At $1000 this looked pretty well done, clearly not so. According to the Fed. this must be one of those stocks that is not overvalued, just trading where it should. In EW terms things look differently. Wave 5 is now about equal to wave 3 (or wave 1 and 3 combined). With the exception of commodities this is often as good as it gets. The high today was 1333 where it trades at a p/e of 37x. The RSI and MACD both suggest a reversal is right around the corner. First target is $600.
See previous blogs, we got this one nailed perfectly from the $42 high to the $10 low (at which time we did not bother to look). The big picture shows how these structures should develop, they are not always perfect and indeed this one could have gone a little lower. In any event a 5 wave wave C appears to be complete at the Oct. low around $10,. We had the breakout and the stock is just rocketing up with one or two gaps. It is up 70% in four months and looks a bit overbought at this point but the first target is still a lot higher at $22.50 wave 4 of prev. degr. We do not know if a wave 2 to about $13.5 comes first.
See previous blogs- some things we got right , most we didn’t. What stands out is the B-wave. In EW terms that could imply that we are presently in a large C wave down that is taking its time. This is shown in blue. We are already going up vertically and we are close to a “logical” upper trend line level of roughly $44. The stock is trading at a p/e >20x (compared to about 13x for XOM or RDS) and technical indicators are getting overbought. On the bullish side, (we do not believe it!) the stock could be tracing out a large triangle wave 4, with A,B,C and D complete and E still to go. Ultimately this bullish scenario should take the stock to the vicinity of $60+. Again, we do not believe it but, for the moment that is not relevant us under both scenarios the next move is down almost $15 or 30%. To put things in a historical perspective, this company had a capitalization of $1 million in 1989, compared to the $40 billion now, so it has been a stellar performer. We would sell here or use a close trailing stop-loss.
(1/2)^13= 0.000122070312
Should the TSX close today with a gain, and do it again tomorrow which would not be unusual given that it is a Friday, we will have 13 (a Fibonacci #) days with gains in a row, which looks like this;
Again assuming a roughly 50-50 chance each day for winning or losing, the chances of this happening, at the outset, is 1/2 to the power of 13 or a little more than 1 chance in 10,000. As there are 220 working days this is equivalent to once every 45+ years. According to BNN the last time this happened was in 1985, 29 years ago.
The TSX is metric, it loves tranches of about 1000 points. To do that we need to go to 14,450, another 250 points , give or take. The high on the 7th of March 2011 was 14,329 intraday, just 131 points away. As one commentator observed, even Pavlov could not have trained his dogs this well.