The most recent pullback to $1,550 in the price of gold and subsequent drop in stock prices (though muted) has set up a few stocks for a target price. For SAR this had more to do with super pit purchase and capital requirements. As a stock pulls back, it generates a buy signal. For example, RSG recently generated a buy at $1.05. As RSG rises in price, and it has to hit at least $1.34, it creates a target price. $1.34 is a higher high on my charts. There is ONE determinant - it must not fall by more than 15% before getting to $1.34. If it reverses from $1.28 then there is a double top and the stock may be in trouble. This one is in the setup phase. My charts use a built in filter of 15% so the structure is important. Back to SAR. It generated a buy signal at $3.07 and continued to fall a further 5%. It has since reversed and is in the price setting move. As a new recent high was hit at $4.11, it now has a confirmed minimum target of $6.07. The minimum short term target stated above is based on my charts with a 6% filter. I usually ignore this one except when trying to take a stab at a future longer term price. I expect this short term price to be hit before a 15% reversal. These generate buying opportunities. The longer term target will be determined by how high the stock rises before a 15% reversal. It is the strength of this first move up from a lower low that determines future price. I am extremely confident about this stock for a couple of reasons. It is travelling close to the rising trend and the Accumulation/Distribution chart has take a very nice turn to the upside. TIMING - my charts do not have a time reference. W D Gann makes reference to time-price relationship. Many who study this believe this refers to stock price. it actually refers to market capitalisation. The bigger the stock, the longer it takes to get there. RIO took 2 years to hit my target price ($101) without generating another buy signal. This was when they were $60. In the previous run by SAR mentioned above it took a little over 12 months to hit the target then rose for a further 4 months. A $20m stock can take as little as 6 weeks to hit a target, a $100m stock may take 3 months. Target prices are often followed by a period of consolidation which sets up the next run. There is one other element. If SAR hit $6.14 without a 15% reversal then the target price is invalid. This is a 100% increase in the price and a new buy signal is necessary for the next leg calculation. NST and RSG had 100% moves in the previous run up. These were target setting legs. RSG has had volatility which creates a new setup. NST has not. It has gone down and straight back up again. I do not have a target price for NST therefore depend on the A/D and a short term lower low to determine the top. i can usually nail within 6-8% of the top price. It is difficult to explain these things without posting the charts and point and figure charting was considered obsolete since computers. This was the only reliable method of charting when Gann, Wyckhoff, Dow, et al were making fortunes. It is still valid. The way I use these charts and how I have modified them are propriety information. I use these charts to generate the gold stock sentiment indicator posted on the Commodities - Gold - Gold forum. Clear as mud?
SAR Price at posting:
$4.14 Sentiment: Buy Disclosure: Held
