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Elliott Wave Financial Price Forecasting

Lonmin – Is there a Future?

by WaveTrack International| November 26, 2015 | 3 Comments

Lonmin PLC (LSE: LMI)

Lonmin PLC (LSE: LMI)


The shareholder approval of Lonmin’s rights issue on the 19th November resulted in a sharp mark-down in the share price when trading opened in London the next day. From the previous evening’s level of 9.85, it plunged to 1.50 on the opening, later edging down to 1.12 on the 25th November.

The company has re-negotiated its funding from a consortium of 10 banks for its existing facility of US$540m to US$370m due in 2020. As of September ’15, Lonmin had net debt of US$185m.

So what next?

From an Elliott Wave perspective, the additional decline that followed the rights issue has created an entirely different dynamic. It changes what was previously a three wave (counter-trend) pattern unfolding from the all-time-high of 4400.00 to the Sep.’15 low of 14.50 into a five wave (trend) expanding-impulse pattern – see fig #1. That translates into two ongoing aspects – first, it eliminates the possibility of trading into new record highs – second, following the completion of a counter-trend upswing, it will later crash down again, into oblivion.

Lonmin - Platinum - Chart - Weekly

Lonmin – Platinum – Weekly

For the moment, basis Fibonacci-Price-Ratio (FPR) analysis, there is a risk that prices fall even further than they already have, meaning the five wave pattern remains incomplete. The next major support projects down to 0.42+/- pence, derived by extending primary waves 1-3 by a fib. 61.8% ratio.

Now that Pandora’s box has been opened, there are no guarantees, but upon a satisfactory completion of a five wave pattern, R.N.Elliott’s original postulation states that a counter-trend rally will follow and it will ultimately trade back towards ‘4th wave preceding degree’. This area is labeled primary wave 4 and it begins from the fib. 38.2% retracement level of 14.00+/- and extends to its approximate high at 43.00+/- which is the fib. 50% retracement level.

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WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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