BBRY pulls back sharply as modeled.

Wow.  Nice EW call on BBRY's pull back if I do say so myself.   To summarize, BBRY is still way oversold but nothing is expected to go straight up or straight down.  I wrote: "...I expect that the early moves in this will favor the upside with much smaller retracements than normal.  38.2% pullback instead of 50% or 61.8% for example."   A pullback was modeled to $7.20 ish.  Here's the direct link to the chart. 


Today, a massive pullback did indeed occur to the tune of almost 8% and the shares are very near my stated $7.20 target.  Actually, I probably should have made that target more like $6.90 since that would be the 38.2 fib as well as the bottom of the 4th wave triangle.  The exact numbers are not that important.  What I am looking for is an a-b-c pullback to about the level of the prior 4th wave.  If it coincides with a standard fib level then it just adds to the confidence level.  
Always remember, this is about skewing the odds in your favor when betting on the movements of a wild animal - the animal spirits of Keynes.  Professional gamblers know that success is achieved by skewing the odds in your favor and that nobody wins every hand.  Odds, folks, not certainties.  EW is a odds skewing tool, not a crystal ball.

If this model continues to play out, $7.80 was wave 1 up and now we are looking at wave 2. down.  After a-b-c plays out, the EW model demands a rapid 3rd wave up that is, as Prechter says "the point of recognition".  It's the point where traders understand that the tide is changing.  The 3rd wave is where large gaps up are expected by the model.

I should point out that BBRY has had sudden surges in the chart all the way down.  Each time, the surge petered out and then sunk to a lower low.  The shorts who just jumped on this thing again for a massive 1 day 8% smack down are hopeful that this will be the case yet again.  If something has been working for you then you don't abandon it easily.  That's what is meant by the point of recognition: the forces that are in control suddenly realize that their methods are no longer working.

I also want to note that today's behavior is another case of why the 2nd wave in the new direction is often the vee retracement while the 4th wave is often the sideways retracements (and often but not always a sideways retracement of the penultimate triangle variety).  The shorts have not given up hope yet.  They threw the kitchen sink at BBRY today and they will probably follow through a bit tomorrow in order to test the 38.2.  When the 3rd wave arrives and it takes back all of these losses and then some, the participants get the wake up call that things have changed.  The stupid short players just keep trying to ride it into the ground.  The conservative shorts cover their bets and go look for another victim.  The bold shorts cover and then flip and go long.  This is what causes big gaps in 3rd waves.

The main element I am looking for here is the a-b-c retracement.  Zooming way in to the 1 minute chart I see a very possible a-b-c nearly formed which has just a bit more to go on the 5th of c before  finding support as wave 2 finishes.  The last 20 minutes of trading seems to be forming a triangle which would be 4th of c.  Triangles are always the penultimate wave according to Prechter so that fits the EW model criteria.

NOTE: A model has to start somewhere.  It does not pay to have too many models on the tablet at once.  However that triangle might just be the 4th of 3 of C.  It might not be the 4th wave as modeled below.  If this is the case then what I have labeled as 3rd of C might just be 3rd of 3rd of C.  If that is the case then the triangle is 4th of 3rd of C to be followed by 5th of 3rd of C to be followed by the real 4th of C an then finally the 5th of C.  All this really means is that the action can take another week to play out if it wants to so patience is warranted.  The general shape of the model is still basically unchanged if this variation plays out.

This can morph at any time since it is on such a small scale chart.  A gust of wind could move the herd left or right.  But there is not much wind blowing during the holidays and so I do not expect a huge deviation from the EW model here.  It can happen but I don't expect it.  It would not be the first time I see something unexpected happen and so I'm actually sort of expecting it.  Clear as mud?  It's just my way of not looking so deeply into the short term success as to forget that this is dealing with a wild animal which might behave tamely for a period of time only to maul you the next day seemingly out of the blue.  Regardless, a few units of my stored fiat currency will be on the gambling table with this one when the model tells me the bottom is in.