HLF, Herbalife update

HLF march 15 2014 bHLF march 15 2015 s

We made a pretty astute call on this stock quite some time ago and are going to give it another try now that it is in the limelight again. Once upon a time in the late eighties or so there was a company that was called Nulife or something like that. A good friend of mine told me I should get into it because it would make us both rich beyond our dreams. If you could only see it in your mind’s eye it would become reality,  so his thinking went*. Unmoved by his arguments I responded by explaining what a ponzi scheme was etc.etc. and quickly found out how ferocious the cult like thinking and conviction can be in these circumstances. End of friendship. So let’s look at it from an EW perspective only.

On the left, the Bigchart, the 5-waves up into the top is straightforward, arguable there is even alternation between 2 and 4, there is an extended wave 3 of 3, the whole thing fits into a channel and 0 to $85 is a real bull market. Next a correction should occur wiping out at least 62% but often a lot more. All corrections should take the form of an a-b-c (or multiples of that). Our best (educated) guess here is that we are looking at an a down, a b back up, and now a c down which seems to take on the appearance of a diagonal or wedge. Legs 2 and 4 usually touch or overlap a little bit and all legs are subdivided in threes, not fives.  Should this indeed happen then $15 is a reasonable target.

* See Bob Proctor (not Prechter), as in The Secret etc.