Tractor Supply Corp is a hardware store that sells things like chainsaws, garden tractors , fencing and so on. Very comparable to a country co-op. It is enjoying brisk sales, at least in Connecticut as a result of the recent snowstorm. This looks like a B wave, or a 5th wave if it manages to get to about $75. After that it should be downhill fast.
This is verbatim from the Jan 29, 2011 blog. This was the easy part. A perfect B-wave, a Mnt. Everest situation right at the $100 mark and hitting the upper channel line. I used to consult this company on FX some 30 years ago. They are great at hydraulics and engineering, but not much else. But recently someone must think that they found a way to make water burn. Here are the long and short term charts once again.
The left, longer term chart is there just to show, once again, that wave patterns form with almost ridiculous accuracy. The results are uncanny. Our prediction at that time was for $55, the “pause” level. That was wrong as the stock went to $59. In hindsight we must assume that the wave 5 was a wedge and did not live up to its full potential, normal for wedges. What we did not anticipate is the violence of the next rebound. From $59 to $85 in a matter of three weeks. This melt-up is unheard of. In my opinion this has to be a short covering move. Typically you go short on stocks that have moved up for no good reason other then momentum. So then things reverse it is these same stocks that have to be bought back. But, from an EW perspective this stock will continue down almost certainly. The hard part is waiting for wave 2 to complete (somewhere here and soon).
Never know which is which, sometimes only the derivatives are available on the charting system. One would think that when the world is looking to China to be the savior of our economic system , first by providing cheap goods, then by providing the cash that allows us to maintain low interest rates and then by providing the bailout money to keep things going, that some of this would rub off on the local stock markets as it does on Toronto’s condo market where most units (70+%) are presold to overseas buyers sight unseen , should be expected. Not so, here is the DJSH, then and now;
On the left comments from early January of 2011 anticipating a drop. On the right what happened. It did drop but then came back to finish the A-B-C. Now it is dropping for real and at roughly 300 it is trading at about 1/2 of it’s peak value. Not all that impressive for a country that has a fiat currency and a fiat banking system and recently added liquidity to the tune of about 1/2 of GDP. The Hang Seng is even worse;
The Hang Seng index (Hong Kong), predictable collapsed once the large B-wave correction was complete. At the recent 165 low it was trading at 1/2 of the peak value in late 2007, much worse than the Dow Jones Industrials or the S&P. In detail, it looks a great deal like the copper stocks and the European indices;
Notice that overlap is a long way away, that the Oct. correction is a clear as a bell a-b-c with just a little more to go before c=a. None of this bodes well.
The common thread between these four items is, of course, copper the metal. What I will try to do is come up with an average so to speak as there are a number of conflicting elements here. First IMN, several times in the past we called for a drop to around $47.5 or so long before it was even close. The basis for this was an apparent triangle forming. Here are the then and now charts;
Triangles are always either waves 4 or B. Well before we got here I had to conclude that the triangle was probable wrong, but I maintained the target (see previous blogs). The stock dropped nicely to $40, in hindsight the proper target as it represents the pause area on the way up. Of course the $40 level would have been a buy but i was not paying attention. Since then, Oct.4 the stock has bounced an incredible $22.50, well over 50%. This causes overlap for a number of counts that are not shown and leaves us with a simple A-B-C. These can be repeated 3x so this is not necessarily bullish long-term.
I got FCX wrong thinking that it could drop further. It did not. Just like Inmet and the others the stock rebounded from that same pause level;
Freeport does much the same as Inmet but clearly there definitely is no triangle. This leaves a 1-2-3 and now 4, or a 1-2, 1-2 , 3 , and now 4, or a simple A-B-C. Overlap occurs at $45 for the first two counts. It looks like the stock wants to go to $48 (causing overlap). The rebound looks like an a-b-c but the c wave already has two gaps in it. If this happens the A-B-C interpretation will prevail as the most credible.
Copper, the metal has behaved in a similar fashion except that it was relatively stronger than the stocks,it did not fall as much;
On the left the Oct 4 expectation, proven to be wrong immediately as that day was the low. Overlap will occur at about 3.85 and 4.11 respectively. Copper is up 25% from the lows, obviously lagging the stocks by a wide margin. Here again the count is anything but clear even if all possibilities are still open.
Ivanhoe has a virtually identical pattern , dropping precisely to the pause level of $13 which I thought of as an extreme. Where it differs is that it has two tops which makes things rather messy. Starting from the February top the patterns are pretty much the same. I am fundamentally bullish on IVN but the rebound from the lows of Oct 4 looks decidedly corrective just like all the other ones. Overlap occurs at first $23 and then $24, but neither excludes a continuation of the bear if this turns out to be an A-B-C X A-B-C Y A-B-C. Therefore stop-loss levels should be used un till this clears up. The stock is already up from $13 to almost $21, more than 50%.