Oldtent Archives 2007 - 2008

I guess today is as good a day as any to show a possible new wave count for the HUI that I believe no one in the whole wide world is looking at. We are getting to a point where I have to post this, possible new wave count, to go on record as it will be meaningless after the fact IMHO. As you know, the bullish rising wedge is a pattern that most chartists aren’t picking up on. They tend to happen in fast moving markets, a relative term, and tend to be halfway patterns just like any other consolidation pattern. Gold had one of the most beautiful bullish rising wedges I have ever came a crossed so far in this PM bull market. Below is a chart of that bullish rising wedge and its implication to the gold uptrend channel at the time. What makes this gold bullish rising wedge so beautiful is the way it evolved with the little hesitation pattern just before the breakout and the backtest after the breakout. Upon it’s completion it changed the angle of the uptrend channel to a steeper angle signaling an acceleration of the gold bull market. The blue arrows measures the bullish rising wedge as a halfway pattern.

Now on to the the HUI. There has been some things that have not added up for me for several months now. Something just didn’t feel quit right with my current wave count. There is the major uptrend channel and the length of time that so many PM stocks have not had a decent rally, 4 years to be exact, that led me to do some serious analysis as to why so many PM stocks have lagged so far behind. What I found out was that, you guessed it, another bullish rising wedge, still in the making, for the HUI. What I will be watching very closely is how we interact with the top rail of the bullish rising wedge formation.

The next chart shows the bullish rising wedge and it’s position within the major uptrend channel. The thing to notice here is where the top rail of the major uptrend channel starts. Most folks are using the already existing tops to form the top rail. I think when its all said and done the tops we now see will look like intermediate term tops that will measure only half of the major uptrend channel.

If this bullish rising wedge is truly a wave II consolidation pattern, then we are now in wave 1 of III instead of wave 3 of III. This should be the beginning of a major move for all the gold stocks, including the jrs, that should have some vertical moves similar to the moves in the big wave I up. The consolidation patterns in this next wave III should be on the shorter time scale, 6 months to a year, similar to the consolidation patterns in big wave I up. When wave III ends our bullish rising wedge will stick out like a sore thumb as a halfway pattern IMHO. Below is a line chart showing the possible wave III construction over the next 3 years or so and price objectives.

To put our 4 year bullish rising wedge into perspective with some other long term consolidation periods that relate to the HUI, I have a couple of more charts to show.

I always enjoy reading your perspective on this generational bull market GR, as there is more than one way to skin a cat, ooops can I say that? I think we still have a long ways to go yet to reach the ultimate top, weather it will be in 5 years or 10 years, the road ahead will be filled with many highs and lows and the reward at the end of this bull market will be, hopefully, a big pot of gold.
All the best to you PMFEVER…Rambus