HON , Honeywell

Hon july 22 2011hon dec 2011

The chart on the left is an old one (see previous blogs under CAT and ) done on July 22 of this year. The argument then was that the stock had completed a clear B-wave and should decline (ultimately to new lows). In reality the top was already behind us and the stock was doing a wave 2, never quite doing a double top but reaching a high of $62+ . Then it took a dive to about $41+, or a little more than 30%. Then it rebounds , after a pause to complete a 5-wave structure, at about the same speed. This seems to be symptomatic for these times where gambling is reduced to a binary all-or-nothing, red or black game of roulette.

Here we are back at $56 is what should be a wave 2 of C that should take us to new lows. With a retracement approaching 80% the risk now is entirely to the downside.

The patterns are ugly, neither the 5-waves down or the a-b-c up for wave 2, are text-book examples. Perhaps it is the constant meddling, the plunge protection team or the binary nature of these markets that change the normal patterns and distorts them to some degree. In any case, it is time to exit Honeywell.