FRX Forest Labs

Forest Labs has been mentioned in this blog, but quite some time ago. I had completely forgotten about it. Here is the chart of March 9, 2009;

FRX arithmatic march 9

If you go to the blog you will see that this stock was recommended as a buy, for the rather obvious reason that the A-B-C looked pretty nice and symmetric.Here is what happens next;


You would have doubled your money, and even if you sell now you are still up 50%. So what is next. The big A-B-C says that the $18 low should be the low for a long time, yet the small A-B-C says that the $40 high is the top of a counter-trend rally and consequently we should go to new lows, particularly since there is already overlap and the 3-waves cannot, anymore, morph  into a 5-wave sequence. When two outlooks are not reconcilable obviously one must be wrong. So when in doubt get out, take the 50% and move on.