There are many rules and guidelines in EW that I do not fully comprehend. The last few years we have had an inexplicable two to three years time delay, as if everything was frozen, in old kinds of stocks. No doubt it is caused in no small degree by the Fed. intervention in the market. EW is based on the premise of free markets with a large number of players. One could argue that that premise does not hold when the Fed. (or the ECB or the PBOC etc.etc.) simple writes another cheque for X bln. when things do not work out as they want them to.

     In the case of FM a very clear and well proportioned B-wave developed immediately after the lows of the great recession, peaking in 2011. From there a 5-wave down sequence should have started for wave C. It did not, it was delayed and when at last the down-leg did materialize it looks a lot more like a zig-zag A-B-C than a 5 wave C. We have precisely the same situation with RDS.B and Oil itself (see recent blog) and a few other stocks. Perhaps the B-wave, which MUST be followed by a 5-wave C, did not exist after all and the orthodox top actually occurred in 2014 instead.

    In any event the targets are not materially different. We should make a new low, that is below $2.60 Of course it can always go a little further but it is impossible to slice and dice this any further. A buy below $2.60!

For the record, we first predicted this trajectory back in March 2011, without of course the extra 2/3 years, as per below;

You would have saved yourself $116 or so!

We start with the usual then, June 2011, and now charts;

At the time we observed the near perfect B wave that created the top in 2011. This called for the C wave to be next. Normally it should create a new low below the lows of A and it should develop in 5 clear waves. So far it has done neither. That low was at $2.70 on Dec. 5th, 2008 which is stock split adjusted. The low of $4.52 recently is close but we could still go lower but the long-term trend line may be hard to cross. There is also no clear 5 waves down. If anything there is a pretty clean a-b-c both up and down. This suggest, potentially at least that some sort of double zig-zag is forming. That would argue that there never was a B-wave and that the real or orthodox top is actually the one in 2011, not 2007.

The stock has doubled from the recent lows at $4.52, no doubt on massive short covering. The same has occurred with TCK.B but in both cases we would caution the investor/gambler that the bottom may not yet be in. Overcapacity is rampant and much is financed with borrowed money. Demand is scaled down considerable and there does not appear to be much improvement in the near future.. This is your classic hog-cycle which may take a little longer. In the mean time you have saved  nearly 80% of your money by not owning this stock.

Here was our chart from June 22. It shows the ubiquitous B wave loud and clear. Management clearly does not read my blog, or they might not have gone for a 5 t0 1 split on August the 9nth. The stock had just peaked at about $140. Here is today’s chart adjusted for the split;

You have to look closely. The stock closed at $13.71.  It will go to, at least $10 but probable a lot further at which time the company will do a reverse split , if for no other reason than that they want to keep the stock marginable! The moral of the story, time solves all problems and you should read my blog.

This is a repeat of an earlier blog in which we showed the B-wave. This Google chart shows that scenario even better. B waves are counter-trend rallies and therefore 3-wave affaires. Counter-intuitively they can, and often do, climb above the corresponding A wave, but usually by a relatively small margin (less than 25% or so. Once complete the breakdown starts, usually to below the low of the A wave. You do not want to own this when that happens.