Elliott waves vs traditional technical analysis.

Every once in awhile I find it entertaining to look at someone who is making a living off of trading, selling investor advice, etc. and see if I agree with their analyses.

Enter Sam Collins and AXP.  I get his free emails which I just quickly scan.  But when his headline said AXP (American Express) was poised for a 20% gain I just had to look.  Here's his explanation about that.

The following chart is just the rally since the 2009 lows.  Note how AXP was trading at $8-$9 back then, just a stone's throw from having to admit that it is a leveraged mess that would have gone under without massive government bailouts.  Since then we have my "Ying Yang" formation.  I'm sorry Sam, but anyone buying this thing at these levels needs to get a stiff beating by the Ponzi Police for the crime of cluelessness.

Folk, this is a bank.  A money changer.  It does not add any economic value.  It just filters money through its networks.  When the credit dries up again suddenly (and it will at some point), this thing is going to collapse and perhaps even BK.  But under no circumstances should anyone be throwing money at shares that are going exponential like this.  The easy money has been made and now they are just looking for patsies to unload these worthless shares on.  That's just my opinion, I don't know that for a fact.  But it's what I would do if I were them.

OK, now let's have a look at this chart without all the noise.  First off, these Ying Yangs are 3 wave moves.  I'll count this one as a-b-c in very large letters.  They should be made up of 5-3-5.  This one is a textbook example of that.  Wave C is quite a bit stronger than wave A which is good.

Now, Sam wrote something about a bullish gap up that just happened.  I see it completely differently.  I see a massive ending diagonal that already provided initial breakdown confirmation by first breaking out of the top channel and then failing to be able to hold it and subsequently breaking back down into it. 

Second confirmation also seems to be just finishing up: the back test from below; Prechter's kiss good bye.  Imagine a pilot in an underpowered airplane trying to get over the mountains.  He's giving it full throttle but not gaining altitude.  The face of the mountain is getting closer and closer.  As he gets within 1000 yards, he panics and pulls the yoke all the way back.  The plane goes up suddenly but then stalls and falls right back down.  Still panicking, the pilot pulls the yoke back hard again but now he has bled off airspeed by his foolish move and the plane only goes up a little more than half as high as before and again, you can see the chart beginning to roll off to the right.  He's stalled it again and now he has literally no airspeed.  There is only one way to go and it's not a 20% gain.  Sorry, Sam, no offense meant.
 
Unfortunately Sam's email came out at the worst possible time.  He probably should have waited until that which I'm labeling a failed 5th (red 5) broke out before pressing the send key.  Unless this thing breaks out dramatically it will be left with a very ugly declining double top and, let's face it, The Owl.  But Sam's attitude shows the sentiment out there: oblivious to any danger, and charging like a bull into a meat packing plant.

The next stop for this will be about $70 and then we shall see what we shall see.  If another so call Asian Contagion shows up, right now, it could be the end of AXP as a going concern.  How can I possibly say that?  Well, the shape of the chart is evidence.  If you are a bank you are not inventing something new.  Your "profession" has been around as long as hookers.  There is nothing new under the sun and so no surprise outcome.  Under these circumstances you can't go exponential without leverage and this one has gone exponential.

One more thing, and it is important folks.  a 3 wave move up is not motive even if it resulted in a higher high.  It means that some much larger triangle of some sort is likely playing out and that these shares could whipsaw between $9 and $90 a couple times.  I also want to point out that manias often stop at the 10x level.  $90 is almost exactly 10x of the 2009 low.   Coincidence?  Maybe.  But this thing is too riddled with them to give it a second look for anything more that buying puts against.

Again, apologies to Sam, there are many TA people out there doing the same shoot from the hip analysis.  They look like geniuses until the trend changes because they are all trend followers not trend predictors.