Sunday, January 31, 2016

Interesting situation with [AGI]

At the backlink I provided the model below:

Actual is below.

AGI is clearly at an important juncture.  It is now kissing up hard against the bottom of the resistance line and breakouts from this position are rare, a phenomenon which I have on several occasions referred to as the "one inch punch".  It is bullish if this can gap up over resistance at this point but it is also rare.  I would at the very least expect a 38.2 fib retracement at this point and then a rapid 3rd wave breakout which could likely contain a gap.

So my primary model is for a pullback here per the red model and there is an implied model that says it could just break out using a 1 inch punch.  But since it is rare I didn't want to muddy the charts with it.  However, if you see it, respect its meaning because of the very fact that it would be a rare occurrence and a great omen for longs.

Having said all that, the recent bottom did so mid channel as falling wedges can sometimes do.  But we should not assume that the bottom must necessarily be in at this point because that low might only have been A of blue 5'.   If this extreme situation turns out to be the case then AGI will probably not be alone in falling so do be sure to set reasonable stops for JNUG/NUGT.

If blue 5' does decide to play out it will truly be a once in a lifetime buying event folks.  Getting the likes of AGI for 50 cents would be exactly what Prechter wrote would happen during US deflation (close paraphrase): "you will be able to buy a $19 stock for 50 cents".  If AGI goes this route, BE READY because it will not be hanging around at the bottom waiting for everyone to get their nerve up.  It will bounce hard at the first strong upward move in gold.

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