Last July (chart on the left) we warned to step aside until such time that the count became clear. There was the potential of a large A-B-C wave 4 (to be followed by  wave 5 up). Apparently that is exactly what happened even if our target of $47 was not quite met ($44.95). If you look closely that B wave is , in fact, a single tick higher than the “orthodox” high. We had a clear 5 waves going up into that peak and again one going down for a first wave.

Looking at a bigchart, with a lower resolution, the three top numbered in purple as 2,3 and 4 are actually dropping, which would lead to calling that first top the top. That would be an error. Counting waves is an art, not a science.

Then (Febr. 29 2011) and now.

So the suggestion on Febr. 29th was to sell this one right away even if it could still go a little higher. It did so 2 days later on the next Monday (it is a leap year!) and dropped to $35.62 , less than a dollar short of the indicated target and more than 20% down.

Where does it go from here? My guess is down once the (red) a-b-c is done, which could still take the stock to, perhaps, $43. But, and this is a big but, there is also potentially a much larger A-B-C (in black) which could take the stock back above $47. This scenario does not jive with the outlook on oil, but nevertheless it remains a possibility. Stay on the side.

Whereas some stocks have done very little over the past 10+ years, that is certainly not the case with Crescent Point which has gone from under $2 to above $46. We would sell it now. Veritas has a $50 target on it but we doubt that it will go much above $48 given the above “wedge”. The extra dollar or two is not worth waiting for considering the downside risk this sort of pattern usually entails.