We are at a low of $65 and called the top quite accurately even if it was the second time. Our target was $50 which equates to the top of wave one in an extended 5-wave sequence. This is only one out of a number of possibilities.

The count as shown (in previous blogs) cannot possible be correct. By the time we get to the ground floor one has to assume that a full correction has taken place. That is not possible if this is a 5-wave down sequence. More likely it is a double zig-zag or a–b-c  X  a–b-c. The p/e is still above 30 but certainly down from 225 or so. We suspect that at least one more minor wave is needed, as shown in detail below;

This is a log chart, as it must be given the idiotic range. Now we are only $7 away from the $50 mark but a little lower is definitely possible and we will get to the $50 today.

PS. Now that the stock has gone all the way to $45  and that is where the two legs are about equal on this log scale. If you were to start both legs with a 1-2,1-2 setup you could also view this as a simple A-B-C , 5-3-5 with C equal to A, shown below. A 4-5 would still be needed but it does not have to travel that much further. Interestingly, for a brief moment this stock had a larger capitalization than the Royal Bank!

Our target was always around $50. This is based on bubbles bursting and returning to a level below the starting point. A few things have happened since our last blog.

Hillary Clinton angrily denounced the company for its predatory pricing, mentioning a very specific senior citizen who essentially could no longer afford the medication. The price had gone from $180 to $18,000 for a certain dosis.

The CEO is back in the saddle after a short leave of absence for medical reasons, hopefully without having to use any of the company’s medications.

The company is now under investigation by the SEC for bad behaviour.

RBC Capital Markets analyst Douglas Miehm , yesterday March 1, downgraded the company and lowered the target by US$100 to US$85 (about C$115), still about 30% above the present price. The stock is now “sector  perform” down from “outperform”. But if you are wondering if you should perhaps sell now that the stock has lost 78% from the peak, you may find it heartening to know that this analyst still things the company has a bright future.

From an EW perspective it is most likely that the stock completed a 4th wave triangle (which may have started a little earlier than you think) and is now thrusting down. The $50 target is reasonable in this context. For those that speculate, this stock should be a buy at about that level of $50 for an upside target of , possible, $150.

As a practical point, one should not forget that investment advisors, certainly if they are working on a discretionary basis, are seriously conflicted if their own research departments go negative on a stock they hold for their accounts. Essentially they have to find the courage to sell the stock , or are forced to, and face the music. This usually takes a little time as these advisors are mostly tone deaf when it comes to losses. Deutsche Bank “suspended” their rating, Scotia is reviewing and no doubt there are hundreds more that are going to the same thing amplifying the swings in the market.

Today the stock gapped up and started trading at $143.36. Last blog we mentioned that we would sell once the stock would trade above $140, which it did today. So we would sell now for a 50% or so gain. We do expect, as mentioned last time, that the stock could easily trade above $160 or so. Tentatively we view this as a 4th wave but more importantly there is a public announcement re. Wallgreen etc. etc. For the courageous, you may want to hold on early in the morning and get out at the open of the market. These spurts up ($22 so far) tend to extend for at least a day.

By the way, at these low prices the stock is still trading at a p/e of 74.

The usual, Nov. 18 and now.

We are getting close to the line. If drawn properly it runs slightly above $140. I would expect higher levels as in the 50 day moving average or a wave 4 of previous degree, both at about $160 or, perhaps even $185 or so where the retracement is about 38% of the drop. However I would not wait that long and would sell any time over $140 preferring to rather be safe than sorry. A 40+ % gain, at this time and in two weeks, is certainly worth writing home about in any case.