See our April blog. The stock was at $36 and we opined that it should go back up to $43 (it went to $42) and then down again to $32, or lower. So far so good. When things are not working out we put an American at the helm. We will see if that changes anything.
So we got the 5th minor wave as expected to finish of wave C. As a result we have a perfectly symmetric structure within the blue circle shown above. I have absolutely no idea what that all means except that has a tendency to expand in time. My guess, and that is what it is, is that we go up to about $43 and then back down to somewhere in the order of $32
Back in January we noted that SNC Lavalin had retraced to a very nice Fibo number of 61.62 after tracing out an equally nice B-wave. The conclusion, as always an initial drop to about $41 and more after that. Here we are today;
The actual top clicked in at just a few pennies higher and the stock dutifully drops to about $39. The way it does that could be 5-waves, or just waves 1-2-3-4 with 5 still to come. The rebound as either wave 4 or 2 is a clean a-b-c zig-zag that cannot go higher than $52 if a wave 4. We shall see but either way the next big move is down.
In EW terms the B-wave is normally the mid-wave in an A-B-C, correction, (by definition 3-waves). They tend to have an inordinate amount of symmetry and seem to ignore all fundamental information being almost oblivious to the rest of the world. There are 2 basic problems with the B-wave. First of all what may be 3 waves now can always develop further into 5 –waves and thereby stops being a B-wave. Next they can, and often do, rise above the origin of the preceding A wave which, intuitively, seems to make no sense. Yet it happens like clockwork and sometimes with a margin of about 30%. Despite this , it still is a B-wave. Here are 4 examples (there are literally dozens of them right now).
and AGU.
Typically the B-wave will retrace 50% to 62% in most cases, sometimes more and , if it gets that far, it frequently double tops, as in SNC above. The symmetry is nearly always present for reasons I do not understand, markets just love symmetry. In most cases that means that waves c and a in the B wave are equal (as vectors). This is pretty much the case with all four examples. In some cases the symmetry goes further and all 3 sub-divisions in the B-wave are vector equal, as, again, is the case with SNC. Anytime you observe this symmetry it pays to be very careful as once the B wave is complete, it is right back down often to below the starting point. If by some oddity the top should occur at a rather precise Fibonacci number (61.8) as for instance with the Canadian dollar in Oct. of 2001 or 2002 and now with SNC, I would get out altogether.