Has DRYS finished wave 2 down?? If so, wave 3 could be up on deck.
In it I wrote: "I'm guessing that what just happened in the chart below is that wave 2 was made up of a flag formation. You can see the characteristic 5 rail bumps labeled a-e below and then you can see the throw under on the e wave. The first confirmation happened by suddenly breaking back up into the channel. The next confirmation, should it occur, would be a break out of the upper, down-sloping channel resistance line.I'm going to assign this one a 70% chance of breaking the top resistance. If that happens the next target becomes the making of a higher high than wave 1 (i.e. > $4.00)."
Today DRYS closed at $3.60, up 25% since I called that near term bottom. So the bounce call was right, but now it's time to review the current chart to see if this looks like a real 3rd wave is in progress. It could possibly still happen that what I last modeled as wave 2 down might turn out to only have been A of 2. If so, the 25% rise since the bottom might just be B of 2. If so then C of 2 could reverse the chart back down to the 61.8 fib at around $2.43. I really didn't expect the 50% fib to be the 2 wave for a volatile POS stock like DRYS.
Looking at the shape of this latest move which I have boxed in red below. The argument in favor of this being the 3rd wave is that the bounce has surpassed the 61.8 fib of the move down. I didn't show that on this chart because it would have been too visually busy. Typically the 61.8 is the highest a bounce will go if it is a B wave.
The argument against it is that it really doesn't have the shape of a strong 3rd wave. It could be 1 of 3. In any case, a break above $4 means that it cannot be B of C. That doesn't necessarily have to mean it would be 3 of 5 either. I'd really want to see more, stronger upward gaps in this to believe it has the nature of a 3rd wave. A break below $3.50 would be a strong warning. A break below $3 would be a certain sell signal.
If I had to guess, I would say it goes up another 10-15 cents to 3.70 o 3.75 and then heads down into C of 2. I did not draw it on the chart but the lower target in that case would be $2.45, perhaps a bit less. An eventual smack down to the 61.8% fib would be bullish, at least until the S+P, DJIA and NASDAQ all finally crash. When that happens, DRYS could BK.
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