CDE by Rodin - The Matrix Decoded
Coeur D'Alene (CDE) is not quite Coeur de Lion, but it does sound similar. In my defence of the Lionheart graphic below I claim artistic licence! Already testing recent highs, how high can this silver miner's share price go?
A long wave analysis shows a parabolic well with a sinusoidal inflection. AG thinks the US economy is a coiled spring? Look at the potential energy stored in this picture! PMs are the coiled spring IMHO. Think stone falling into a pond. Think cocked crossbow.
CDE - Long Wave Running
Two orthogonal sets of vectors are shown in this next figure. Some are better supported by data than others….
CDE - Log Scale / Linear Matrix
All lines are either parallel or orthogonal. Once again a log chart delivers straight lines. IMHO Linear charts only work when looking at very localised price movements - say 10-20% swings (See footnote). For a resume of how market action is really exponential or sinusoidal in nature read:
APPLYING EXPONENTS AND SINE WAVES TO T.A.
www.gold-eagle.com/editorials_03/rodin062303.html
What does the orthogonal array of Figure 2 tell us? Well, we can definitely see which way the wind has been blowing. However, right now we can't see the wood for the trees. The matrix is too dense. We really have to isolate lines of maximum significance - the root notes as against harmonics, if you like. These are the lines that will have a huge bearing on the path of least resistance to the price action going forward. On these power lines we can then base further technical structure.
To help me out here I used a powerful analytical tool I learned to appreciate when studying chemistry. This tool is particularly useful when unravelling molecular and crystalline structures. It is called simply - symmetry.
Following chart represents the culmination of an intuitive, iterative, interactive process that involves your writer playing with drawing tools, engaging in reflection, observation, imagination, measurement and other such mumbo jumbo. Time will be the final arbiter of the usefulness of this approach to chart analysis.
CDE - Symmetrical Fan Formations
Notes to the above chart
- The pattern exhibits rotation & reflection symmetry about the purple downward-pointing 'axis' arrow 4 fans in 2 symmetrical pairs define major support and resistance.
- The divergent green fan that opens up moving forward whose apex is on the 'axis' is postulated purely on symmetry grounds as a rotation of the convergent green fan about the purple 'axis'. Its validity is yet to be tested, though price action has been supported by the upper line recently.
- The orange fan pairs are similarly related by c2v symmetry. Both fans are already supported by chart data, the divergent one obviously less so.
- The white dotted line shows a possible inverted head & shoulders formation, aligned along the trend angle of inclination - the way the wind is blowing - identified in second chart above. This H & S is centred on the purple 'axis', and indicates possible price support going forward.
- The ultimate price peak will depend on how long and high this silver bull runs.
Conclusion
The chart of CDE calls for $100 by 2007 and eventually $300 +. The upside potential seems comparable with Hecla, also discussed in a recent article (see below).
FOR...UM...YOU!
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KGC
I said 'We may have to re-test the triangle support just one more time' (Black arrow dates quote). Well, despite some strange SM action KGC has not yet done this. It has however tested the parallel broken trend lines as shown.
RGLD
Royal Gold continues to behave as predicted - moving steadily up the power uptrend. Barring mishaps we could see $40 before the year end.
FOOTNOTE ON LOG CHARTS
A word of caution about log charts. The are often shown starting from price zero. However -
The log scale going up takes values like 1, 2, 4, 8, 16 etc per uniform division.
Going down it reads 1, 0.5, 0.25, 0.125 etc. IT NEVER ACTUALLY REACHES ZERO. (Mixing desk faders actually drop to minus infinity, not zero, dB).
Therefore it seems to me that a price chart with a log scale that extends down to zero must necessarily be distorted at low values, much as a flat map of the world grossly distorts the poles. Note also that a map of a portion of the globe, for example Iraq, is a very good approximation since the flat map represents only a small part of a large curved surface, small enough for the error caused by the radius of curvature of the Earth to be negligible. In similar manner linear charts work better the smaller the price swings.
Rodin
13 August 2003
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