In 2012 this stock looked like the bull was over at about $72. It did drop a little from there but almost immediately started its trek up once again. Today, it looks pretty ripe again.
I have never fully understood why a bull market sequence should consist of 5 waves up, other than noticing that this is often the case. Even then the actual counting of the waves is more an art than a science. Often it is really not possible to do in real time with a high degree of certainty. Also the constant mention of alternatives is, in my opinion, not always helpful. With those caveats I think JNJ may have peaked.
The single most important attribute of EW is that it must look good. And yes that is mostly in the eye of the beholder and why you do not listen to every Tom,Dick and Harry who pretend to know how it works. Here, fortunately, there are many supporting factors. The channels work relatively well. Wave 3 is still the longest, at least under one count which includes a triangle for wave 4, but barely. This is normal. There are a number of variations that would fit this chart but however you slice it, it does look complete.
Assuming the above is correct than this stock should drop 62%, to the 4th wave of previous degree, the triangle if there is one etc.etc., roughly to $60 which is cutting the value in half. If this could happen to JNJ, a defensive stock and a pillar of most investment strategies, what is in store for the market as a whole?
Below is one variation using Google Finance which covers a longer period. Here we introduce the possibility of a “running flat”, that is one that is skewed slightly upwards. The triangle could be part of that, i.e. wave c. So the whole thing could be 8 to 9 years long.
