Monday, February 29, 2016

[JWN] update

In the backlink I provided the model below.

Actual is below.  I removed the interior constructing counts to focus on the the main count shown in black below.  JWN is a good example of shares that I think are unactionable from a trading perspective.  They have fallen in the first big wave down too far to want to short and it is not clear that wave 4 will actually end in 4'.  So I would not buy this for a countertrend either.  The best plan for this is to wait for black 5 to happen and then buy it for a nice 25% ride back up.  If you make that 25% I then suggest to use it to buy puts for the 3 or C wave down that will likely come following the modeled recovery bounce.

One thing seems clear here though: market internals are not good.  Many stocks have gotten slammed 50% or more from their peaks even though the big indices are not showing that kind of weakness yet. 

For those new to the blog, please review my original post on Nordtram's because it is now a matter of historical record that my models saw this peak coming when "da experts" were pumping this stock up on CNBC.  The chart below is what I provided in that post.  It's easy to sit back and attribute all of this to blind luck but thinking people will observe that the JWN chart peaked right in the middle of my red oblong in terms of both price ($83.16) and time (May 23, 2015).   And if I was right about that, could I also be right that JWN and IBB were the canaries in the coal mine? 

Time will tell but I will note that if the peak of 2010 was wave 1 up then the recent dip could not have been wave 4 down because it dipped back into the range of what should have been 1 in that motive count.  This does not bode well for Avi's model of higher highs coming in the S+P IMO.  If these indicator stocks are deflating then it is not a good sign.


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