$5.25 should be in the cards, good for 25+% gain. But that is only the first 4th wave as, at a different degree there is another one at about $7.25. Normally you get an a-b-c correction in the worst case scenario. So far there is but one single leg so higher levels are a distinct possibility. Up to you to resolve the bird in the hand etc. problem.
LNR, Linamar is an excellent company in an industry (automobiles) that has a grotesque amount of over capacity plus a degree of nationalism that is only exceeded by the airlines. It just got downgraded by RBC which is not a matter of concern. What is , is the chart. Quite apart from EW, it is worth noting that much of this company’s stock climb occurred in just a few years. It has only been higher than it is today for perhaps a single year in the past 25+ years. Moreover it has been breathtakingly volatile.
The larger chart can be read to mean that a large wave 4 completed at the recent low and that we are in the process of tracing out wave 5. If, and it is a big if, that were correct wave 5 would reach double top levels in a mere $4 from here. Not a lot. Looking at the shorter term chart there appear to be a clean 5 waves up from the lows of $12.30. There is also a distinct 4th wave triangle which, by itself , calls for a drop back to about $19 or so. On balance we would exit counting how lucky we were, twice!
QCOM has made a marginal new high which it should not have. But then again around the world events take place that no one would have thought remotely possible just a few years ago. We remain bearish. See previous blogs.
We begin with the then, June 2012, and now charts;
As you can see some eight months ago, the stock had already been as high as $42.50, we thought it could go a little higher (about $50) but that there was not that much left in it. Other than time passing by nothing has changed. The stock could still go to $50, which would represent another 10% or so from the present $46, roughly. We would advise a tight stop however, as we are near a point where things can get a little nasty, if for no other reason than that they have been so nice. Here is why on a chart;
This is using the MSN chart, monthly and arithmetic , instead of the Yahoo semi-log chart. Not only is the difference rather startling, proving once again that you can prove most anything with a chart, but the implication to be inferred , at least from an EW perspective, is that we are in a 5th wave that is now about 62% of the extended 3d wave influenced by Nortel. Not only that but the straight line, no interruptions performance over the past 3/4 years is indicative of pure thoughtless momentum buying, something that can go on for ever provided the value of money is debased, or it can stop for no particular reason. From a risk/reward perspective the time seems right to either use the tight stop loss or get out.
For an incorrect count see previous blogs. We will not give it another try but nevertheless we doubt that this stock will rise above $48.50! To stick around for so little is not sensible.