Canyon Services Group has been a great performer. I use the past tense as the chart suggest this is not to continue. Seldom does a stock have such a clean a-b-c as this one.If correct we are about to go into a second big dive.
Month: March 2012
EL, Estee Lauder Cos Inc.
This stock has traded at a high of $60.365 but the charts suggest it might go a little higher. The charts and the price targets of 18 brokers suggest maybe $65 is in the cards. By the way not a single broker is suggesting a sell. If one considers that those lucky enough to own this stock, have a six bagger for sure one can only wonder what the adage buy low, sell high means in practice. In our opinion it means now or hold on with a very tight stop.
There are a few very good reasons to sell. The upper trend line is at about $65. At $65 waves 1 and 5 are equal. $62 is a nice round Fibo #. A thrust from the present, minor wave 4 triangle, would target about $63. The RSI and MACD are both already heading down. Last but not least, the analysts that are always excellent prognosticators are calling for $63.56, not a single one out of 18 has a sell, it does not seem to be part of their DNA
MSFT, Microsoft
Both charts are essentially the same. I like using two in this case as one sort of confirms the other. They can , as always, be enlarged by clicking on them.
Clearly there is a triangle in here somewhere. On rare occasions these structures that normally have 5 legs, a,b,c,d and e, add another 4 legs to make it an a-b-c-d-e-f-h-i. This one is rather accurate. As triangles only exist in 4th or b-wave positions it has to be one or the other. In this case, being totally out of proportion with a wave 2 if one can even find it, chances are that this is a b-wave in an a-b-c , that is making a large B-wave from the lows. If c should equal a we would get to about $42 which would exceed the double-top level of $37 which normally does not happen. If , on the other hand, c climbs to 0.618x a it would target roughly $34, which also just happens to coincide with the size of the “mouth” of this triangle.
We have no idea what the right number is but the max is about $37, reasonable is $34 and in the end the stock almost invariable drops back to at least the lowest point of the triangle, about $23. So in reality the choice is between $3 to the upside and $11 to the downside. An easy choice.
QCOM, Qualcomm
Qcom also just made a new high at $62.74. This stock has taken about 10 years to repair most, but not all, of the damage caused by the tech wreck in 2000/2003 ( see also our blog on the Nasdaq, which, almost to the tick, has recently retraced 62% of that drop). In this case the picture is absolutely perfectly clear, wave A down, followed by an almost perfectly symmetrical a-b-c B-wave back up, not quite getting to the double-top level. The c leg in this B-wave is almost certainly a “diagonal”, read wedge. It has not yet reached the upper trendline, which would be around $66. This is also approximately where wave c is equal to a in both time and amplitude (vector). The entire structure is a 5-3-5 , a-b-c. No reliable alternative counts present themselves. The stock has a p/e around 24. We would sell here or fractionally higher.
The ultimate target would be below the lows in 2003 by about the same amount as the stock fails to double top.