The big picture is not a pretty one, perhaps just another casualty of the tech bubble. But then everything is relative. This stock has not  even retraced a minimum of 38%. It may yet do that, almost, if our mindboggling scenario is correct. It seems that we potentially have a 3 year triangle, unfinished as it is, in the making. It has been light years ago that the stock made the low of $4.57. From that point at the very least one would expect an a-b-c rebound. The triangle concept fits nicely in that scenario as wave 4 of C.  Fortunately nothing needs to be decided now. An e-wave is still required to finish the triangle before the thrust can start. These e’s can be devious as they need not travel to “the other side”, at least not all the way. Still there are months to go before this one is ripe. Then we can re-evaluate and do so with more confidence.

The “diagonal triangle” a.k.a. “pennant” or  rising flag, is a fairly common pattern that indicates an upcoming reversal as it invariable occurs in the 5th, or last, wave in a 5-wave sequence, or in a C of an A-B-C. At the very least the market should take the stock back to the base of the pattern and , in the event that it was a C in an A-B-C, usually a lot lower than that. EMC Corp. , a tech stock that was named, I suppose, after Einstein’s famous E=MC2 formula, is providing us with a text-book example of one of these patterns, right now!

Nothing in this business is ever straight-forward as there are numerous valid ways of counting this wedge. In red is the smallest, green is a little bigger, blue bigger than that and then purple. Given all this ambiguity one might , justifiable ,  comment that perhaps there is one even large than all of these. However, since the apex is just a few months away, at the most, and the angle at which this pattern rises – about 50 cents a month – is so low that even in that event the stock is not likely to runaway from you by much more than a single dollar at the very most. Against that you are virtually assured of at least $5 to the downside making this, essentially a 5 to 1 proposition. By the way, both the MACD and the RSI are not confirming the recent highs! Also, looking at the big picture, we get;

From the big chart there is no specific target that is compelling , one way or another. But from the intermediate chart an argument could be made (in contrast to the above) that the stock completed , ( or is about to complete ) , a 5-wave move from the most recent lows of $8. The present level to about $23 would complete the pattern.

These wedge patterns are extremely reliable and work  as scripted most of the time. That , combined with a 5 to 1 reward ratio, makes this a very attractive trade!