Exactly a year ago we suggested that this was a sell and even though , at certain points, it was down by almost 20%, it has done essentially nothing except, perhaps, frustrate both bulls and bears. The 1-2, 1-2 count, which includes a failure for the top, is little more than a wild guess. One can easily substitute a simple a-b-c and come up with only a single 1-2. the important thing is that the stock has been range bound for more than two years now,so the odds still favour the downside. (see previous blog).
This is a 5bln cap. company that is, as the name suggests, involved in specialty chemicals. It earns a dividend income of about 1.8% and presently trades at a p/e of 18. Here is the chart;
Everything about this chart points to a large “flat”, that is an A-B-C where the legs are about the same, here successively bigger, without the stock making any headway. The typical subdivisions are a-b-c,a-b-c,1-2-3-4-5. We just started 1 of the C wave. This scenario would ultimately result in a loss of about 60%.
There is an outside, very improbable, bullish alternative (in red) that views the recently completed up-leg as wave 5. Even in that bullish interpretation a loss of 40% is still a logical outcome. Both can be avoided by selling now.