As anticipated, here we are at the trend line at about $12. The guy who ran this into the ground by interfering is now out of the picture together with his pile of stock. The catharsis can now begin. This is a screaming buy with a maximum and unlikely downside of one or two dollars and an upside of $18!! Nice risk/reward ratio.
The usual then – 12 Nov, 2012 – and now charts;
The arrows actually point to about $3 , that part we got right. But we did not get the triangle which shows one of two possibilities and we did waver a bit as $16 to $3 seemed like an awful lot, briefly $6 seemed to be low enough. Today we would count this whole thing as a double zig-zag, which could mean a complete correction were it not that there also exist triple zig-zags as in A-B-C X A-B-C Y A-B-C. For the moment we will ignore that possibility. This stock is at the 200 day moving average, near the upper trend line and the RSI is in overbought territory. Also the rebound is nicely symmetric so a pause may be required after this double from the lows, but the stock does have the potential to go a lot higher , perhaps >$10.
First the big picture. Around the turn of the century (not this one but the previous one), this company was founded by a fellow by the name of James Cash Penney. So this retailer is not in any way connected to “dollar” or “dime” stores or their ilk. It is more comparable to a Sears and often finds itself as the anchor store in malls in suburban areas. This company had Mr. Ackman of Pershing Square fame on its board un till recently and created a “poison pill” structure to fend off unwanted advances. Presumable there is a real or perceived threat of some sort. Applying our most favourite mantra – Buy Low / Sell High – to this stock, tells you at a mere glance that buying now is a lot closer to the bottom of the range, from $10 to $90, than to the top. Also if you do not understand the stock, rest assured that you are not alone. But one thing is perfectly clear given the magnitude of the swings in price in the past 20 years, and that is that anything is possible! Even likely if we look at the details;
In EW parlance this is a diagonal (contracting triangle). In normal English it is a wedge. One chart is normal, the other semi-log. Also the time frames are not the same. The wedge is clearly visible in both. The nice part about this structure (and all others) is that the 3d wave cannot, ever, be the shortest. Wave 1 is from $32.55 to $15.69, or $16.86. The third wave is from $23.10 to $13.55, or $9.55. The 5th wave, so far, from $19.63 to $12.34 or $7.29. The furthest it could possible go is to $10.08, but that is using the extremes. Going by the trendline $12 would be the lowest possible level. The shorts are still at about 20% of the float.
The initial target is at , almost, $20.00, the top of the triangle wave 4 of this wedge. Next target is at $22.50, again the top of a triangle using a less likely different count. Next is $30/32 which constitutes the base of this wedge. By the way, almost all are retraced all the way to the base and usually quite rapidly. Essentially this stock is an open invitation to doubling your money in a very short period of time! Things can always go wrong so by all means put in a stop at $11.
Then – 5of June 2013 – and now charts as usual;
We are adjusting our outlook for silver. Two months ago we expected silver to trade up in what we assumed would be a 4th wave of 5. That does not make any sense even if silver did trade up as expected. The triangle, if there is one, cannot possible be a 4th wave triangle and ergo it has to be an X wave. The whole structure is then more properly viewed as an A-B-C X A-B-C, also known as a double zig-zag. I have stylised the A-B-C’s such that they are directionally precisely equal but mirrored. If correct silver will get to about $15 per ounce. We had this interpretation in our October 10, 2012 blog.
Fortuna Silver FVI illustrates the possibilities;
These are the same charts, just different outcomes. The bear outcome fits well with the present up move. It should not last much longer. However it does not fit at all with SLW.