Should the Dow go decisively through the 11120 level, today’s high, the triangle becomes uncertain and a simple a-b-c might fit the picture better. Then we could go another 400 points higher. For the moment I prefer the triangle.
Month: August 2011
OTC, Open Text.
June 2nd this was a sure sell at $65 . It had taken years to get out of a range and broke out at about $52, than it appeared to have completed either a simple 5 wave rise, or a wedge. This chart shows the wedge;
Earnings must have come out or something of that nature..in any case the stock is now down about 18%, half of it today. The immediate target , of course, is $35 0r $27.5, the base of the wedge. The only interesting thing about this stock is that there was a gap on the way up, and one on the way down. This leaves an island behind and chances are very slim, at least in the foreseeable future that you will see those levels again. The break of the trend-line at around $60 provided a good warning.
DOW , update again
MSN has a cleaner chart that is almost a tick chart. On that info the 600 point surge we had after the Fed rate-freeze announcement could be interpreted as a 3-leg affaire, rather than 5. If it was 3-legs the triangle is still a possibility and , in fact, more fitting. Today we would be in c which should be about 60% of the 500 plus drop yesterday so 300 to 350, then down again and up again. In the end e would end at about 11000, putting the target at 10400. If it happens it could start late Friday or the next Monday. Do not trade on this, it is just an educated guess to give a roadmap.
PS, The flat is not out of the running!
DIS, Disney
Disney is not much different from a whole host of stocks. It starts down in an A-B-C in which the C is the 2008/9 market crash. The next move up is a pretty standard irregular B wave, itself comprised of an A-B-C The entire structure looks to be an expanded flat (but could become a huge triangle!). The large C wave has begun and should develop into a 5-wave down move. It may do so at approximately the same tangent of the A wave, first part slow and then faster. If that were to happen a pretty steep rally should be around the corner. The stock has now lost 37%, by my rough calculations, from the irregular top of B 3 or 5 months ago. That is close to the Fibo 38% and it also coincides with the low of the triangle (at least the short version).In terms of the rally post March the stock is down roughly 50%
There is an outside chance that all of this will turn out to become a fourth wave of some high degree. A flat would fit this nicely but so would a triangle (in blue). On the outside chance that it does become a triangle, typically the legs (5 of them) relate to each other by 61.8% (this is akin to the dampening effect by friction on a swinging pendulum ). That targets approximately $25 for the C leg. I do not like projecting out that far in the future, too many things can change, but it does give a roadmap for the next best stopping point $25.(that is also where 62% of the rally is erased. The early clue will be how wave C develops , if it turns out as a 3 legged affair the triangle will be will come to the front, for the moment $14 is the target.