NEM WEB

Charts are log, traced from Bigcharts

Newmont Mining - major HUI component, bell-weather gold-mining share and largest market capitalisation in the sector (at least until the merger of Anglo Gold and Ashanti is concluded) has had a great run for a big guy. It's now sitting on a new multi-year high. The question is, can it go any higher? No, actually, the question is not can it go any higher - it has been - twice where it is today in fact. The question is - will it continue upwards, consolidate or correct near-term? Up and the HUI goes up with it. Sideways and the HUI may still go up. But down - now that would put HUI 275 in doubt before Christmas - unless of course it was followed by a big fast bounce - one scenario I have considered for the HUI. Back in March I (and others) argued that the HUI was headed for 275 autumn 2003. That was from a base of around 120. It is now pushing 220. Close but no cigar. We are 2/3 of the way thru the move to my primary target. Or, to put it another way, we still have 1/3 to go in pretty short order according to wave analysis. The purpose of this editorial is to try to second guess NEM's next move. We will also look at long term prospects.

WEB

The most obvious starting point had to be the topmost points in the chart. The ascending resistance line from 1974-88 is well defined, topping at the blow-off peak of $80+. The descending resistance only had two points supporting it - well actually three now, because we are right on that line today.

Having identified the top rails, parallel lines connecting price direction changes were scored thru the chart to reveal the web as shown above. The web is held together by a fan from the blow-off spike.

In the next chart the web has been replaced with a diamond derived from the web.

DIAMOND

I have drawn three more parallel line sets.

Going gently uphill are a myriad of dotted pink trend-lines. These lines are parallel to the left/right diagonal of the diamond. I believe this is the prevailing trend for NEM.

Two steeper trends are shown, one falling, the other rising. Note the thicker blue lines. Last time this line appeared it projected the final blow-off. I wonder if the same will be true this time around? Perhaps we are seeing the formation of another, steeper diamond with 2 blue sides? If so, the price objective (PO) for 2011 would be around $120 - $160.

= 200-300% gain from here in 8 years

Meantime strong support, in the event of any pullback, is given by the rising thick blue up-trend line, currently sitting around 30 (also shown on Hook's chart).

ARROW

From the above chart it is clear that between now and sometime in early 2005 the breakout of an upward sloping but essentially symmetrical triangle must occur. We have seen this formation on a number of charts. It looks and feels like there will be a lot of potential energy compressed into that arrowhead - and the further forward we go without a resolution the higher will the price pressure be.

I do not think we will have to wait long….

COMPLEX

This chart shows a number of features.

PITCHFORKS

The white lines are equally spaced, as in a 'pitchfork'. The top channel is clearly defined, the bottom just forming.

The black lines are actually headed in the same direction as the pink ones in chart 2. They are also equally spaced about a mean 'swing' line, giving another pitchfork. Here I have indicated the swing line by shading the area under the price chart. Over time (lots of it!) I expect the shaded area above this line to equal that below, more or less. Right now we are overdue some upside.

Note: The swing line is actually an extension of the left/right diagonal of the diamond.

H & S

The yellow dotted line marks out a 'pointed head and shoulders' formation, while the pale blue dotted line may eventually reveal an inverse 'fat-head and shoulders'- like formation. We will see….

SINUSOIDAL

A sinusoidal meanders throughout, turning at, and tangentially to, dotted black or white support/resistance. It is conceivable that the sinusoidal will now be turned back at the swing line back into rising support. However I think the sinusoidal has its sights set on the upper black dotted line. It may even hit at a point coincident with the intersection of black & white!

Disclaimer - I do not own NEM

MERRY CHRISTMAS FROM RODIN

Contrarian Christmas Presents

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4 November 2003