Jan. 14th of 2012 we were absolutely sure that this stock was a sell. Nice B wave followed by a first wave down and a retracement that should not have exceeded $55.  It didn’t and the stock promptly lost about 30% of it’s value. Nice but not good enough. Here we are again at $70. This time we can argue that there is another, much larger B-wave. It is rather large but perhaps not in the context of the 3.5 trillion that the Fed. has used to force you into equities. We are at the original upper trend line and would again sell any time now between here and $75. Target under EW rules is $15

By the way, if the B-wave is viewed as too large, not unreasonable, than we would have no problem with a 5th wave instead from the lows of $15. The end result, once the dust settles, should be about the same.

Eaton Corp. is a globalized diversified power management company. We suspect the reader does not own it. Notwithstanding that, the chart is symptomatic of so many others that is is worth looking at to underline the big picture.

The picture must be familiar by now, it is the basic A down, B up and now C down that we have witnessed with so many different stocks. Normally the C wave drops below the start of the B, but sometimes symmetry is maintained , which, if it happened, would argue for a low around $18 or so. This B-wave counter-trend rally to a slight new high is text-book EW, the vertical distance being equal for both up-legs. In detail;

Wave 2 should be nearing completion any day now if not already. Next is wave 3 which normally is the most devastating. Notice that wave 2 is also text-book EW even if the retracement is relatively large which may have more to do with idiotically low rates and  intervention in one form of another , than with real optimism.