Earlier this year, on the 21 of March, we opined that this bank would not go much higher and should in fact start a very steep decline.Here is the chart at that time;

At the time the stock had traded as high as $83.31, subsequently it managed to eek another dollar  but then did precisely as expected, dropping a little over 20% to, almost $67, a few dollars shy of the then suggested target.

Today’s earnings were good and that may have given it an extra little push, but the stock might have completed a 5-wave down sequence just a few days ago. The bottom part is a little muddled but with the benefit of hindsight it looks like wave 4 was an irregular flat (on the day the US was downgraded. Then followed a wave 5, more or less equal to wave 1. Waves 2 and 4 alternate and given the proximity to the expected target this makes the most sense (probable with a lot of other stocks as well!). What this means is that we are now correcting the entire wave 1 down, typically one should then expect a 62% retracement, to wave 4 or wave 4 of 3 etc.etc. and that is what is happening. $77.5 would be an ideal target and then the stock should drop, and do so faster than during the last 6 months (see previous blogs).

If there is any bank in Canada that has made a public display of incompetence, is particularly prone to nepotism and is totally a-moral if not immoral, it is the Bank of Commerce. All over Canada we still have their offices like little fortresses in local communities, and of course, HQ in downtown Toronto was , for decades, the tallest building in the British Empire.  They have not been able to shed this mindset and it has cost them big time.

To get to the point, this chart “predicts” in EW terms that the stock may well drop to the 4th wave of previous degree, no different than your daughter getting married at age 27, not that I know here , but that is what 95% of them just happen to do. That is at about $22 As one truly silly investment advisor on BNN said today, “It is not timing the market, but time in the market that counts” .Clearly this guy has never put a foot on a trading floor of any financial institution, preferring to dream on in some sort of moronic isolation. Another $5 and you will have made NOTHING on this stock over a 14 year period, except the dividend! See previous blogs.

On the left is today’s chart; on the right the view earlier this year on the 22nd of March. Apart from the slight throw-over the stock is doing precisely what should be expected after a completed B-wave. The stock is now down $14 from $85 to $71, it should continue to about $43 before finding some support. After that it should go lower.

A month (Feb 18) ago I presented this same chart. Today we are 47 cents higher than then but have been lower most of the time in between. The stock kept hugging the upper trend-line of this wedge formation. RSI and MACD have diverged for the longest time already but something is going to come out of the woodwork that will bring this stock back to the levels of August 2010, just 5 months after the financial meltdown. It should all happen soon and rapidly once it does.