On the left the April outlook which was twice adjusted to events in the market. The last one that this was definitely a buy if you could get it under $9 (or thereabouts, of course). It got to $9.05 . On the right what actually has happened. The small c in the B-leg was expected to go to about $17, it only reached $16, but then the stock followed the script pretty well verbatim. What we have here is a wave 2 retracement of wave one up, retracing 50% (which is low for 2’s) and doing so in a 5-3-5 pattern. An alternative would suggest that the C wave is as yet incomplete. This alternative has little credibility considering that all other criteria have been met rather nicely. Wave 5 of C is most likely a wedge diagonal triangle adding certainty to the count. If this is indeed a new bull market the stock could go much higher, but in this dicey environment I would not expect too much soon.
This one could continue up to $16 easily. Before that there may be a wave 2 of 3 up that would interrupt the process. In the meantime the stock is up about 29% from the lows. There is talk that the company will reinstate it’s dividend at next weeks meeting (according to Barclays). It would supposedly be 8 cents a quarter, which, if I calculate it correctly is 32 cents per annum or at a stock price of $11.66 is a dividend of 2.75%, not bad.
F
Perfection would suggest that Ford could trade around $7.84 in order to retrace a precise 61.8%. But perfection in trading leads to frustration. The upside potential is such that anywhere under $9 this stock should be bought as opposed to our previous recommendation to sniff at it with a tight stop.
F
Our ideal target for Ford was in the high $7, $7.84 being a Fibo 62% down. The stock may well be a buy at these levels despite being about $2 short of that low. The reasons are;
1. The stock dropped 50%
2. It dropped to the 4th wave of previous degree.
3 The drop is a crystal clear a-b-c, 5-3-5 structure, complete even of it could become more complex yet.
4. The RSI and MACD is at lows not previously seen over this period.
5. Fundamentally they are doing relatively well.
Recognizing that the correction could become more complex, for instance by moving back up to say $16, and then going south again towards $8 (shown in black). Even in those circumstances this is a buy for a very reasonable trade , up $5 or so is, after all 50%. Just use a stop, mental or real at $10.
F
If you use a sharp pencil , you could say that today’s low is right in the trend-line. More often than not it does not even get there. The stock could still drop to the $22 level but regardless where you buy it, it should have a rebound to the $30 level.
RIM has dropped slightly below the trend-line. Things have never been so dark so from a contrarian view it must be a buy.
Ford also had one of these diagonals. It too exceeded the trend-line briefly. Now it is in the correction of the first bull leg. As mentioned earlier this correction can be very deep and should look like and a-b-c. $11 is where c=a, $10 is the low point in the triangle on the way up and a 60% correction would take the stock to just under $8. Where it will, in fact stop, time will tell but on average a buy at $10 will probable be profitable.
CCO, F, RIM
By special request a quick update on Ford. After retracing the wedge to about $10 the stock proceeded to go on to $19. This is where the 4th wave of previous degree resides and therefore a very “logical” target. At that point it had , at least under one count, completed a 5-wave bull up-leg for a wave 1 of a new phase in the life of this stock (one hopes).
So far, see detailed chart, the stock has gone down in a nice 5 wave move and therefore needs another 5 wave move to complete its correction, but not before an intervening a-b-c is complete. My best guess here is that we still need to do the c part, to , say , $17 or so and only then will we get the next bigger leg down to complete the correction. A logical target, as always, is the 4th of previous degree, in this case $10 but it certainly could go further.
In the long run it is hard to even guess how high the stock might go. Intuitively I doubt very much that it will ever again go beyond $25 or so. This industry is barely a hundred years old but seems destined to experience some rather major changes in the not to distant future with way more competition than ever before. The Americans still seem emotionally hell bent on building cars by taking two railway rails and putting a 560 cubic inch engine between them , which does not put them in the front row for innovation .
F
Ford has completed its a wave correction and is now doing the b part. That should roughly retrace about 60% of the drop which is 0.6 X $5 = $3 which from $14 gives $17. After that wave c of the correction should take the stock to about $10, or a little lower. At that level the stock should be a buy for a resumption of the bull market for Ford. We shall see when and if we get there.
There is an outside possibility that the first 5 wave up sequence is not yet complete. That would imply we are now doing wave 4. Highly unlikely but if it happens it would likely be a flat or triangle wave 4, in which case there would be ample time to adjust our strategy.
F
First Toyota. The big chart should bring tears to the eyes of the true EW(avers), in that it follows all the pragmatic little rules and guidelines perfectly, so far. My drawing is simplified just to get the message across better, but in reality wave 3 tops one block lower as wave 4 is most likely an irregular zig-zag. The top line should go through the top of wave 1. The result is that wave 5 is equal to 1 and 3 combined, there is alternation between 2 and 4 and the 3d of 3 is extended. All picture perfect.
Typically correction take a stock to the level of the 4th wave of previous degree, roughly $40. Furthermore, again this is typical, the stock loses at least 62% of its value, about $50. It has done neither of these,yet. It will , if it keeps behaving.
Ford has pretty well also done what it should having completed a first wave up, right into the level of the 4th wave and at about the 50% retracement level. From there it has dropped in, what appears to be, a very nice 5 wave down for A. If you are courageous the next B wave up should be good for $3/4 to the upside, but after that the stock should go down in the c wave to at least $10 (but possible $7).
GM peaked after its public offering at the beginning of the year. Since then it has dropped below the issue price. There is little chart to go by but what little there is does not look promising.
F, GM, TM
Red, Green or Yellow? This was one of our best calls. The initial target was $9 with a very high level of certainty, (back to the top of the wedge). After that $15/17 for wave 4 of previous degree. At this point we have no idea whatsoever, the stock could continue to the usual 50/60% retracement levels or a lot further if we are in a real bull market. Paradoxically ,you would not touch this stock if you are long-term bullish. A schematic representation of a real bull would look something like the green chart. Before we go up a solid pull-back in wave 2 should normally be anticipated; these typically retrace the 60+% and therefore it would not be surprising to see the stock first trade at about $7. In a bear market the stock could easily continue to about $23. This is yellow, stay out the risk/reward ratio does not warrant a position.
F
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