Hi Captain. I’ve traded NCM and also done a lot of work on the NCM chart in the past, the last time though in January this year. I hadn’t been following it since as I assumed the gold run was sort of done with pending interest rate rises and that it would get too risky to trade this year. Nevertheless I spent a few hours going back over old charts on the weekend and updating them in response to your query. There’s too much to post in one go here and not worth it as it’s difficult to draw conclusions at the moment. I’d like to see it put in a major low again sometime after the Fed raises rates as a reference point I can work from.
Nevertheless I’ve drawn out some relevant analysis below. (Note the USD gold chart has disappeared from my charting package for some reason. So I’m analysing NCM without knowledge of the underlying gold chart. That might inform my view differently)
Monthly
I only really get comfortable with trades when I have a clear Elliot Wave position on the monthly chart. NCM expressed quite a predictable, regular chart pattern until August this year then started going a bit haywire.
I had previously assumed Wave C had completed in Dec 2013 at $6.96. It then did a nice little subwave 1-2, but then has had huge swings. You can see it broke up through the monthly downtrend line (orange) in June 2014 and is now in an uptrend (bounded by pink lines), but it’s not a stable trend. I’d like to see it put in another higher low to give a clear reference point as a larger Elliot Wave 1-2 coming off that Dec 2013 low. But it’s possible it could keep going down below that Dec 13 low, i.e. Wave C hasn’t completed. It’s also possible it keeps driving up from here. The monthly chart is bit too uncertain for me at this point,
Jan 12015 Weekly:
I thought I’d reference a post I made in the NCM forum on 25/01/2015. (can someone tell me how to link a post?) You can look that up for further details and commentary if interested. I put this chart up as it’s worth referencing where it gone from a quite steady and predictable (to me) to highly volatile.
I got a three-bagger long trade up under that $14.20 resistance line (Point d). I then closed out thinking it would pullback or consolidate and then press up towards the $16-$17 level. It did do that although I recall I lost on my next trade. I stopped trading it here. You can see below it started getting a bit volatile where it dipped sharply and then rose to $15.34 on 1 May 2015, but was weaker and not quite getting the highs I expected. The pattern then completed short of target and it start trending down to August. All this is I guess a regular pattern but then in Sept it started two massive swings.
Weekly Chart current:
September saw a break of the down trend line and a 45% rise in 5 weeks and then a 30% fall in 4 weeks. These are hugely unstable swings and where the charts starts going wrong. I assume this was about the fed rise in Sept that didn’t happen and then the short covering exhausted and fell back as Dec rise has become probable. On this basis is should resumes its previous trend which was down on the weekly and probably down on the monthly but not certain.
Price Intervals: What I found really interesting was that I took the horizontal support and resistance lines from the above Jan chart and replicated them up and down. I haven’t shown the zoomed out view to the left of page but these picked up a lot of reversal points. There is a clear $1.80 (approx.) Price Interval occurring for NCM. I don’t pick these up often, but when see them it gives a clear rhythm to the price rises and falls and can assist in trading swings. You can see the volatile spike in Sept hit right on the money and I’d suggest that future price action will hang off this $1.80 interval framework.
Time Analysis.
Time is not my expertise and I need to develop my skills here, but there appear some time structures relevant to this stock that others may be able to contribute to. Although I can’t draw strong conclusions, some interesting exercises in time are noted below.
Cycles: When I was studying Merriman’s cycles approach I did some calculations on NCM. These counts work of 80% probability of a low to low occurring within a 1/6 bandwidth of the count. My notes have NCM having a 16week (+/- 3wk) Primary cycle repeating within a longer 47/48 week cycle (+/- 8wks). Without showing all these calculations and markup, the $6.96 major low in December 2013 appears to be an end of even larger degree cycle. I was quite excited to see cycle from then to the low in 7 Nov 2014, the Subwave 1-2 marked on the Monthly chart, was 47 weeks (shown in green on the weekly above). Within that the first primary cycle was 15weeks. Both right on calculations. The next longer cycle (low to low) completed at 39 weeks, slightly short, but did then consolidate for some weeks after before taking off again. The next primary cycle from August to last week (blue outside bar) and encapsulating that high volatility spike is 15 weeks. I’m an amateur at this stuff but these counts are fascinating to me having done my calculations back in 2013. It suggests the last primary cycle has completed and the next move should be up for some weeks. This can still then put in a higher low or lower low, but that will form a good reference point for the unfolding pattern.
Gann Box extension: The other interesting time and price analysis is the Gann Box charts below. One is larger scale and then one zoomed in. First chart just shows how I’ve put a Gann Box over the low in Dec 1997 to the high in Oct 1999. I’ve then just duplicated the box beside and above the first box then extended it to the current time. It’s fascinating how those price and time structures from the late 1990’s resonate now. On the detailed current chart I’ve marked in Red where the price action has hit the grid. It looks like the current price might bounce here for next few weeks.
The intersection of the lines is said to often hit turning points on the chart. It’s close enough (within two bars) that it seems there is some sort of time structure occurring. Going any further is beyond my expertise but I think @Wassup does Gann time stuff, if he (she?) wants to have a go at the NCM chart for interest. @Rhodes might also have a view.
Conclusions:
The problem with Newcrest is that the company in recent years has had high debt and poor management (that may have corrected now, not sure), but as the largest gold stock it can attract funds wanting gold exposure, is liquid enough for stock lending and derivatives trades so you get short selling and short covering and it’s also beholden to the underlying gold price, which gets pushed around from international macro issues as well as AUD movements. So you never quite know what you’re getting with NCM. You could buy it for exposure to gold movement and they come out with some crappy company specific announcement, or you could short it and something suddenly triggers a short covering rally.
Lots going on in the Newcrest charts and a lot of structure and interesting analysis, but still hard to reach definitive conclusions.
What’s useful out of the above is that the price moves to a rhythm of $1.80 price intervals.
It also seems to work well to a time pattern but I’m an amateur in analysing that. Merriman-type Cycles and the Gann Box suggest a short term bounce for next few weeks. I’d love to see someone else have a go at analysing time on this chart though.
Bigger picture monthly is again uncertain, but I’m leaning towards a good pullback lower (after a possible short-term bounce) and in fact I won’t trade this until I see a big low put in on the monthly so I can get a good reference point again on the Elliott Wave position.
Hopefully at that point the above bits of analysis will all come together better to give a more certain picture.
(20min delay)
