The time scales are, unfortunately a little different, ABX’s is much longer but you get the point. Just superficially I could come up with a multitude of counts, at least four in these two charts. No idea which one is the best but the one in green seems to have the most followers right now. Most importantly, apart from a slight immediate drop, the next bigger move for all of them is up not down. Playing it from the long side appears to be the way to go. For ABX it might pay to wait for $18,$17 or something like that first.
The usual then, July 11 of this year, and now charts;
$27 was the target at that time and that was reached just a few days ago. It looks complete now. Not only is the structure of the rebound a clear a – triangle b – c, that is a corrective move, pretty clear but it also retraces a little more than 62% of the drop AND both the MACD and the RSI have turned down more than a month ago.
If the A-B-C scenario is correct, this stock could reach a level of $12 or so. Time to disembark ?
Air Canada, that was featured in the same blog, went three or four dollars higher than we anticipated which just proves that perfection is elusive.
Boeing is actually the largest component of the ITA in our previous blog. The chart on the left is a year and a half old and despite getting it wrong we show it nevertheless as it illustrates what the right count might be. Whatever the case, we still feel that the 2009 low was somehow the end of a 4th wave. If correct the rest is a fifth wave which now, more clearly than before, is completing or, at the very least , very near to completion.
There is one little quirk with this company and that is their method of accounting, that is the “programme accounting method”. Essentially costs of manufacturing are allocated to production according to an estimated initial production run. Any costs above that, per unit, are simple capitalized to be spread out over future production. So far about $35 billion has been capitalized. To put that in perspective, that is about 5 to 10 years of profits. If the company fails to sell according to initial expectations there is a hefty price to pay further down the road. Beyond that the company is meeting its pension shortfall, one of the largest of any S&P companies, with its own shares, a dubious practice at best.
The stock is now going vertical. It is not clear how this is a Trump effect as the company was berated for charging way to much for the next set of Air Force One’s . Anyway it is all talk. EW wise this stock is a sell.
Below is an alternative count;
Both these charts are of ITA, which is an iShare of the US Defence and Aerospace industry. On the left is the “normal” or arithmetic , and on the right the semi-log chart. Sixfold in less than nine years and almost double since Trump. Of course the military industrial complex in the US is huge and no doubt it did little harm to have a president, already favourable disposed to this sector, who is surrounded by billionaires or generals.
The iShares has Boeing, Northrop, United Technologies, General Dynamics, Raytheon and similar companies in it. In total 39 of them. The iShare looks like it has done a clean 5 wave sequence since the great recession. This is one of those things where you wonder, why did I not think of this. Well we didn’t and now it MIGHT just be too late. Apart from another 10 points or so to take this to the upper boundary on the semi-log scale, this thing should be a sell. Maybe Trump and Kim Jung-Un or whatever his name is are going to meet and immediately become soul mates. They are, after all, birds of a feather.