Anther possible way of looking at Colgate Palmolive is to assume that the stock has been tracing out a year long , perhaps even longer, triangle. I prefer the other count but it is interesting that the target for both counts is roughly the same. Time wise this interpretation would suggest completion  around mid July but with a high degree of variability.

For completeness the other (two ) counts are repeated below.

Colgate was up more than $2 today. As expected it is increasing the speed at which it is looking to get to the ultimate target. As indicated earlier two counts are plausible. Most elegant of the two is the notion that we are in a 5th wave wedge, now in its 7th year. This is because of the overlap that has occurred. A very plausible alternative would be a 1-2, 1-2 start which then requires a 4-5, 4-5 finish to complete the 30 year 5 wave sequence.

There may well be good reasons to prefer one count over the other but it is purely academic as BOTH counts call for a fairly drastic drop at the very least to $55, but more likely $45 or even $35 where the 62% retracement level lies. By the way, this is not a bearish call, just one that recognizes the normal ebb and flow of stock cycles.

My target for a top was about $90. Now that some time has gone by – a month – a more accurate guesstimate would be $92. At a rate of $2+ a day we could be there within a few days!

In the mean time the 85 strike 2013 put is moving towards the expected level of around $7, in fact, should the stock move to $92 or about $5 up from here with a delta of about 0.5 (we are at the money) the ask could drop another $2.50 which would bring it to $6.40 all things being equal.

Some may wonder why , if you expect the stock to go up by about $10 or a little more than 10% you do not recommend buying it. The simple answer is that I do not like playing 5th waves from the long side. The new high may only be marginal and the risk is at its highest!

Cl is working it’s way up. Soon it will be at a new high from where it could continue, perhaps all the way to the target trendline of $90. That, if it gets there, is where the put should be bought.

Colgate has one of the best EW patterns I have ever seen. This makes the predictive value so much greater. The only unclear part is this last 5th wave, is it a wedge or a 4-5, 4-5. We will keep an eye on it and assume (for this market that seems appropriate) that it is a wedge and therefore could continue its climb towards $90. It is a bit like watching grass grow but sometimes things speed up a little at the end.

All waves within a wedge are always 3-wave affaires,not 5-wave affaires as is common for impulse (bull) waves. In the detailed chart that would require just one more leg up of about $10 ( the same is true for a 4-5. 4-5 situation except that the starting wave at the bottom is included). Once it reaches $90 it should retrace the wedge in its entirety. That happens to coincide with a fourth wave of previous degree and a 50% retracement level.

For those that do not wish to short a stock , I would suggest going long a put option! Do not do this today!, wait for the stock to get up there. Today’s quotes are as follows;

Above the line is out-of-the-money and below is in the money, at least for the puts on the right.. I prefer close to the money if not at the money which today would be a strike of 80 with the stock quoted at $81,28 . The bid ask is ridiculous at 6.85-10.55. The 75 is trading at 4.50-7.00. In the event the stock reaches $90 that is approximately where the 85 would trade. Lets assume you pay the ask of $7. Should the stock then drop to the $45 level within roughly a two year time-frame your option would be worth $40, assuming no time value at all was left That is almost 6X your money with a very high level of accuracy. Talk to your broker to decide how far out and what strike best suits your risk profile. By the way, if it reaches $90 the P/E would be close to 20x. Below is the “model” for this entire pattern, except that the wave 4 triangle is stylized away.