Monday, April 6, 2015

[LL] update

At the backlink I provided this model:

I'm not happy with what has transpired since which is some very sideways looking action that can easily turn into a 4th wave as shown below.  If this moves higher than green a below then the 4th wave HT scenario is negated but if this continue to play out then within a week or two we could see a very sudden down draft into the 5th and final wave down as shown.  This is a good one to keep an eye on.  LL has no debt but not much cash.  If massive lawsuit judgements are issued against it then it could have trouble paying up.  But so far I don't see complaints of injury by people and so, with a conservative breeze blowing across the country, perhaps the lawyers will not find many people who want to play the legal card.  After all, without damages the most that people will get is a new floor and that is quite disruptive in people's lives, something which they would not be compensated for.  The lawyers would make out but all the plaintiffs would basically lose.

Besides, frivolous lawsuits are a liberal activity.  Conservatives do not sue just because they can.  They only sue if there is significant damage.  60 Minutes got the investment community to go all in short on LL and if that final wave down plays out in 5 subwaves then I'm going to picks some up because the likely retracement from this massive sell off is in the $68 range (level of prior 4th).

Unless LL gets hit with massive lawsuits pretty darned quick, this selloff will likely prove to be waaaaay too premature.  But with a 4th wave HT potentially forming I would be careful about buy and hold at this time.

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