ZFX - Zinifex Limited

[wavepicker]

What is that chart wavepicker?

With regard to ZFX, maybe you're right, and maybe I'll miss the next move, but for my money ZFX will have another leg lower first in quite a simple double zig zag off the highs. Emphasis on simple - which maybe I am. Then we move higher. If my analysis is incorrect, so what, an opportunity lost is all.

Sincerely,

Radgephile

Hi Nick,

Not 100% sure what ZFX will do at this juncture, and was not referencing your analysis at all. Have not seen it. Was just listing some additional possibilities to those Kauri had mentioned in the earlier post. One has to really have an open mind as to all the possibilities in theis business.

As to the Radgephile, that was a nick(no pun intended hehe) that another poster used some time back.

PS: the chart was just an example to explain to kauri was I was trying to say (in this case in the EURUSD)

Cheers

 

[eMark]

Will the financial's due on Wednesday commence the next down move????

Or will the financials due commence a further move up? Based on a higher dividend & half yearly results.

 

[Freeballinginawetsuit]

Michael,

Actually, the Zinc pattern is 100% identical to Allco Finance (AFG), which I said on 31 Jan, "..we will trade lower again, probably to $12.00 as a minimum..". Today AFG dropped 6% to $11.80 or so. Zinc is the same pattern. A spoof rally is about to occur and suck in the perennial bulls...enough to spit them out again.

If I may ask a simplistic question, why is it necessesary to draw a comparison of Zn as a commodity to AFG (Allco Finance).

You have mentioned that the pattern is the same. Are the business interests of a finance company and a commodity company reflected in patterns on a chart and mutually driven by external market influences. Quite obviously many experienced punters on ASF value youre expertise in EW greatly but in the end isn't it just attempting an easy view of punters fundamental calls and market outlook. Just the same as Windows makes an easy view/operation of a computer as opposed to MSDOS. In the end the programming/market dynamics are what make both entitys succesful

Surely time and the exhaustion of sellers will inherently drive a Companies net worth if the company/market dynamics still exist. ATM Zn is a sheer necessity and this need is not going away in the Short Term, many factors can and have manipulated the current spot price of Zn none of these are relative to its necessity as a product in the current market place.

Would this not be the reason for many a commodity stocks current price, as opposed to a couple of years ago?. It is entirely possable we may see another spoof rally for Zinc, we have had a couple of those in 06, no doubt 07 will have a few.

As for the Bulls being spat out, theirs probably no 'Spoof' left in them, its all drained and in the bank, or eyeballing the next fundamental call.

 

[rederob]

Zinc's fundamentals remain wholly intact.
The recent correction was spurred by a massive selloff from Chinese zinc producers on arbitrage opportunities and local tax rebates. This has not yet worked itself through the metals system and warehouse drawdowns remain subdued.
The current commodity bull has seen a number of metals afflicted by a "destocking sysndrome" which has subsequently sent the metal's price higher still. It occurred first for nickel, then copper, and tin and lead, and now zinc.
I can't see 2007 being a great year for metals generally, but neither do I see it as a poor year.
More likely, a year where some great price swings offer some excellent opportunities as money moves from commodities that are in rapidly changing favour. In this latter regard, watch out for a big spike in nickel prices - again.
As for me and ZFX; it gave me a 70% return in 2006, so with a current pe of about 6 I reckon there is a fair chance I can just milk the dividends for a while and not worry overly about price action.

 

[Nick Radge]

The fundamentals of Zinc may be strong. I don't disagree with that. What I said is that I doubt any immediate strength in Zinc can be sustained. In other words I wholly expect short term strength but we should not see new highs in Zinc in the near term.

Markets are driven ultimately by fundamentals, however in the interim they are driven by supply and demand which in turn is extraploated to fear and greed. These factors create price patterns and because human emotion stays the same over the generations, so do these price patterns. The patterns can be simple (such as micro triangles and congestions) to more complex patterns such as Elliott Wave. Because human emotion is always involved we have a vast depository of these price patterns to draw on. When they recur we can assign probabilities and more importantly we can assign right/wrong attributes to protect our capital. We can assign the same for fundamentals, albeit in a slightly different light. Rederob has essentially identified a pattern that he is happy with. Most fundamentalists do the same without really recognising it. A better word for "pattern" maybe be "checklist". What is the PE? What is the state of the economy? What is the state of the company? What are its EPS? etc etc. Its a pattern that once you're comfortable with will enable you to take a position.

Therefore a price pattern in AFG has the same attributes as that pattern in Zinc. By drawing on the same patterns we can get an idea of what to expect and when we'll be proven wrong. Look at Gold. I publically said on these pages when Gold was nearer $600 that we should see $680 again. We're within a few dollars of that. My point though is that the price of Gold followed a pattern that has been repeated hundreds of thousands of times. Because it repeated does not mean it will repeat again. But we do know when we're wrong beforehand and that allows a quantifiable risk to be accepted or rejected.

What is a quantifiable risk with regard to long positions in Zinc? There is none with respect to the fundamentals. When they change, then so should your positions or attitude toward Zinc however we can't know what the price of Zinc will be when those have changed. Look at TIM as the most recent example. The fundamentals were apparently very strong according to a swathe of highly paid anaysts. Now the outlook has changed, but only after the price plunged.

 

[michael_selway]

The fundamentals of Zinc may be strong. I don't disagree with that. What I said is that I doubt any immediate strength in Zinc can be sustained. In other words I wholly expect short term strength but we should not see new highs in Zinc in the near term.

Markets are driven ultimately by fundamentals, however in the interim they are driven by supply and demand which in turn is extraploated to fear and greed. These factors create price patterns and because human emotion stays the same over the generations, so do these price patterns. The patterns can be simple (such as micro triangles and congestions) to more complex patterns such as Elliott Wave. Because human emotion is always involved we have a vast depository of these price patterns to draw on. When they recur we can assign probabilities and more importantly we can assign right/wrong attributes to protect our capital. We can assign the same for fundamentals, albeit in a slightly different light. Rederob has essentially identified a pattern that he is happy with. Most fundamentalists do the same without really recognising it. A better word for "pattern" maybe be "checklist". What is the PE? What is the state of the economy? What is the state of the company? What are its EPS? etc etc. Its a pattern that once you're comfortable with will enable you to take a position.

Therefore a price pattern in AFG has the same attributes as that pattern in Zinc. By drawing on the same patterns we can get an idea of what to expect and when we'll be proven wrong. Look at Gold. I publically said on these pages when Gold was nearer $600 that we should see $680 again. We're within a few dollars of that. My point though is that the price of Gold followed a pattern that has been repeated hundreds of thousands of times. Because it repeated does not mean it will repeat again. But we do know when we're wrong beforehand and that allows a quantifiable risk to be accepted or rejected.

What is a quantifiable risk with regard to long positions in Zinc? There is none with respect to the fundamentals. When they change, then so should your positions or attitude toward Zinc however we can't know what the price of Zinc will be when those have changed. Look at TIM as the most recent example. The fundamentals were apparently very strong according to a swathe of highly paid anaysts. Now the outlook has changed, but only after the price plunged.

TIM you mean fundamentals changed, then price dropped?

ZINC price dropped but fundamentals didnt change much imo

thx

MS

 

[Halba]

i notice the drawdown rate of inventories has been extremely slow

 

[toothfairy]

Interesting to see whether sp of ZFX today will follow the wavy peaple's theory of 1-2,1-2, 1-2 ( down ), OR follow the POZ overnight (up).
My guess is UP.

 

[wavepicker]

Interesting to see whether sp of ZFX today will follow the wavy peaple's theory of 1-2,1-2, 1-2 ( down ), OR follow the POZ overnight (up).
My guess is UP.

Hey toothache,

I suggested that another possibility on top of what kauri posted was a series of nesting 1-2's. Not that this will in fact happen as I don't know what will happen until we have more market price information at hand. What I did say about Zinc/ZFX back in late Dec was that it was a high probablilty that at a top was in, and that Zinc would fall back to $3000 and ZFX will fall back to $15-15.5 That did actually happen as expected. That pattern was just too convincing to be otherwise.

Now further analysis is needed to determine if the trend will continue down or not. If this move up is a countertrend it should hold lower than the last swing high and then we may get a fast move down. If not then the entire move down to date will be fully retraced.
I don't hold any positions in ZFX (never have)so my opinion is totally unbiased

Cheers

 

[trendsta]

Another round of good news for ZFX today:

BRUSSELS (AFX) - Umicore posted forecast-beating full-year results as it continues its transformation from a metal to a materials technology group, with investors anticipating the company's proposed listing of its zinc joint venture with Australian peer Zinifex....

He also countered suggestions that Umicore would delay the timing of the IPO to accommodate the evolution of zinc prices.

The venture, seen as a 60:40 Zinifex-Umicore spit and planned for the third quarter, will to lead to the world's leading producer of zinc metal ahead of Korea Zinc and Xstrata PLC.

http://www.basemetals.com

Also, due to Bernanke speech and moderately positive outlook about US economy the metals complex is higher... Zinc also moving up nicely.

 

[toothfairy]

Hey toothache,

I suggested that another possibility on top of what kauri posted was a series of nesting 1-2's. Not that this will in fact happen as I don't know what will happen until we have more market price information at hand. What I did say about Zinc/ZFX back in late Dec was that it was a high probablilty that at a top was in, and that Zinc would fall back to $3000 and ZFX will fall back to $15-15.5 That did actually happen as expected. That pattern was just too convincing to be otherwise.

Now further analysis is needed to determine if the trend will continue down or not. If this move up is a countertrend it should hold lower than the last swing high and then we may get a fast move down. If not then the entire move down to date will be fully retraced.
I don't hold any positions in ZFX (never have)so my opinion is totally unbiased

Cheers

Unless you can say POZ also follow the 1-2, 1-2, 1-2 pattern. I can't see ZFX sp follows 1-2,1-2,1-2 pattern. ZFX sp more affected by POZ, which is in turn affected by end-user. Shares of banks may follow the above pattern due to people's psychological make-up and generally their news is boring, but ZFX is affected by POZ as well.
The medium term bullishness in Zn does give this share a very good support and uptrend momentum. Short term (weeks) volatility is a must and that's where you can make more $. I just can't say it follows any patterns, that's all.
You can't say you are neutral if you don't hold ZFX shares, you may be bearish. (Apart from a very few brave short sellers). I am neutral because I did sell out a few weeks ago and only lately starting to buy back 20%. I don't care weather it goes up or down, I just trade.That way, I have no toothache!

 

[Magdoran]

I’ve seen a lot of technical players in my time, and I can say without a doubt that out of all the people contributing to the ASF site, and in fact all the trader’s I’ve ever met in my lifetime, that wavepicker is the most gifted, seasoned, and learned EW player I have ever met.

With all due respect, most people only know very basic concepts in EW, but it is a very detailed discipline, which takes years to fully grasp. The foundations are certainly contained in the body of knowledge developed by Robert Prechter over many year. While some of his concepts are necessarily flawed, I would argue that to be fully conversant in EW theory requires a detailed knowledge and understanding of his work .

Many of the counts I’ve seen on this site look more like they are based on Robert Fisher’s approach, which is an alternative school to the Prechter/Frost approach. wavepicker is more from the Prechter school, although is conversant in Fisher’s concepts too, but has refined his own unique style. The subtleties contained in wavepicker’s work are probably not easy to recognise from a novice's perspective, and it is more likely that seasoned EW practitioners will appreciate the knowledge and innovative approach wavepicker has developed.

What many people fail to realise, is that many different markets trade in very similar patterns, from Forex, to commodities to stocks and indexes. The core technical analysis principles based on an astute observation of how markets trend can translate very well almost universally. Hence the confusion when less knowledgable people raise distinctions between different asset classes, misunderstanding the applicability of pattern recognition across markets. Some people seem particularly obtuse when it comes to recognising this simple concept, not grasping the key point.

In sum, there are a lot of novice EW players out there that would benefit from the depth of knowledge wavepicker has. Also, those unable to see the forest for the trees when it comes to patterns of trend are splitting hairs.

Those who are fundamentally based just won’t understand what all the fuss is about because their discipline is radically different, hence it’s probably better for such people to stick to very long term perspectives since that is that approaches nature. (Broad strategic thinking, as opposed to shorter term swing and position trading with leveraged instruments which requires more short term precision in time and price and wave structure). Hence I fully understand the disconnect between FA and TA players - fundamental and technical perspectives I think are actually complementary, but are different tools for different jobs.


Regards


Magdoran

 

[wavepicker]

Unless you can say POZ also follow the 1-2, 1-2, 1-2 pattern. I can't see ZFX sp follows 1-2,1-2,1-2 pattern. ZFX sp more affected by POZ, which is in turn affected by end-user. Shares of banks may follow the above pattern due to people's psychological make-up and generally their news is boring, but ZFX is affected by POZ as well.
The medium term bullishness in Zn does give this share a very good support and uptrend momentum. Short term (weeks) volatility is a must and that's where you can make more $. I just can't say it follows any patterns, that's all.
You can't say you are neutral if you don't hold ZFX shares, you may be bearish. (Apart from a very few brave short sellers). I am neutral because I did sell out a few weeks ago and only lately starting to buy back 20%. I don't care weather it goes up or down, I just trade.That way, I have no toothache!

Hey Tooth,

EWP is in force on all stocks at all times, just like many natural cycles are. Whether the average guy can see it as an easily identifiable pattern is another story completely. Usually the more liquid the instrument the more easily it is make head or tails from market patterns/motion compared to the random noise. There are offcourse cycles/patterns that are more peculiar to some stocks. Therefore whether we are talking about banks, miners or anything traded, it should not really matter. As far as being bearish ZFX goes, I was bearish in late Dec/early Jan and went short ZFX. ATM not 100% certain but will hopefully have a fair idea by end of next week if the right pattern/probability presents itself. Good luck with ZFX and good to see you have no toothache, hope ZFX does not give you any headaches.

Cheers

 

[moses]

I won't buy ZFX, and hardly even bother watching it anymore, because it is unreliable and doesn't make sense to me. It kept rising after the dividend (very bullish!) and then when everything seemed fine suddenly reversed. Who knows what it is going to do next...I see the experts arguing back and forth, but basically the ZFX SP has moved from steady growth and huge reliable potential into confusion.

Goodluck to the Rederob's of this world who, as fundamentalists, bought in so low that the swings really don't matter either way, and goodluck to the Wavepickers who see patterns in the noise and trade the swings. But for this little black duck ZFX has moved into the zone of the dark arts, and as it hasn't a hope in hell today of being a 10 bagger anymore why take the risk?

Emotive? Perhaps. But thats the market...

 

[trendsta]

I won't buy ZFX, and hardly even bother watching it anymore, because it is unreliable and doesn't make sense to me. It kept rising after the dividend (very bullish!) and then when everything seemed fine suddenly reversed. Who knows what it is going to do next...I see the experts arguing back and forth, but basically the ZFX SP has moved from steady growth and huge reliable potential into confusion.

Goodluck to the Rederob's of this world who, as fundamentalists, bought in so low that the swings really don't matter either way, and goodluck to the Wavepickers who see patterns in the noise and trade the swings. But for this little black duck ZFX has moved into the zone of the dark arts, and as it hasn't a hope in hell today of being a 10 bagger anymore why take the risk?

Emotive? Perhaps. But thats the market...

Fundamentals for ZFX have changed very little. If they have it has been on the positive side.
- Zinc stocks are 96k, only 10k above the lowest level in Dec last year. Zinc prices are still strong.
- Lead stock levels are at their lowest. Prices close to their highest
- ZFX will have additional $3 billion odd by divesting its smeliting operations

The market perception keeps changing. Essentially it depends on your own financial goals. If investing for a year or more you can simply block this noise. If you are trading for short term thats another story - fundamentals matter less, market perception, psychology, etc matters more.

 

[rederob]

Magdoran
You are probably right in many regards.

The only issue I have with wavepicker's approach is that its forward view is too two bob each way, and so be it.

Every forward view is prone to major revision on unknown factors, over and above those that have been anticipated.

In the case of zinc late last year, a top had clearly been achieved and a retrace was due. However, the extent of the retrace was exacerbated by Chinese taxation policies on zinc that enabled excess metal to be immediately exported for substantial profit. The data on this are now well established.

Given that zinc producers are themselves presently proposing that 2007 will be "balanced" for zinc, it will be a brave person that goes overly bullish. Producers are in the market, know their competition, and study brownfield and greenfield trends because that regularly impacts their decision making processes.
It does not imply they get it right, because they are only using "known" information based on current trends. Greater global industrial production can sharply swing a tight market and rapidly raise zinc prices. The downside is less of a problem as it will take a substantial period of time to get inventories to their previous "balanced" level, and those wanting to exit will not lose their shirts if they are half smart.

The reason I remain more bullish now that even I thought I would be is because data from Japan, India and Europe is suggesting the negativity of America's present downturn is being absorbed elsewhere through upturns.
Anyone following LME inventories (as a proxy) will see strong warrantings in the USA - for various metals - being counteracted by drawdowns on other continents.
Should America's economy turn around any time soon, watch out!
In the meantime, I just "watch".

 

[wavepicker]

I’ve seen a lot of technical players in my time, and I can say without a doubt that out of all the people contributing to the ASF site, and in fact all the trader’s I’ve ever met in my lifetime, that wavepicker is the most gifted, seasoned, and learned EW player I have ever met.

With all due respect, most people only know very basic concepts in EW, but it is a very detailed discipline, which takes years to fully grasp. The foundations are certainly contained in the body of knowledge developed by Robert Prechter over many year. While some of his concepts are necessarily flawed, I would argue that to be fully conversant in EW theory requires a detailed knowledge and understanding of his work .

Many of the counts I’ve seen on this site look more like they are based on Robert Fisher’s approach, which is an alternative school to the Prechter/Frost approach. wavepicker is more from the Prechter school, although is conversant in Fisher’s concepts too, but has refined his own unique style. The subtleties contained in wavepicker’s work are probably not easy to recognise from a novice's perspective, and it is more likely that seasoned EW practitioners will appreciate the knowledge and innovative approach wavepicker has developed.

What many people fail to realise, is that many different markets trade in very similar patterns, from Forex, to commodities to stocks and indexes. The core technical analysis principles based on an astute observation of how markets trend can translate very well almost universally. Hence the confusion when less knowledgable people raise distinctions between different asset classes, misunderstanding the applicability of pattern recognition across markets. Some people seem particularly obtuse when it comes to recognising this simple concept, not grasping the key point.

In sum, there are a lot of novice EW players out there that would benefit from the depth of knowledge wavepicker has. Also, those unable to see the forest for the trees when it comes to patterns of trend are splitting hairs.

Those who are fundamentally based just won’t understand what all the fuss is about because their discipline is radically different, hence it’s probably better for such people to stick to very long term perspectives since that is that approaches nature. (Broad strategic thinking, as opposed to shorter term swing and position trading with leveraged instruments which requires more short term precision in time and price and wave structure). Hence I fully understand the disconnect between FA and TA players - fundamental and technical perspectives I think are actually complementary, but are different tools for different jobs.


Regards


Magdoran

Hi Mag, thanks for your kind words, dunno about the "gifted part"

Let's just say like yourself, we both try look at a chart as objectively as possible.

Rederob,

It really depends on what your goals are in terms of developing a trading approach. Both Mag and myself are short to medium players trying to practice precision timing approaches. We patiently stalk stocks/instruments assesing probabilities that meet our price,pattern and time requirements.

Our strategies are primarily based upon taking up positions :-
-at the completion of counter trend moves
-early in 3rd wave setups at the degrees of trend we wish to trade
- at the completion of trends and taking up contrarian positions

You and many others on this thread appear to have more longer term objectives are in the buy and hold school.

Clearly it really depends what you want from the market

Cheers

 

[rederob]

wavepicker
If it works, use it.
If it doesn't, don't!

The markets are an interest for me, not my "living".
I do, therefore, trade with a long horizon, and am never in a hurry to buy or sell because the issue of "preserving capital" is not a factor I need to consider.

I am grateful for your insightful charts as it makes little sense to me in not being armed with as much information as possible, regardless of personal viewpoint.

You might notice I don't shy from a bit of confrontation. Not because I am necessarily disagreeable, but I find that "wounding" the enemy brings out their strongest fight. Only then do I have to truly confront my stupidity.
Borrowing from politics, I need to determine when to "cut and run", "stay the course", or remain besotted to my ignorance because "in my heart of hearts I know I am right".

But on thread, is ZFX worth a punt?
I like moses' early reply - and agree it's a hard one to want to be on right now.
But I also believe, and perhaps you, kauri and others agree, that this sector offers massive percentage gains when the hurdles are met for a trade.

I would like to think I could "set and forget" ZFX (and KZL), but their volatility can swing me up or down by $10k or more on any given day, so I really do have to "watch" them. I don't "worry" about them, though, because there is enough info out there for me to determine when it's wise to implement the exit strategy. In the case of ZFX, there is a juicy dividend to look forward to so I doubt it will see too many jumping ship until the storm clouds have well and truly cast their shadow over the stock.

 

[michael_selway]

Hi yeah not bad

EPS(c) PE Growth
Year Ending 30-06-07 321.7 5.1 46.3%
Year Ending 30-06-08 266.3 6.2 -17.2%

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 219.9 321.7 266.3 182.5
DPS 80.0 184.0 145.1 78.9

thx

MS

 

[Nick Radge]

Mag,
If your reference to the Fischer method is at me then you are correct. I'd even go further to say that I'm more aligned with Miner rather than Fischer. Prechter is a great analyst and more so a theorist but I feel there is a major step between that and trading which Miner has grasped. As others have said, what ever you feel works for you. My public record with EW trading (shorts & longs) is +45% in 7-months.

Anyway, this thread is not on the semantics of Elliott Wave or mine being bigger than yours but rather ZFX. Here is my short term view on ZFX. A break up through $18.28 would probably render this immediate view incorrect.

This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.