DE, John Deere update

de march 9 2013 b

How many lawnmowers do we really need? Well 25 or so years would suggest just as many as is required to keep the stock in this well articulated channel that has been in existence for all of this company’ lifetime. Things change courtesy Greenspan cheap money etc. and all of a sudden , starting in 2006, we all take up the weekend sport of mowing the lawn with a vengeance. Even the Chinese are attracted to this levelling approach to nature despite the lack of lawns on the x-floor of an apartment building. The stock shoots up, tumbles, and shoots up again, proving once again that central banker’s main purpose is to create waves. These ups and downs could be an A and a B and now is developing, or,  a 4 and 5 and now a 1 of a correction. Either way the stock should work it’s way towards the $30 to $45 level in order to return to the channel, regression to the mean! In our previous blog (Oct.27, 2012) we suggested that in the bear case the stock could still rise to $95 to complete a wave 2 on the way down. Now 4 months later we have this;

de march 9 2013 s

Clearly the prediction was dead wrong. The stock went to $95.60!, leaving just 33 cents of leeway before invalidating this prediction entirely. As it stands things are still going to plan, in fact the little of the a –b –c counter-trend wave 2 , is a classic example of a wedge (diagonal for EWers). Since the top at $95.60 the stock has, presumable, traced out another wave 1 and 2 (of different degree) and next we should have a 3 etc. and that is usually where the fun starts. This stock, by the way, speaks volumes on the efficacy of the many QE’s, Twists, arm twisting etc. etc. that the central bankers have engaged in. All that and still 30 cents short. A sell of course.

CAT and are in slightly different positions, the 4-5 alternative being the most probable, but otherwise the counts are similar and the expected downward move of similar proportions. See CAT and CMI below, no lawnmowers buy a lot of mining/farming equipment etc.

CAT march 8 2013cmi marck 8 2013