Then – Feb. 21, 2014 – and now charts.

The target at the time was $35, or more precisely the low point of the triangle. It did exactly that losing 50% of it’s value and about 62% of the last leg up. It is now probable in a wave B of an A-B-C correction. That wave B is not quite complete so it might go a little higher. Then wave C should start.

   The gun industry is in trouble. The US is the ONLY civilized (?) country where you can buy these things without too many questions, sometimes no questions at all. The right to bear arms is in the constitution which was ratified in 1788. 227 years ago circumstances were slightly different than they are now but that right is defended tooth and nail by all sorts of people. However the laws are chipping away at it, most recently Obama came up with a plan to disarm the elderly on grounds that they are over 65, receive Social Security and fall in the category of,  people who have     "marked subnormal intelligence, or mental illness, incompetency, condition, or disease."  Apparently there are some 4.5 million of these and you sure would not want some senile opa shooting squirrels from the porch next door with an AR-15. Not good for the neighbourhood , the elderly, or this industry.

Last year Febr. when the stock was about $70, we had this to say about this company;

This is somewhat counter-intuitive. Pres. Obama does not like hand guns and would like to restrict them so people in the US decided to make hay while the sun still shined by buying 26 mln. during his first term. Just last year they added another 8.5 mln. This is completely contrary to the president’s intentions. In economics this is a phenomenon that is referred to as the J-curve. If it is a J-curve, things will soon go the other way. A drop to the low point of the triangle ($35) is a first target.

This is what happened;

The actual low was at $33.90  Depending on how it gets there it looks like a sell again when it gets closer to $70 if we notice!

This is somewhat counter-intuitive. Pres. Obama does not like hand guns and would like to restrict them so people in the US decided to make hay while the sun still shined by buying 26 mln. during his first term. Just last year they added another 8.5 mln. This is completely contrary to the president’s intentions. In economics this is a phenomenon that is referred to as the J-curve. If it is a J-curve, things will soon go the other way. A drop to the low point of the triangle ($35) is a first target.

The usual then (Sept 30, 3 weeks ago) and now charts:

The difference is $20 on $60 or about 30%. You are now on the bottom trend line so a little bounce would not be all that surprising, but this one should continue to at least $25 if not more. See also Smith and Wesson (SWHC) that has experienced a similar drop from $11 to below $8. This by the way, is a good example of the EW contention that stock prices are not moved by events but by investors moods.