The usual then (July) and now. I am not at all sure there actually was a bona fide triangle but in any event, it worked. The stock hit a low of about $32 the other day completing (?) a 5-wave sequence down. Normal rebound levels would be $70, $80 and even $90 as the top of the triangle.Of course the question is , can it go lower?
Yes it can, but by some measures it may have gone too far already. Worth discussing with your broker?
Sometimes EW simple doesn’t cut it. Straight lines become more reliable. There is a very good chance this stock will not cross the line in which case it will easily rebound half the drop from $40, that is $7, give or take (about 25% on $26). Both the RSI and MACD seem to support this notion. In case it does break put in a stop at $25 or a wee bit lower. It is a risk/reward of 1 to 7, quite acceptable. And , on top of that China is doing a little more easing today and they could use a few cleaner burning diesel engines.
Then & now;
Had you chosen the middle target it would have resulted in a 25% gain. If you forgot all about it there is still a small gain left!
Some of the best results are obtained when you forget about a stock. It takes away the nervous finger on the trigger stuff, and gives you tons of patients that you normally do not have. This , by the way, is a side-product of a stop-loss as it allows you to forget.
Last time we commented on Tesoro was in Febr. of 2010. I was familiar with the company from earlier experiences as a credit officer; my bank lent it a lot of money a long time ago. Here are the then and now;
4 months after suggesting $10.50 as an ideal entry point (based on Fibo relationships), the stock actually makes a low of $10.37, hits the first target of $20 and keeps going as indicated in the picture to a level of just under $30. That could have done the trick for all we knew so we would have exited the position. Now, with hindsight, it is clear that that was only one half of the correction! Here we are at a little over $40. If you still hold it , it is now definitely a sell, see below.
Not everyone will necessarily agree with the A-B-C count right into the 62% retracement level. After all it also counts nicely as a 5-wave impulse wave up in a new bull market. At this point it really does not matter as first waves are typically retraced rather deeply and certainly to the bottom of the 4th of previous degree, in this case well below $20. A sell either way! No wonder they say that ignorance is bliss.