Just in the past week or so we had the Russians come out with a surprise drop in their interest rates, the Aussies followed suit and again today the Chinese are supposedly freeing their banks from certain reserves, all this for the general good. The Greeks promised to behave and everybody believes them. To top it all off our prime minister is meeting with Mrs. Merkel right here in Canada. Refreshing winds are blowing everywhere and this is a good time for the Dax to peak.
We have no problem counting this up-leg from the ’09 lows as five waves. For the previous 15 years, good and bad times, this stock traded at about $15 on average just eye-balling it. So it is up 5x having hit a high of $74. It could drop $30 or more any time now so we would sell.
Air Canada is not quite at our ideal target but the “turbulence” sign is glowing brightly and you have been requested to fasten your seatbelts. Time to jump.
The usual then – Sept. 2, 2014 – and now charts;
This is all pretty basic Elliott Wave stuff. You have a wedge, so it must be the last wave in a sequence, in this case the 5th wave. That 5th wave is virtually always retraced, certainly if it is a wedge. So the next big target is around $55. So far we moved from the peak at $103 to a low of $86. Without even using a calculator I figure that is about 17%, less than the 20% the talking economic heads regard as a correction.
Now one could argue that this wedge might not be finished. Theoretically, and in this market anything seems possible, the wedge may continue upward and onward for another year or so and make a new high. Relative to wave 3 the proportions of wave 5 would become too large. Furthermore there is substantial overlap, 3 x already which is a bit much even in a wedge. Therefore a very high probability must be attached to this stock going to $55 at the very least.