Today was one of those day’s when most news was bad, which obviously is good, more QE’s etc.etc. As far as the TSX is concerned we are still in no man’s land. As long as we stay below 12250 this could still be a 4th wave, most likely a triangle. All that is needed now is some good news. Again this could turn out to be just 4 of 3.
The possibility of a simple a-b-c correction is becoming less and less probable. We have done about 700 points down so far, about 1/2 of the recent rebound. For the TSX 1000 points is rather common. Should this happen again we could have a day or two of sideways movement and then a 5th wave to complete wave 1 of 3 of C. Time will tell.
We would be constructive on this stock now (we were bearish). The reason is pretty simple. Going down from $3.30 to 62 cents is a loss of 80+%, enough to please any bear. Next the drop is displaying an absolutely perfect A-B-C with C equal to A, both in time and amplitude (as vector). Moreover the RSI and the MACD have been signalling a turn now for the past 4/5 at about $1.25 would be a minimum expectation at this point.
Right now it is not clear what this was. The beginning of the big bear in which case we would be in a wave 3 of some degree that is not finished and then continue down. The alternative , and given the symmetry etc., quite a plausible one is that we completed an A-B-C correction and now we go back up. The thought alone tires me but that is the message for now. The C wave should be 5 waves which is certainly not clear, and in a “flat”, which is what this is, the a wave is usually an a-b-c itself, which it is not. So I would favour the bear case but only marginally.