Elliott Wave Analysis of ASA (Gold & Silver Stocks) by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.
From Yahoo Finance: “ASA Gold and Precious Metals Limited is ASA a self management investment trust. The firm invests in the public equity markets across the globe. It primarily invests in stocks of companies engaged in the exploration, mining or processing of gold, silver, platinum, diamonds, or other precious minerals. ASA Gold and Precious Metals Limited was founded in 1958 and is based in San Mateo, California.”
For decades, professional money managers have used ASA as a proxy for the entire precious metals sector. From an Elliott Wave perspective, ASA (as well as a large number of precious metals stocks and ETF’s for that matter) appears to be in the very late stages of completing a large expanded flat structure that commenced in March 2008. Expanded flats are ABC structures that subdivide 3-3-5.
Wave A’s of expanded flats must internally subdivide as a “three”, and the downward movement from March through October 2008 appears to easily meet that requirement. Wave B’s of expanded flats are also “threes”, and most often retrace wave A by 123.6% to 138.2%. In this case, primary wave B (burgundy) retraced wave A by factor of 1.236. It also subdivided as an ABC structure. Textbook.
Primary degree wave C (burgundy) of the expanded flat has been underway since December 2010, and needs to complete five intermediate (black) waves down. Wave C’s of expanded flats internally subdivide as a “five”, and end beyond the extreme of wave A. Downward movement since December 2010 in ASA easily counts as a five-wave non-overlapping impulse, and has already moved below its October 2008 low of $10.34, so the overall scope and shape of the expanded flat on a weekly chart (above) has appeared complete since December 2014.
However, as we zoom in on the most recent price action on a daily chart (above), despite the appearance (at the time) of a completed black wave five on December 16, 2014, followed by five waves up into January 20, 2015, ASA made a new low yesterday. So what’s going on?
In my opinion, the five waves up into January was wave C of an expanded flat for blue wave four. Then, starting at the January 20 high, blue wave five in ASA is likely carving out a contracting ending diagonal. Internal subdivisions since the end of blue wave 4 have been somewhat ambiguous, which fits well with the diagonal interpretation, as each leg of a diagonal is typically a corrective ABC. Because Hurst cycle analysis is expecting that a 20-week cycle trough is a bit overdue, and based on the Fibonacci targets shown on the chart, it appears that ASA is bottoming in pink wave 3 of the contracting ending diagonal now, with pink wave 4 due next, likely moving price up into late August. Then, if this interpretation is correct, there will be a final pink wave 5 to the downside, ending in about September/October 2015. $8.94 is a solid target for the end of the diagonal later this year, as that is where blue wave five will be .618 times the net traveled of blue waves one through three.
In contracting ending diagonals, wave three must be shorter than wave one was, so if ASA is putting in its pink wave three bottom about now, price cannot move below $9.03. Then, wave four (pink) cannot be longer than wave two pink was, followed by a wave five that is shorter than wave three was. It should be noted that wave fives’s of ending diagonals can also truncate. Each (pink) leg of the diagonal should subdivide internally as a green abc zigzag.
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