We got this one wrong, twice in a row, in both cases because we interpreted wedges as 5th waves whereas, with hindsight, we now know that they were not. Counting waves is an art and not a science therefore it is always advisable to ignore those trade ideas that are incorrect – you do that by using stops.

     Now that we are here $35 looks to be the right target, perhaps even a little too low. There is a whole cluster of potential targets at that level or just above. For one thing it is the level of wave 4 of previous degree, maybe. It would be a correction of 61.8% at about $38. Both the MACD and the RSI are calling for a turn. Particularly the RSI is improving from an unusually low reading not seen on this stock since inception or on most stocks in general. It is a buy here or between here and $35 for , at least, a decent bounce that should reach the gap or perhaps even close it.

Two years ago, almost, this stock looked pretty overvalued at about $70 but then it did its own Mnt. Everest thing and climbed on to an even $100. Then it happened and we did not pay attention. Here we are a perfect Fibonacci $38 down from the peak and we have the same situation as with the previous blog of YUM , except here the stock is in a down trend instead of an up trend and the diagonal is a contracting rather than an expanding one. Waves 1 and 5 are also equal, both at about $15. This time we expect the stock to go up to about $78, for a gain of roughly $16 or 25%. Given that the wedge wave 5 took 4 to 5 months, one should expect a violent move up that takes 1/2 that time or less, perhaps even a few days only!

    A 63 out-of-the-money call option is quoted at $2 to $2.30. A little further out-of-the-money drops the price quite fast, but you get what you pay for. Again talk to your broker and do not let him tell you that options are a tool of the devil and way too dangerous. Change brokers!

Yes , the rich are getting richer but this luxury retailer is priced a little too rich for our liking. A sell.