At this morning’s high the Dow was within 16 ticks of the 2011 spring high. If that happens it would negate the most plausible count that underlies the immediate bearish scenario. What will take its place remains to be seen. We will cross that bridge when it happens. The number is 12841 intraday, see previous blogs.
Nice to know; the average holding period for a stock in the US?? 22 seconds!
As the Dow Jones looks like it may break through a critical level today on the job numbers, that other Dow still supports the big picture outlook. Here are the charts;
The pattern is essentially the same as that of hundreds of other stocks, a first wave down (A) followed by a very clear B-wave up and now the C. Wave 1 down and an a-b-c up are now pretty well complete, see detail below.
Anything is possible so this leg up could still develop into something bigger and higher but going by the present evidence this would be highly unlikely. Both the 5 waves down of wave 1 and the a-b-c up are unmistakable. Also this fits the bigger charts perfectly. The rebound has been a little over 62% and very close to where c=a. The RSI is at nose-bleed levels and deteriorating AND the MACD is in a similar position. The 5th minor wave of c may be a wedge with perhaps another dollar to the upside but that should be about it.
Fundamentally the stock is expensive at close to 14X p/e, but a yield of 2.8% still compares well to that of 10-year govies. But who cares. This stock is about to dive back down.
Talisman is following the script. No idea if it will continue, but for the moment this is a very good outcome. The chart below is that of Ford which had a similar pattern a few years ago, it runs from 07 to 09! We are presently in the b-wave of wave 5, itself an a-b-c. The c would be equal to the a at about $10. Wave 5 of the diagonal does not have to go to the boundary line, often it stops well short of that. Ford, of course went straight up to $19 after making the low of $1, Talisman will obviously not do as well as it is sitting higher up on the scale but $5 on $10 is still about 50%.
Back in Oct. last year we recommended buying NFLX back if you were short at $75. The stock did drop a little further to $62, less than the $20 or so that one might have expected but still pretty close to the lows. The stock has in the mean time gone up about $50 or some 70%. There are now clearly 5 waves up so it would be a good time to step aside. One possibility is that we are halfway in an a-b-c correction. If so the b should take the stock to about $90.