DRYS update

In my last post on DRYS (Dry Ships, a Greek dry bulk shipper), my model suggested that the 2nd wave could be complete.  That post, which was written when DRYS was trading for $2.88 per share, was entitled:

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.