I fully expect that is you own this stock at $3 (say), you could make a dollar or even two profit, perhaps a lot more. Even so, as I am missing a 5th wave, I would recommend exiting the position early rather than later. In the end everything is about the conservation of capital!

Sino Forest reported poor results , blamed Authorized Intermediaries for a lot of the confusion, whatever that means. Anyhow the stock dropped another 32 % and now it looks like a buy! From a high of $26 to a low of $3.35 is quite a drop; more importantly it follows a very countable 5 –waves down signaling that a rebound of sorts should occur imminently. A bounce could take the stock to $6 or higher which would be a double of you can pick it up for ,say, $3.

In May of last year we thought this one was ripe for a turn. QE2 was still to come and sort of “postponed” the event. It even managed to double top at $26 (only $4 above our sell). Now it is going south with a vengeance. A bounce should be forthcoming soon but ultimately the previous analysis still holds. A hedge fund by the name of Muddy Waters did just that by claiming the company is a fraud and should sink to a single dollar.

This may be a good harbinger of what may happen in the not too distant future. This stock , like so many others (Open Text for instance) has had its technicals deteriorate for quite some time now, also it had reached and even marginally exceeded a logical (the top of wave b in an a-b-c that forms wave A). From here on a reasonable expectation may be that we are seeing a hugh flat formation forming in which the A and b legs are complete and now C has started. If this is correct expect the stock to trade at a few dollars sometime in 2011.