CMI, Cummings update

The usual then, June 15, 2014 and now charts;

CMI june 15 2014cmi dec 26 2015

See our blogs on this stock. We were targeting about $80 for the first drop, either a wave 1 or a first zig-zag of a double zig-zag as shown in the chart. The high was about $160, $159.06 to be precise on June 6th, a week earlier, but could have gone a little further to about $170. After that the stock went down rapidly to its first target of roughly $80, just about 50%. We expect a rebound from these levels after which the decline might continue to become more complex.

Diesel engines are nothing new even though there have been great improvements recently, particularly with regard to the injection systems and so on (see Borg Warmer, BWA). There is a high correlation between sales of heavy duty diesel machinery and farm income which is down by about 38% from the recent peak, so this kind of performance should be anticipated over a broader spectrum to include John Deere (DE), CAT, Kubota etc. etc. Most have yet to catch up with Cummings.