triangles, it seems that there is still a small upside to finish d up and then follow by wave e down to finish the triangle. Wave e (orange) low for HUI meets the lower trend line at 455 while silver meets at 18.5. (Gold at 1200).

It doesn’t seem to me that the triangular consolidations have finished especially seen from gold prices pattern. But I don’t rule them out.

Major Wave II Corrections.





The target price at counter trend B rally top to is calculated by assuming Y (green) wave equal to W wave (green) in price level, then we get B top for silver at 30, HUI at 850 and gold at 1750. If B top is calculated by assuming Y wave equal to W wave proportionally, then since W top increased by 244% for HUI and Y top (also B top) for HUI can be calculated to equal 1110 (244%*455).

Since B tops for HUI, silver and gold are significantly higher than A tops, major wave II corrections are running corrections with C waves down as contracting triangles above A tops while SPX and general markets undergo severe 5 waves C down to new lows.

The markets strongly favor the current corrections for both gold and general markets to come to an end by October follow by powerful advance lasting into early 2012 and provide major buying opportunities for buy and hold positions. The advance for SPX and TSX are in the order of 50% while HUI is in the order of 100%, gold shares provide better returns. Oil price may increase from midway b correction low of 65 to 70 to 120 to 130 at B rallies top for 78% increase; oil shares also provide favorable investment environment. Natural gas should also do well from current low level. We should also watch uranium for possible powerful resurgence.

I think we should hold on all gold positions and if we have cashes we can wait for pull back at wave e low of triangle. Gold price has been in extended advance for over a month (6 weeks); it is due for reasonable pullback on its own weight even though it is not at wave e down.

Junior shares have their own timings that may be different from big cap stocks. I think we should start accumulating now if the beaten down but fundamental sound junior stocks are sitting at major supports and buy genuine breakout beaten down junior stocks with volume from long base. I recently bought back some FCO shares at 80 cents, I reason that even if FCO recover 38% of the drop in next powerful up swing of gold and general markets, it represents 380% increase. Of course, I am prepared to lose all my capital if I am wrong for whatever the reason.

SPX and General Markets.

I am not doing a new chart for SPX, the chart of my last post still applied. The low at 1040.88 last Monday Oct 30 was a fifth wave (wave v red) failure and it finished wave 1 (pink) of c down (orange).

SPX is currently in wave 2 up, it may sill has some upside before it top out to finish wave 2 up, but then it can also be the first part wave a of a more complex abc wave 2 up.

Wave 3 down, 4 up and 5 down are waiting to unfold. By the look of it, the prices actions will be very choppy in both up and down directions. It also looks to me now that it may bottom well above 950.


Happy Trading,
Sam

[Schooner]

Hi Sam

Congratulations to you and your family. I think having your youngest heading off to follow her brothers at university is an important milestone for all of you to be proud of.

Thank you for sharing all of your work and thoughts on this forum. I always appreciate your posts. I wish you all the best on your well deserved break. I will look forward to your return to the forum whenever you are ready.

Happy travels.

[samxxli]

My youngest daughter is going to university (University of Western Ontario in London Ontario, the same university as her two brothers) in September. My wife and I have decided to take a break in life for next couple of months and do some traveling (oversea). I am also taking a break in my weekly update of the markets for next month or two and will come back sometimes in October. I may occasionally update my blog if I see an interesting set up or a major turn of the markets for investing.

Gold shares and silvers have been in triangular consolidation since May highs. They can breakout or breakdown of the triangles. HUI and especially silver showed exceptional strength last week, coupling with strong seasonality for pm markets, we must be prepared for the upside breakouts.

I include wave counts for bullish breakout and bearish breakdown of silver and HUI.

Bullish Scenarios





The bullish counts for silver and HUI are shown in above charts. The triangles are trending triangles. Wave d up of the triangles may have peaked last Friday and wave e down may have started and will continue into next week.

HUI need to breakout above 502 with force and silver need to breakout above 19.8 with force to confirm the bullish scenarios and that may happen the week after Labor Day.

If price actions were down next week but they are weak, sluggish and corrective, that may indicate wave e down of the trending triangles in play.

The prices target on upside breakout for silver is 22 while that for HUI is 580 based on the waves patterns. There will be large pullback for gold, silver, and HUI to follow and I am not surprised to see the lows at February lows or even lower.

Some gold stocks may not participate in anticipation of the subsequent large pullback; some laggards may bounce during the run up but then fall to new lows in subsequent pullback. Stocks picks are the keys.

Bearish Scenarios







The bearish counts for silver and HUI are shown in above charts. I also reproduce a long term count for HUI.

The triangles were ending triangles and the triangles may have completed last Friday, HUI has clearly showed 5 waves up for small wave c of wave v (blue) up. Silver and HUI are likely on wave c (orange) down to complete abc (orange) correction since December 2009 highs.

The decline need to be strong and impulsive to confirm the bearish scenarios and silver need to breakdown below 17.2 with force and HUI need to breakdown below 430 for confirmations.

The prices target for the current c (orange) wave low for silver is February low of 14.68 while that for HUI is 363.25.

I personally prefer the bearish scenarios to unfold. The consolidations will be almost a year at wave c (orange) lows since December 2009 and gold markets have build large and solid bases to launch large and powerful advance of third legs up for 2012 rivaling the first leg up from November 2008 to December 2009. The target top for third leg up of silver will be 28 to 30 while that for HUI will be 750 to 850 for 150% gain and many individual stocks will make more than 300% gain just like the first leg up.

I have learned to be objective and not dictated by my wishful thinking to make money. The nature of declines (strong or weak, powerful or sluggish, impulsive or corrective) next week will tell directions of subsequent moves and I trade accordingly.



SPX counts are shown in above chart, I want to show a bigger picture such that it is hard to see the details of small moves last week, and nevertheless I did label the moves last week with red and black small legends.

There will be another leg down to finish wave 1 (pink) down of c (orange) down; wave 2 (pink) up, 3 down, 4 up and 5 down will follow to unfold. I still target 950 as the b (green) correction low by early or mid October.

The latest AAII bullish percentage is 21% close to 5 years low. There were 48 times with 21% or lower bullish percentage on record, and stocks will be higher 3 months later for 47 times. This pattern has repeated again and again since May 2009, the sentiments turned overly bearish after markets setbacks. Markets do not plunge on worry, they plunge on complacency. That’s the reason I maintained bullish all along and count the current markets setbacks as midway b corrections and the markets will be followed by c waves up to revisit 2007 highs.

The bullish counts have also been confirmed by the resilient prices actions of TSX index and copper. They are closed to highs even after 4 months prices weakness and the prices patterns can only be counted corrective. If Dow index is on the way to 1000 (SPX to 100), then the global markets will indiscriminately sink to oblivion eventually.

The trend for general markets should stay down until early to mid October due to 4 year down cycle. But since so many investors target 950 as the low, I am not surprise to see the low at higher level (950 to 1000).


Happy Trading,
Sam

[samxxli]

Hi Dale,

[Geo Dale]

Hi Sam

I read all your posts, but don't always understand everything. Thanks for all your efforts here at SI.

What happened to your August 15th call for a SPX bottom at 950? Was that pattern invalidated? What if you have not given enough time to confirm or deny the change? If you could, please explain what has happened with C down, confirmed Hindenburgs, et. al. to make you change your mind.

Unless I am completely mising something....It seems like you occasionally (maybe close to 50/50? and I don't mean to be unkind or cynical) keep revising your targets to fit a pattern you like best, which appears to me to be a rear view mirror type of analysis. Looking again, maybe it is three waves of C down, perhaps I just answered my question because I'm dense and ultramafic.

Dale
_________________
"Never doubt the ability of the markets to remain irrational far longer than you can remain solvent".... John Maynard Keynes

[samxxli]

Gold markets moved up higher last week. The down trend reversal has not been confirmed. HUI moved up as high as 478.19 which was closer to my target of 470 to 475 and the pattern looked even better as an ending triangle.

I assumed the top was in in my last post because time was running out as I originally expected gold markets to bottom in mid September as is called for by strong seasonality of gold and also c waves down for general markets have started. Now if there is still a c wave down to revisit February low of 363 and complete the correction since December high of 516 for HUI, the whole correction will likely not end until mid October the earliest.

I know that many gold bulls expect gold to continue to move higher to new high of say 1350. If we review the weekly gold chart since October 2008 low of 681, we can see that all corrective declines lasted 2 months or less. This is not sustainable and gold will likely plunge and starts a lengthy and large correction from new high level (1350 or higher). Many gold stocks may not participate in the run up just as they didn’t during the last run up for gold. I don’t think I like this scenario to unfold, it merely postpone the inevitable large pullback

If we looked under the surface, many gold and silver stocks have already led gold to the downside, gold and silver stocks such as FVI.TO, EDR.TO, IPT.V, AUY, KGC, AEM, SSRI and HL have already started c waves down and many of them have dropped below February lows.

Silver has led gold and HUI to the downside, currently silver is consolidating at support of 17.85 to 18. If silver breakdown below 17.8 with force, then down trend reversal has been confirmed and if it continue to move down and breakdown below support of 17 with force, then c wave down is confirmed and the target low for silver is February low of 14.68.

I still believe gold, silver and HUI are in midway X correction since December 2009 highs and there will be final legs of c waves down to revisit their February lows.



The bigger picture can be seen from my post of Sun Aug 15. In the current post I only show the short term count for wave 1 down and 2 up of the c (orange) wave down.

I still count the c wave down as 5 waves 3-3-3-3-3 down. Currently SPX is on third leg c (blue) wave down of wave 1 (pink) down. I expect wave 1 down to bottom at support of 1010 to 1040 and then start a large wave 2 up.



The bigger picture can be found from long term count for HUI in my Sun Aug 8 post.

The HUI chart above assumed b wave (orange) up since February low was in and in reality the chart can still allow another leg up to new high to finish wave b (orange) up (not shown in chart).

I do expect wave 1 (red) down to started soon if not now and fall to support of 430 by Labor Day week. Wave 2 (red) up will start the following week after Labor Day (strong seasonality week).

The whole midway X correction will not end until mid October the earliest and likely will drag even later. This is against seasonality of gold but then there is always exception in stocks markets. I give priority to wave pattern.

Again down trend reversal can only be confirmed after HUI breakdown below support of 448.6 with force and HUI also need to breakdown below support of 430 with force to confirm c (orange) down is in play.


Happy Trading,
Sam

[samxxli]

SPX is currently on c wave down and it has been confirmed. Wave b up has retraced 50% of wave a down and that is the characteristic of 5-3-5 Zigzag, a 3-3-5 flat should retrace at least 62.8%. I carefully reviewed the pattern of wave a down, changed the count a bit and came out a count of Zigzag midway b correction with wave a being a 5 waves 3-3-3-3-3 down.

Gold price continued to make new high last Friday to 1217 since July 27 low of 1157. The bullish scenario has neither been confirmed by silver prices nor by HUI. Silver price peaked Aug 3 at 18.68 and has since been on lower highs and lower lows moves. HUI showed negative divergence to gold price last week with lower high and lower low ending triangle. I still expect gold, silver and HUI to revisit their February lows before starting powerful run to upside.



I redo the count for midway b correction of SPX; the whole patter is 5-3-5 Zigzag. Wave a (orange) was 5 waves 3-3-3-3-3 down as shown in the chart. Wave b (orange) up was 3-3-5 flat. I felt more comfortable with the new count.

The current c (orange) wave down can be a normal 5 waves 5-3-5-3-5 impulsive moves or 5 waves 3-3-3-3-3 corrective moves. 5 waves 3-3-3-3-3 corrective moves will be choppy and take longer times to finish and that seems to fit to my target timing by early October (8 more weeks). In the SPX chart, I outline the roadmap for possible 5 waves 3-3-3-3-3 moves.

One of the noticeable differences is that the current Zigzag pattern has a specific target price. Wave c tend to equal wave a in price for a Zigzag and the target low can be calculated to equal to 950 which turn out to the confluent focal level and 48.8% retracement.



The bigger picture can be found from long term count for HUI in my Sun Aug 8 post.

In the HUI chart I assume wave c (orange) down has already started since last Friday and the c (orange) down pattern to be 5 waves 5-3-5-3-5 impulsive moves.

Topping process is not easy to predict, trend reversal can only be confirmed after HUI breakdown below support of 448.6 with force and HUI also need to breakdown below support of 430 with force to confirm c (orange) down is in play.



Happy Trading,
Sam

[samxxli]

Hi Roger,

Yes SPX is in c wave down, wave count is shown in following chart, and I still target c wave low at 950 to 1000.

It is still hard to say that with HUI and gold, they may still be in topping process, but silver seems already in c wave down,





Cheers,
Sam

[rogerklam]

[samxxli]

Both gold and SPX plunged in the morning and stopped and reversed course to upside in the afternoon. The scenarios that c waves down have not been confirmed, I assume b waves up are still in play for both gold and SPX and redo the counts as shown in the following charts for SPX and HUI.



I counted b (red) wave as a triangle in wave v of ending diagonal for SPX. Wave c to follow may still take SPX to my target of 1145 to 1155 at the upper trend line of the rising wedge. If SPX breakdown the rising wedge decisively, then we must assume c wave down is in play.



I counted c (pink) wave up for wave v of HUI as 5-3-5-3-5 up. This morning’s plunge was part of wave iv (green) down of c up. HUI is currently in wave v up of c. This count can meet my target of 470 to 475 for HUI. If HUI breakdown below wave iv low of 450 as shown in the chart, then we must assume that c (red) wave down is in play.



Happy Trading,
Sam

[samxxli]

Gold price is currently (8:36 am) at 1192 and silver price is 17.96. The large pullback for gold and silver indicate wave c (red for HUI with last post) down for gold market (gold, silver and HUI) might have started.

SPX future is currently down 11.6, it may also indicate that wave c (orange) down might have started. But SPX still need to move down below 1088 to confirm.


Happy Trading,
Sam

[samxxli]

I used to have core positions of juniors stocks for long term hold. I sold UXG (previous NPG) in mid 2009 and sold FCO early this year, I held both stocks since early 2002 with 60% of my original capital and came out with small loss. If I traded term (following markets timing as I outlined in this forum), I will be a millionaire now.

I currently do not have core positions of juniors stocks, I believe that junior stocks are in bear markets and prices will remain depressed for years to come. $CDNX follows the index of $TSX, and most previous popular junior stocks in this forum behave even worse than $CDNX and have completely decoupled from the gold advance.

I include long term counts for HUI, TSX and Oil prices to show their inter-relationship and also explain why I am bearish with junior stocks.







The prices advance since 2008 or 2009 lows were corrective in nature for all three charts with prices overlap and no alternation between wave 2 and 4. They can only be counted as B rallies of ABC correction.

The current prices weakness since recent highs are corrective with prices overlap, they are mid way b corrections (or X correction for HUI) of abc B rallies. The third leg of wave c (or wave Y for HUI) up of B rallies will follow to take the indexes to new highs.

If wave c up is equal to wave a up in prices or proportionally, then the B rallies for TSX will top at 15500, oil price at 120 to 130 and HUI at 750 to 850.

The corrective patterns for TSX and oil are 3-3-5 ABC flat; the C wave down will likely undo all B rises and then some from early 2012 to fall 2014 as shown in the charts. There will be large deflationary force from 2012 to 2014 for commodities and general markets.

The B rallies top for HUI (also silver and gold) is significantly higher than wave A top. The corrective ABC pattern is running correction with C wave down being a contracting triangle as shown in the HUI chart. Therefore while general markets are on devastating C wave of 5 waves down to below March 2009 low, HUI, silver and gold will be on 5 waves triangular C moves above wave A top.

Junior Stocks

Most of the previous popular stocks such as SNN, MTO, GOZ, ATW, SAM, TM, GGI, EPL, BGL, UC, AUN, ECU, GGC, NGG, MDN and KXL have not participated in B recovery rallies for HUI, prices have lost 80% to 95% and stay in low levels, many junior stocks stay even below Oct 2008 lows. These are strong indications that junior shares move more in sync with general markets than gold and they are currently being pulled down by the larger bearish force for general markets. If they don’t do well during counter trend B rallies and they likely will do badly during devastating C wave crash. I stay away from them no matter how cheap they are.

I do plan to fully invest with mainly gold stocks at the midway b correction low sometimes in mid September to mid October and I do intend to include those quality junior gold stocks such as EDR, SVM, and LSG etc for more leverage.



I include hourly chart to show the c (pink) advance of b (orange) up. The bigger pictures can be found from my last post and the top second chart of TSX index.

The chart is self-explanatory. It seems the top is still at 1145 to 1155. The reversal to start c (orange) wave down should happen sometimes the beginning of next week if the count is right. Wave c (orange) down is of 5 waves, I still target the low at 950 to 1000.



I only include hourly chart to show wave iv and v (orange) of bc up. The bigger pictures can be found from daily chart of my last post and top third chart of HUI index (with different colors for legend).

It seems there will be another leg up to 470 to 475 to finish b (red) up. HUI will then start c (red) wave down to my target of February low at around 350.


Happy Trading,
Sam

[samxxli]

Last week’s pullback for SPX was larger than I expected. I carefully reviewed the wave patterns and wave counts and concluded that the c wave (pink) up since July low of 1011 is a 5 waves 3-3-3-3-3 ending diagonal. SPX is currently in 5th wave up and the upside will be capped by the top uptrend line of the rising wedge. I include a more detailed waves counts to shown the 5 waves 3-3-3-3-3 ending diagonal.

The b wave pullback (pink) of wave v (orange) up for HUI was also larger than I expected. Yet the basic structure has not changed. I do expect now the c (pink) up of wave v advance for HUI will likely be very choppy of 5 waves 3-3-3-3-3 ending diagonal.

Both HUI and SPX will likely roll over and start large pullbacks of c waves down sometimes next week or the beginning of the following week the latest if the counts are right.





The first chart showed the intermediate counts for midway b (green) correction while the second chart concentrated on more detailed counts of 5 waves 3-3-3-3-3 ending diagonal of c (pink) up since July low of 1011.

SPX is currently in last leg of wave v (blue) up. The upside will be capped at around 1145 to 1155.

The force coming down of rising wedge will be strong and fast, and will at least undo the entire rise since July low. I expect the ultimate low at 950 to 1000.





I include a gold chart to show its difference from that of HUI and silver.

The ending triangle for gold is an expanding triangle with 5th wave failure while that for HUI and silver are contracting triangles

I expect the 5th wave up of the ending triangles for gold markets to be well below their recent highs (failures) and the c waves (red) down to follow will revisit their February lows.


Happy Trading,
Sam