As with CL it is possible to count the EW sequence for JNJ with a series of 4-5’s. The end result is still equally bearish;
This is what we had, see July 28th blog. Here is the other possibility;
Instead of a single multi year “wedge” 5th wave, two 4-5’s can be inserted assuming that a similar series of 1-2’s occurred back in the eighties. Both counts call for substantially lower levels soon.
Timing is everything. This one we got wrong. This is what we have been expecting for quite a while now (see previous blogs). The whole thing would have ended with a wedge and a price of about $92. Clearly that is not how things turned out. It would have been unrealistic at the time to assume that this whole thing from the lows could actually take 4 to 5 years and another $18. However, in our defense, we did point this out as an alternative(see blog of Aug. 31, 2011) as in the (updated ) chart below.
Rather than a single wedge wave 5, this count anticipated a series of 4-5’s. The target (depending on the time) somewhere in the order of $100+. We are beyond that by about $9 which could simple be a usual “throw-over”. Comparing CL with the S&P500 clearly demonstrates the unusual “blue chip” behaviour of this stock;
This comparison covers the past 5 years, 2007 to the present. The S&P has done virtually nothing on balance over that period, down marginally by 4.61%. Colgate, on the other hand is up by 56.78% for an outperformance of 61.39% (nice Fibo #). Looking at it in comparison to one of its main competitor Unilever NV (UN),produces similar though smaller results;
Unilever shows an increase of 14.53%, but if you go back a little further in 2007 the stock is actually down by about 6%. Cl, as before is up 56.78% . Cl has a p/e near 21 and UN closer to 18. The stock is again a sell, and this time there is no clear alternative in sight.
In two previous blogs (Jan 5 and July 7, 2012) we discussed the likelihood of this stock going either to $72 or $69, depending on how big a triangle , 12 year or 4year, you assumed occurred. Time wise, from the June date we mentioned the possibility of this whole process taking another 2 months which makes it about Sept 7, roughly now. Here is the chart again, showing only the smaller triangle;
The highest reading , so far at least, was at $67.45 just $1.55 away from the target set 8 months ago when ABT was trading at about $10 less. Still we are not perpendicularly above the apex and nor have we used the total width of the channel (purple lines) so $69 or even $72 are still possible. The problem is that these charts do not necessarily show the highs and lows of the day, they are pretty rough. To fine tune this a little here are two more;
In the short-term Big chart above the triangle’s mouth is precisely the distance travelled in the thrust, which would argue that the top is in. However it could well be that the mouth should be measured some 8 months earlier which would add about $3 . This would bring the thrust high to around $70. It is furthermore possible to count the thrust as having completed 5 waves already. Given that this is little more than a best guess another high should not be excluded. It is fine to split hairs but if you own this stock you should dispose of it now. If you do not own it , it might be a good short, now or a dollar or two higher, next stop is at $41
For less than $5 you can buy a Jan 2014 put with a strike of $60. The Jan 2013 put goes for $1.15. You get what you pay for but the shorter the term the bigger the bang. Rolling over a short-term put is some times the best option.
Spot the differences. On the left the NYSE index and on the right Autodesk, a software company. The difference on these two charts is minor but after today the ADSK will have dropped about 24% which is compatible with the start of wave 3 of C.
As always you can click on them to enlarge and then you can move them around for a better comparison.