We were looking for $67 as a first target, but only got a reading just under $78 or so. So either the count is incorrect or this particular leg down is not yet complete. As it stands we have retraced about 60 % of the recent minor wave 3 down at about $92. All if this in seven days. Give it another day, after which the count may well be wrong.
See previous blogs on this one. The big picture has served us well and we are not about to change that. In fact, over and above the EW count, a head & shoulder pattern can be seen that adds considerable credibility to the general direction. What we did get wrong is the size of the a-b-c rebound from the Oct. lows. It runs from about $40 to $70 and could have been complete at $62.5 but wasn’t. Swings of $30 or 75% of the value at that time are completely unwarranted in terms of the need for copper in China or elsewhere. This swings would appear to be the collateral of Central Bank interference combined with a black/white investor community, or risk on / risk off if you prefer. In any event the $40 rebound was taken back rapidly in the next 5 months.
Right now , from the big picture , we have to assume that this stock will go lower. However, from the more detailed chart this outcome, at this time, is not a given. The leg we are presently in should be wave 3 of C, usually the longest (with commodities it is often wave 5). If that is the case than the count in blue might be applicable. Otherwise the count in black might apply. In short it would be a good time to stand aside. Notice that we are right on the “neckline” and some resistance should be expected as a result. The problem here is that if the stock goes up now there would be overlap. This could only be if we are in the process of developing a diagonal, read wedge, wave C. Stand aside for now.
Back in Nov. this looked like it was topping but there was still room from the big picture so we recommended putting in a stop-loss at $5.25, the stock then was at $6. We would now raise the stop to $6.25/$6.50. Both RSI and MACD are not confirming much further upside.
The other day they sold their aerostructures and industrial division for about $300 mln. This propelled the stock up, briefly , by 33% The other part of their business is making landing gear for aircraft. The chart is hard to interpret properly, perhaps above my pay grade , which is not hard considering I am not paid at all. Looking at the big chart, one might wonder why the low of 2009 is not it. After all a nice A-B-C could be considered done at that point. The problem with that is that the C leg has to be a 5-wave move. It isn’t. The first leg, into the 2003 low is unequivocally 3 waves. The second leg up into the 2007 high is clearly also a 3 wave affaire. So is the third leg down into the 2009 low. Three in a row does not make a flat, therefore we believe the correct count is A – a-b-c – C. The leg we are in presently, or may have completed, must then be sub-dividable in 5 separate waves which is not that hard to come by. Once complete – a 4-5 may still be required – the stock should then fall back to the levels of the previous two lows (2003 and 2009). We would sell.