Thursday, July 30, 2015

[CAT] update

Probably my first real post on Caterpillar was this one back in September of 2014.  In that post I provided the top level model shown below.



Fast forward to today and you might be thinking that this looks just like my model so we should expect one more wave to a higher high.  But a 4th wave HT is not confirmed until it is confirmed and this one looks like it has busted.  The reason is that E of 4 must be 3 waves and my best count here is that this wannabe E is 5 waves down.  If I'm right about that, it blows the whole top level count.




Zooming in on just the supposed E wave (below), we can see a very clear 5 waves down have transpired.  Also, this wannabe E has now fallen far more than expected for a normal E wave throw under.  Because of that, I have to wonder if red D is really wave 2 down of a stealth bear market in CAT shares that actually began in 2011with 5 waves down into late 2011.  

If that is the case then the recent wave down to today's level is likely only 1 of 3.  That means that if we get the 3 wave move back up to $90, which is currently my top count, then that would be 2 of 3 and of course then the next wave down would be 3 of 3.  In other words, the best time ever to buy 2017 puts if one were options oriented.  Cat collapsed down to the 20s  during the last bust into 2009 so I think this time the bottom could be lower than that.

If this moves into green 2 as shown then I will be posting further on what options I will be playing on this.


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