Elliott Wave Analysis of ASA Gold & Precious Metals Ltd by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.
As I mentioned in my last post about precious metals and the Aussie/Dollar, ASA Gold & Precious Metals Ltd (ticker: ASA) has long been utilized as a proxy for the precious metals and miners sectors by market professionals. ASA is an investment trust, so it acts very much like a sector ETF. But ASA has existed for far longer than ETF’s, so there’s a nice long history of data to work with.
If one starts an Elliott Wave analysis of ASA in the early 1970’s, an expanding diagonal pattern appears to be underway. In an expanding diagonal, wave 3 must be longer than wave 1, wave 5 must be longer than wave 3, and wave 4 must be longer than wave 2. Additionally, wave 4 must overlap into the price territory of wave 1, and perhaps most importantly (for wave recognition purposes), each wave within an ending expanding diagonal must subdivide into a zigzag.
As you can see on the monthly chart below , all of those requirements are present in the proposed wave count. An updated Hurst Cycle Analysis (using Sentient Trader software) indicates that a large nest of cycle troughs (including the 20 & 40-week, and the very important 18-month cycle) is due between November 22 of this year and April 14 2015.
If the above Elliott Wave interpretation is correct, all that is left of the precious metals bear market is a Minute-degree (pink) wave 5 to the downside, as shown on the weekly chart below. In ASA, price must move down to $10.14 or below, because wave 4 (burgundy) of the decades-long expanding diagonal must be longer than wave 2 was. Once that occurs, all necessary subdivisions will be in place, and ASA, along with precious metals and miners should rally strongly for several years. Once Wave 5 of the expanding diagonal gets underway, it must end beyond the extreme of wave 3 (burgundy), which peaked in late 2010 at $36.13.
There are several Fibonacci price targets below $10.14 for the end of blue wave 5 (or alternate blue wave C). They range from $6.77 to $9.99, and are shown on the weekly chart above. I’ll be eying round number support at $10. ASA is $11.80 per share at the moment. By the way, ASA is one of several precious metals and mining sector stocks we are tracking for potential purchase within the Eleven-Quarter-System trading model portfolio.