Sometimes EW simple doesn’t cut it. Straight lines become more reliable. There is a very good chance this stock will not cross the line in which case it will easily rebound half the drop from $40, that is $7, give or take (about 25% on $26). Both the RSI and MACD seem to support this notion. In case it does break put in a stop at $25 or a wee bit lower. It is a risk/reward of 1 to 7, quite acceptable. And , on top of that China is doing a little more easing today and they could use a few cleaner burning diesel engines.

This is log-scale, works better with such wild gyrations. If you did buy this as suggested you should also be stopped out with a loss of one or two dollars. You could do it again but we prefer to wait a little while before we repeat a mistake even if this might be an excellent time to do it again. The RSI and MACD suggest that it is. We will wait for it to get to around $20 to try it again, that is if it ever does. For the moment the last leg down seems to be missing a 4 and 5. Further more the $20 level corresponds with the low of a triangle and the base of a wedge.

Looking at the big-chart it is not clear at all clear if this stock is in a new bull market from the low in 2006, or still in a correction from the 2000 highs. That is the beauty of discipline,  you don’t need to know. Just buy the stock and put in a stop at about $27. This one is so volatile that it could easily gain $10 or more on the next move, risking a dollar or two is probable worth it. The RSI is signalling a turn soon so you may want to wait another day before putting on this trade.

This is it as far as I am concerned. You could have made almost $8 on $25, all you needed was patience which I certainly do not have. Today’s high of $32.60 is just 10 cents above the top of the suggested range. That is at least 7/25 or 28% in less than a month.