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In an article I
wrote on January 26, 2007 entitled “A New Analysis Technique
Applied to the Gold
Market” http://www.lemetropolecafe.com/pfv.cfm?pfvID=5876
I showcased the new
analysis using ECU Silver Mining as an example.
I have developed two
predictive indicators that I have called Potential Energy
(PE) and Kinetic
Energy (KE). In that article I showed that when these two
indicators are
synchronously moving together in a particular direction the price
will mostly likely
move in that same direction. From the energy analysis of ECU I
predicted that a
very large upward move is in the offing. I would like to show you
where we stand
today.
 
FIGURE 1
The energy analysis
shows both PE (blue) and KE (green) were rising
synchronously from
points 1 to 2 which predicted the massive X10 move up in
the ECU stock price
(black line) from Jan 2006 to May 2006. The energies then
moved synchronously
down from point 2 to point 3 and the stock price duly
followed. The
energies turned at point 3 to point 4 and the stock again rallied.
The stock failed to
break-out of a consolidation box formation defined by the two
red lines and the
price fell back. The energies again synchronously turned up at
point 5 in October 2006 and have not changed direction ever since. This was
predicting the
generally rising trend of the stock which has displayed higher lows
along the support
line AA. At point B my sources tell me that a large shareholder
had a margin call on
some position (not related to ECU) and was forced to sell
ECU shares to cover
his other loss making investment. From conventional
technical analysis
this created a very ugly technical picture because this made
the stock price
break down out of the consolidation triangle bounded by AA on
the lower side. The
price remained, however, well within the consolidation box
formation but
nonetheless conventional chartist would have taken this as a “sell”
signal. The kinetic
and potential energies have hardly blinked and have not been
fooled by this
spurious event. The energies are locked in an upward pattern and
still indicating
that ECU’s underlying strength is going to result in a predominantly
upward path. The
spurious event at point B means that ECU has some catching
up to do and the
move is likely to be impressive.
To give further
credence to my analysis I would like to point out that I have been
one of the lone
Copper Bulls in the last few months. Figure 2 shows the energy
analysis for Copper.
The energies synchronously turned at point 1 while the
copper price didn’t
break-out until one month later at point 2. The energies have
been screaming
skywards ever since and copper has gained 40% in 10 weeks,
outperforming the
precious metals by a long shot.
From an energy
analysis point of view ECU looks in great shape. For the many
frustrated
shareholders out there (and I sympathize because I am one too!) I
would prescribe a
little more patience. ECU is going to surprise the short sellers
in the same way
copper has gutted the copper bears.
Adrian Douglas
Marketforceanalys.com
Adrian Douglas writes many articles
on his observations and analysis on financial markets, gold and silver
markets, and some selected company stocks. The articles were all initially
published at www.lemetropolecafe.com.
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