If you do not see the bubble here you have to be wilfully blind. Yet it could go one notch higher if we are presently in 4 of 5 of 5. A serious break of 1400 would cause overlap and indicate that the bear phase has started. A quick peek at Siemens SI, Philips PHG, Nokia NOK etc.etc. tells you this this one is the only one that has gone to such new highs, except, of course, Apple AAPL, see below. We are neutral on it now that it almost reached our initial target.
See also our previous blogs. A month (almost) ago we suggested that this one could peak at about 1050. It has reached 1008 and we wonder if this is it. It is the big “are we there yet?” question. This is a near perfect expanding diagonal triangle 3-3-3-3-3 structure which ONLY occurs as a 5th wave, that is at the end of the ride. They invariable break down to the base and do so rather rapidly. By the way, legs 1. 3 and 5 correspond quite nicely with Fed. action. 1 in anticipation of the Y2K problems that never materialized, 2 in response to the market lows of the tech wreck of 2003, and 3 in response to the “great recession”.
P.S For those that would argue that wave 5 is disproportionately large relative to the entire 5 wave sequence for the larger degree wave 5, we point out that wave 3 goes from 100 to 500, a factor of 5x . Wave 5 goes from 300 to 1000 a factor of 3x so wave 5 is much smaller than 3. It is roughly 60%. A semi-log chart (see previous blogs) would show this better.
Then, Dec. 6 2011, and now charts;
See previous blogs. Despite a minor initial error with regard to where the B wave ended, the stock has followed the script nicely. Short-term things are not that clear;
As we are not sure where the large B-wave terminated it is hard to determine where it will go from there. Perhaps an irregular a-b-c for wave c. The last part should still subdivide in 5 waves, either without overlap (green) or as a diagonal (black). Given the strength in the RSI and MACD we would prefer the diagonal.
Old charts as of Jan 14, 2011;
These were the two possibilities that met EW rules. The top one that of an irregular B-wave to be followed, as always, by a C-wave to new lows. The second possibility, much less likely, is that of a 4th wave to be followed by a 5th to a new high above that of 2007. The leg up from the 09 lows is very hard to count as 5 waves which would have to be the case if it was a 5th and not a B. Other stocks, such as Vale and BTU have similar structures without necessarily making new highs adding to the B-wave confidence. In any event here is where we are now;
The advice to sell at $65 and wait for a target of about $15 looks pretty good now. If you were short we would buy back at today’s $25 rather than wait for a further drop. But, normally, the target for the C wave is below the A waves low!