A dollar or two this looked like an excellent short. Now that a few months have passed and the stock is worth a few dollars more , it looks like an even better short The big picture from last August, to refresh;
More time was consumed but it has traced out the stylized top much better this time. The $60 is a good level to go short.
Manulife, as discussed earlier, is a near perfect barometer of where the TSE and other markets may go. This company believed the nonsense that was widely circulating like no other and, having eaten its own cooking is very sick. In a sense it is the proverbial canary in the coal mine. So far the bird has not succumbed to the toxic gasses but should it fail to cross the upper trend-line soon, things are starting to look downright ugly! The a-b-c (temporary) correction to say $30 would then not apply. Instead a 5-wave C wave would become more plausible dragging the stock down to $4 or lower. Vector equality between the two down legs would occur approximately in March or April of 2012, but a break below $13.50 or so would suggest the bear case is the right one.
Initially bought at $0.33, and sold subsequently is worth revisiting just in case it is still owned.
The correction from the lows is looking a lot like an A-B-C in which the C is forming a diagonal triangle, a.k.a. pennant or rising flag. These are bearish structures and this one has lasted a full year and travelled the exact same distance as the first up-leg. The RSI and MACD are dropping. A sell in my book.
We first recommended this stock at about $5.75, then suggested a sale at about $9 and later again at $15, each time pointing out that the stock could go much higher. After all it had done an A-B-C “correction” from $22 to below $4, a big move but still a correction implying , at least the possibility of a new high. Always mindful of how painful it is to lose money we are always a little eager to take profits, perhaps too eager. The stock is being taken over at $21, here is the chart.
It did drop by about $3 after reaching $15 and it did spend about 8 months in the dog house but in just the last few months it shot up by almost $9 to essentially double top. The important message that can be taken from this is that when you have a perfectly symmetrical A-B-C it is possible that the correction is the entire correction and not just part of it, so a new high is just around the corner. This pattern occurs frequently, see for instance Ivanhoe IVN and, arguable , General Electric, GE.