The stock stops dead in it’s tracks where the two parallel trend-lines intersect. Presently it is on a path towards the lowest point of the triangle. It should do an A-B-C at the very least, perhaps a zig-zag as shown, only a little further than that. Wave 4 of previous degree is at $10.
There is not much chart to go by.The assumption is that the $44+ high immediately following the senseless orgy of greed attending the IPO, is the high. A correction from there would take on the A-B-C shape, probable a zig-zag considering that the B did not even get close to those highs. Should the C equal A, not uncommon, the target would be roughly $15/16. If we leave the gap in the middle the target is around $18/19. A total loss of 62% would target $17. Our best guess $17. At that level you would also be down about 50% from the “official” issue price if you actually received an allocation.
UBS, the Swiss banking power house will be suing the exchange for losses incurred as a result of the alleged mishandling of this issue. ($350 mln?) Apparently greed has little respect for greed.
It has been about 8 months or so since we last commented on CCO. We were, and are, essentially constructive on the stock but were wrong in the low of $15 that we were expecting (see green on the detailed chart). After that a large rebound was to happen (to $27.50) which in fact almost did happen. Here are todays charts;
In green, in detail, what we were expecting, in black what we actually got. There is very little room for the big triangle shown. The stock should trade under $15 given the clear a-b-c move from about $15 to $45, but, in order for this to become a big 4th wave it cannot go below about $13. For the triangle to hold it has to go up right away in wave c. If the triangle is not operative we are probable looking at an a-b-c X a-b-c corrective structure that cannot go below $13, but, on second thought, it actually can (for instance if the top shown is not the top of 3 but 5 instead!). All told, probable a buy with a very tight stop-loss. If all this is too confusing, wait for the sequel, it may be more straightforward. Fundamentally this should be a buy somewhere here, with a huge upside.
About 3 years ago when the stock hit $65/66 we suspected that this was a sell. Today after a peak of $69.70 it is trading at about $69. That is a gain of about a single dollar a year, for 3 years and that is only if you look at the extremes as on average the stock traded at around $62 over that time. In earlier blogs we have singled this stock out for its absolute text book , classic, EW pattern. Just to be superfluous here it is again, straight out of the book;
Actually we would go a little further, the textbook sample does not show alternation within the 5th wave wedge, whereas the real sample has a real clear triangle for a 4th wave and a zig-zag for wave 2. The nice thing about the wedge is that it has to be a 5th wave and ergo the top has to be the 2008 top at about $72. From there you basically have to go down to the 4th wave of previous degree and do so in an a-b-c pattern. We have done neither, but we will. This stock has now peaked above $65 and below $70 a total of 15 times. It is about time for something big to happen and it is not going to be up.