[SPWR] update

To date my SPWR models have proven to be quite spectacularly accurate.  If you are new to my blog and do not have enough charting experience to understand if and how Elliott waves work, I suggest you go research the whole chain of posts starting from where I declared that the great depression in solar was about to end.  The progression of logic is clear and unmistakeable.  There is clearly an element of chance in the outcome but no randomness in the modeling methodology.  It is a huge mistake not to be able to discern the difference between these two statements and I find that the vast majority of people who cannot accept the EW principle as fact broadly suffer from this mistake.

My latest model on SPWR called for the continuation of a major pullback.  That post contains a backlink to my topping calls on SPWR.  Today's update warns that we are at a critical point with SPWR shares according to the wave principle.  My last post had an initial decline target of the 38.2 fib.  Of course that was broken down which is not an unexpected occurrence.  The 50 fib is a common pullback target and the 61.8 is as well, although to a lesser degree in a bull market for a stock.

Based on my read of this chart, I would continue to not own it at this time.  There are things that could change this view but until they happen this stock should be avoided according to my model.  There are two threat vectors here today.  The first is the presence of what is likely W3.  The second is that the 50 fib was support but the 38.2 was resistance.  If the recent bottom was actually "the" bottom then I would have expected that 38.2 to breakout.  Until it does, avoid these shares since they don't pay any divvy and thus have an intrinsic value of zero.  A deflationary collapse could take these right back down to $4.

I view SPWR as an inflation/deflation gauge.  If inflation is on deck then electricity prices will be going way up soon and pv solar will become more attractive faster.  If electricity prices follow oil down then deflation is in control as EWI believes and the inflationists who bought up SPWR will abandon it as the entire stock market sinks.

Nobody knows in advance which will happen but triggers will begin getting tripped in the next couple of weeks and then the odds toward one way or the other will increase rapidly.  I personally believe that deflation has higher odds of continuing to play out and will continue until many US banks, big ones, declare bk or have to be taken over by government in some form or fashion.  Sovereigns must default on their debt in this process and the EU will fly apart.  Even the US will be lucky to remain 50 states by the time the deflation is done.

Having said that, only losers base their investments (gambling) on a theme or an economic theory.  There is no need to do that.  Just build the wave count and get in/out based on the EW triggers.  This is going to work until everyone gets in on the act which won't be for a long time since so few people a) understand EW and b) are any good at counting waves.  I know from years and years of experience that it is not easy to master and I (and everyone else I know and follow) still are learning and making mistakes.  The key between a good EW practitioner and a bad one is that a good one will admit mistakes early and not just stick with a theme until the count leaves him no other choice.