Today’s action, so far at least smells like a third of a third. It now looks like a double is in the cards or perhaps a lot more than that if you are patient. When and if it gets to around $14 or so stepping aside would make a lot of sense as chances would be pretty good that you will be able to buy it back at a lower price if the wave structure warrants it then. The boost today probable was caused by the analyst at National Bank, taking a brighter temporary view on the stock with a $15 target.
See also previous blogs (the index is working again thanks to the best IT team in the world!). Twice we recommended buying this stock, each time it dropped a bit the days immediately afterward so if you had acted on that you should own the stock on average at around $7.60 or so. For reasons described in those blogs this stock should go up. It is now at $10.23, up 34%. Presently $11.17 (up 47%) is within reasonable possibilities as that represents the 4th wave of wave 5 of 5, more or less a minimum expectation. Ultimately it may go a lot further but we would recommend using a stop when going into the buy-and-hold mode,
Fortunately we recommended an exit a few blogs ago. The stock is now, once again at tempting levels. The stock has now dropped proportionally even more than it had back in 2000/2001, the big tech wreck. Otherwise the action now is pretty well a repeat of what happened then which, of course , is the main characteristic of fractals . As vectors go the A and C in the chart are now equal, which then becomes a function of the sharpness of the pencil that you use. If history does repeat the stock should muddle along the bottom for a little while and then shoot up, not necessarily the way it did last time but at least for a good rebound. If you are one of those people that knew it was a buy at $6, and to this day still lament the fact that you could not do it, I am talking about Apple of course, here is a second chance, perhaps.
Last time we got out of RIM at $17 and suggested that it might be a buy again under $10. Here we are , well under that so is it a buy? Well above are two different charts of RIM, you can enlarge them and move them around to better compare them. These are what are known as fractals. Not necessarily perfectly identical but very similar structures at different sizes. EW is essentially predicated on the evidence based recurrence of self-similar structures, the most basic of which is the 5 up 3 down cycle. This concept can be helpful at times to verify the validity of a EW count.
On the left chart the stock rises from next to nothing to about $43, then crashes, rebounds and crashes again in a clear a-b-c, ending at about $2.30, a loss of 94.7% On the right the stock does something very similar, peaking at $150 or so. If it does the same proportionate drop the stock should bottom around $7.95, give or take (this is not like cutting a camshaft at tight tolerances on a lathe). Today we are at $7.40;
The new CEO is , no doubt, viewed as a lightweight in North American circles. He is soft spoken, very knowledgeable and when he says “Nothing is wrong” he means it. Here we prefer backslapping, gregarious loudmouths that bluff their way out of every situation. If one can bridge this great cultural divide, it is easier to become a little more constructive. There is 2.2 bln in cash, 75 mln subscribers, a lot of proprietary know-how and patents and their own network. The new product may be late in coming but perhaps it will be fantastic. Who knows, but we would lean toward buying this stock. Even Nortel went from $3 to $12 before it died and just think, if one had bought this stock between these fractals, you would have made 65x your money.
This chart shows how the two fractals fit together;
