The usual then, a year ago Feb. 3, 2015, and now charts;

We were expecting at least a $30 drop, roughly from $75 to $45, the 4th wave of previous degree. We are at about $40 now and this is a good point to step aside. We expect a normal a-b-c correction and  so far we have only completed the a leg. The b should start right here at about $39 and could retrace 40% or more of the drop, so it could easily go to about $54. Then the c leg should start with a target of $30 or lower.

For the record, we have not always been correct on this stock, but we remind the reader that they should not let losses run. If you cut your losses at 10% say, you can be wrong 4.5X to account for this 45% gain. If you do better than 4.5X wrong against 1X right you still win! This is all the more so if we are talking about opportunities missed as opposed to actual losses.

We have no problem counting this up-leg from the ’09 lows as five waves. For the previous 15 years, good and bad times, this stock traded at about $15 on average just eye-balling it. So it is up 5x having hit a high of $74. It could drop $30 or more any time now so we would sell.

We thought it was game over when this stock first hit the $62.50 high, not so even though it did, initially, drop about $10. Here we are at $63.58, a year and a half later and still going strong. The p/e is now around 40 and the yield is under 1%. Here are the charts;

Identical charts except that one is a little more compressed. There are no 5 waves up structures anywhere in this chart, at least not without overlap. This is the signature of an expanding diagonal, which is a wedge that gets wider as it goes through time rather than narrower. The latest storm in the US may just have given it that extra little push and the large swings are no doubt attributable to the rapidly changing opinions with regard to the housing market and where that is in the supposed turnaround. Save for a few dollars to the upside to reach the trend line this is a sell. Of 8 analysts that follow the stock, all have buys and 2 even strong buys. Nobody else is recommending a sell.

These guys make dimension lumber and consequently one would expect that they are very sensitive to the housing industry, particularly in the US where much of this stuff goes. There are a few “problems” with the count as shown, but the broad brush picture seems to be correct. Notice that the top is reached in early 05 (perhaps even in late 04 ) so the stock ran ahead of the housing market itself which supposedly peaked in 2006. The stock then drops over 5 years to lose 64% of it’s total value. It bottoms roughly (a little late) with the rest of the market and then, in less than 2 years, climbs straight up to a new all time high of $62.23,  just a fraction away from the ideal Fibo  # 61.8 . Given the speed, and the fact that this is happening well before there is any recovery in the home-building world, this must be a B-wave which implies that it is “corrective” and therefore, by definition, a new low should be anticipated (or a far more complex pattern). The details are shown below;

Notice that this B-wave is almost perfect as the two upward components are almost precisely vector equal, topping in April with the markets in general , but not the home-building industry. From there there are seemingly two more a-b-c’s , the first down and the last one back up. We suspect that the one down is in reality a 5-wave structure with a relatively small first wave. The last a-b-c brings tears to your eyes by an unbelievable display of symmetry. Again the message is that this move is corrective and therefore the next move should be down, down to about $20 or lower. We shall see.