de 27 nov 2017 bde 27 nov 2017 s

It is not at all clear what this stock was doing for nine years from 2008 to the beginning of this year. It could have been a very ugly triangle or a very elongated wave b in an a-b-c 5th wave in a diagonal. We simple do not know!

But, the last wave up from about $67 or so is a clear 5-wave sequence that is peaking. Both RSI and MACD favour this interpretation. So do, I think, fundamentals. If you live in farm country you will know that a tractor, properly taken care of, can last for half a century. Farmers buy these “toys” – they come with every imaginable gadget – when they have the money, not when they need them. This makes these machines truly discretionary and as a result demand can fall off like a rock. This stock should be an excellent short.

DE John Deere

DE jan 15 2016

See our previous blogs on DE. You are now down about 25% since we recommended selling this stock (and similar ones like CAT). At first we expected a 4th wave around this level and that  appears to be what we got, at least it is a triangle. However triangles can be either a 4th wave or a B wave.  Given the size relative to wave 2 it has occurred to us that this may in fact be a B-wave (in pink). The consequence of such a change is that we are already in a wave C and could continue the drop much faster than in the other interpretation.

Time will tell.

DE update

DE sept 25 2015

So we got our 4 and 5 waves and the stock is now down about $25. For the moment that may be enough even though forward looking statements by CAT are hardly inspiring. After a bounce this one will probable proceed to about $55 for starters. Komatsu, the Japanese heavy equipment builder looks even sicker.

Komatsu Ltd. ADR, sept 25 2015

DE update

DE aug 21 2015

So we were lucky, was it EW or the sweet smell of manure? Less than a week ago we suggested this was a sell despite the many shorts already on this stock. The company cut some expectations by about 25%, inventories are good for 7 months , for second hand equipment – this stuff lives forever! – it is twice as much. Prices for farmland are now dropping in the US. People are no doubt already wondering if this is not a good dip to buy. In our opinion it is not, not even close as we are looking ultimately for the stock to drop below $30.  Al we did today is complete wave 3 of wave 1 of C. Do not forget “Nothing runs like a Deere”