This is verbatim from the Jan 29, 2011 blog. This was the easy part. A perfect B-wave, a Mnt. Everest situation right at the $100 mark and hitting the upper channel line. I used to consult this company on FX some 30 years ago. They are great at hydraulics and engineering, but not much else. But recently someone must think that they found a way to make water burn. Here are the long and short term charts once again.

The left, longer term chart is there just to show, once again, that wave patterns form with almost ridiculous accuracy. The results are uncanny. Our prediction at that time was for $55, the “pause” level. That was wrong as the stock went to $59. In hindsight we must assume that the wave 5 was a wedge and did not live up to its full potential, normal for wedges. What we did not anticipate is the violence of the next rebound. From $59 to $85 in a matter of three weeks. This melt-up is unheard of. In my opinion this has to be a short covering move. Typically you go short on stocks that have moved up for no good reason other then momentum. So then things reverse it is these same stocks that have to be bought back. But, from an EW perspective this stock will continue down almost certainly. The hard part is waiting for wave 2 to complete (somewhere here and soon).

Back on Jan 29 we posted this blog;

The original can be found either under the archives, the index or by entering the symbol in the top right hand corner.    The stock did go to $97, even to $99.40 adhering nicely to the Mnt.Everest idea. Below is where it is now;

The stock traded as low as $66.49, which is roughly 1/3 of it’s value gone. The greater fool theory worked until there were none left. It is virtually impossible that this stock will resurrect it self any time soon. We have a 1-2, and then a 1-2 of 3 and perhaps a gap at about $75. $55 would be an optimistic target.

Back in January we thought this stock was a sell at about $96/97. Here is the chart again;

We were off by a dollar, perhaps two. The error is in underestimating the attraction of big round numbers like $100 , even in countries where the metric system is so culturally  foreign that many have difficulty multiplying or adding 10 and 10 without a calculator. Call it the Mount Everest effect if you wish, we climb the mountain simple because it is there.

   The point here is that again we have a very nice , almost symmetric B-wave. This one exceeds the starting point of the A wave but it is still very much within the “normal”range for these events. We are in C (the long-term trend-line more or less confirms this(see previous blog). $55 would be a first stop; a new low thereafter.

This company is in the business of making “motion and control” technologies. Hydraulic valves, pistons, hoses and a myriad of other things. You cannot make a John Deere or Cat. without them. I know them well from a previous life in consulting with Bank of America. They are a real American company, whatever that means. Here are the charts.

On the left you have the 30+ year chart. The trend-lines drawn are simple their to show the degree of freedom that the stock has.  It is a little like a cage that defines the normal boundaries . (by the way, the lines would be about parallel of a semi-log chart was used.). Again we have the 5-waves up, just like all the others. Also the $-range is very similar, nearly always $0/5 to $70/90 or so. Then this thing drops like a stone only to make a V-turn and rise to new highs. This is a B-wave, often caused by momentum players who have adopted it and who believe in the greater fool theory. It always ends unpleasantly , when it becomes clear that there is no greater fool anymore, you are it.

   At about $96/$97 the stock will hit the upper trend-line AND c+a within the B-wave. Time to get off this rollercoaster.