It is obviously too late now, you have to catch these things before they happen, but nevertheless Barnes and Noble is a good example of what EW can predict. The stock briefly hit a high of $26 equal to the triangle measurement.
Month: May 2012
ECA update
Soon this stock should trade a little above $22, sell then if you like a 10+% gain in a few days or stay with it if you expect a new bull market. I guess it comes down to the old bird in the hand versus two in the bush.
SHLD, Sears Holdings
We had completely forgotten this stock , here are the two charts, prediction and reality;
The prediction on Jan 23 of this year was that the stock could climb to perhaps $90 when the stock was at $53. It got to $85.90. It would do it fast. It did both for a theoretical gain of 62% and did so rather precisely as shown by the arrow. Also it announced the event well in advance even if we were late to take note. It dropped precisely to where the C=A would have suggested. From here we have no idea where it will go next preferring only to capitalize on the obvious.
Alan Greenspan, the Fed and “Irrational Exuberance”
The Maestro spoke again today, this time to let us know that stocks are dirt cheap and can only go one way given the present p/e ratio and that is up. Just for the record we thought it might be instructive to see when exactly it was that the maestro uttered his most famous words, “irrational exuberance”. It was on the 5th of December 1996, during a speech entitled “The Challenge of Central Banking in a Democratic Society”. On the chart below of the DOW there is a red arrow to show when that was;
In the previous ten years the Dow had tripled in value. Since then 16 years have gone by and the Dow is at roughly 13000, implying a compound growth rate of 5.1% (which does not include dividends), which is much higher than the long-term growth rate. This begs the question why exuberance then and a buying opportunity now?
The answer, I would suggest, can be found in parts of that speech particularly when the maestro says, “We as Central Bankers need not be concerned if a collapsing financial bubble does not threaten to impair the real economy, its production, jobs and price stability”.It is almost as if these guys , like ostriches, bury their heads in the sands of the world of academia and are completely disconnected from the real world.