CP revisited

A few days ago we recommended this stock as a short to our broker friends (there is only one). We have been way too early before on this one and that may happen again, but we feel strongly that this stock is in it’s own bubble. We now also have a plausible wave count as per the chart below;

cp june 4 2013

The count may well be wrong but it is nevertheless plausible. The e-wave in the triangle is a little underdeveloped but otherwise most other aspects fit the description.

cp and cnr june 4 2013

Also the stock’s performance , apart from , perhaps, the operating ratio, is on a par with CNR. And, after tripling their money the hedge fund primarily responsible for the agitation, has now made it known that their position has grown relatively too large. Is this legal ?? Anyway a number of extremely astute investment dealers like RBC have now cut back on their expectations for the stock (this is known as “running with the bulls”). Add to that a p/e of 41. If the stock does what it is supposed to do, it should return to the bottom of the triangle in about the same time as it took to climb up. The stock could therefore be below $60 by the end of 2014. A put option would fit this situation best.