Today’s anti-trust objections to the merger of ATT and T-Mobile has given this stock a little boost. Perhaps it is the beginning of a new bull but I do not think so. For the moment the action over the past month have the distinct look of a wave 4 a-b-c, implying another down-leg right around the corner.
Back in April 2009 this stock was recommended for a move up in wave 3. It was a little under $3 at the time. Since then it had moved up considerable;
It got to $26 and then started breaking down. It looks like 5-waves up followed by an a-b-c down. The down part is clearly not yet complete but should be around $10.50 or so, where wave 4 of previous degree resides and where the rise from the lows will be corrected by about 62%. These miners dig up palladium and platinum, both precious metals that are also of commercial use particularly in catalytic converters . You win both ways!
The STOX50 gives a reasonable cross section of Europe without having to look at X different exchanges. All have in common and A-B-C rally from the lows and most peak around April of 2011. But some are falling a lot faster than others, the STOX50 is more or less in the middle of the pact. This index contains all the big names such as Shell ,Nestlé, Unilever, Siemens, Deutsche Bank etc.etc. It is somewhat underweight the German companies and overweight the Brits and the Swiss but all in all it is a reasonable proxy for Europe. Notice that we are already below the B-wave level of the A-B-C up .(The Dax is right at that point whereas the SMI, MIB, AEX are below).
Looking at the detail chart this is the only one that still might be making a triangle, - others are also in waves 4 but not triangles - presumable a wave 4 of 3 of the first down leg. Despite the recent rally this drop may not be over yet!
Earlier this year, on the 21 of March, we opined that this bank would not go much higher and should in fact start a very steep decline.Here is the chart at that time;
At the time the stock had traded as high as $83.31, subsequently it managed to eek another dollar but then did precisely as expected, dropping a little over 20% to, almost $67, a few dollars shy of the then suggested target.
Today’s earnings were good and that may have given it an extra little push, but the stock might have completed a 5-wave down sequence just a few days ago. The bottom part is a little muddled but with the benefit of hindsight it looks like wave 4 was an irregular flat (on the day the US was downgraded. Then followed a wave 5, more or less equal to wave 1. Waves 2 and 4 alternate and given the proximity to the expected target this makes the most sense (probable with a lot of other stocks as well!). What this means is that we are now correcting the entire wave 1 down, typically one should then expect a 62% retracement, to wave 4 or wave 4 of 3 etc.etc. and that is what is happening. $77.5 would be an ideal target and then the stock should drop, and do so faster than during the last 6 months (see previous blogs).