Wednesday, September 7, 2016

[WDC] update

Long time readers might remember my first post ever on Western Digital corporation.  For those of you just awakening to the concept of Elliott waves, here is the backlink to that post. All will do well, IMVHO, to go back and review the chart based predictions I made.

I wrote:"WDC has been providing good value to people all this time.  As a result,t hey have 5.38bn cash and only 2.41 bn debt.  Trailing PE is 16 and forward is 12.  PS 1.64, BK 2.82.  These are quite respectable numbers across the board.  From every outward appearance, WDC is a solid buy.

So why can I confidently predict a major collapse in the share price of this company over the next 5 years?  Why am I confident enough to write it down and promise never to erase this post?

The answer of course is the chart...  The 5 rail bumps are now complete.  There is no 5th wave throw over yet and that could still happen but after that I am confident, based on the chart pattern alone, that it will again come crashing back down to at least $24 and perhaps much much lower.
" .

As you can see from the recent chart snapshot below, WDC recently touched down to just under $35.  It's possible that the bottom is in even though we did not quite see the $24 price level which my model predicted (right there on 12/12/2014 where the red arrow is pointing).  But the fat lady has not sung yet.  We could be forming a rising wedge 4th before a final move down into my original target price range.

Since everything with EW is odds based, if I were short this stock I would cover immediately and then only re-short if this goes back below the gap up which just occurred.  But neither would I go long this stock because that rising wedge could reverse in an eye blink and then make a new low before a final bottom is found. 

If you think this was a lucky call then you are partially correct because nobody knows the future with complete certainty.  Everything in our universe is probabilistic.  Everything. But if you think it was only luck then you are badly mistaken because I have proven again and again and again that Elliott waves are a real thing which, when properly analyzed by someone with many years of experience, can produce amazing results up to 70% of the time.  And those times when the model turns out to be wrong, well, the model itself tells you where to place your stop loss orders.

If you aren't blown away that on my very first post about Western Digital ever that I made such an incredible price movement call then OK.  You have seen it all, done it all and nothing can impress you.

But if you go back and read that post and then realize that I knew what the odds were that it would happen and I knew the odds were stacked heavily in my favor to be writing with that tone then you know how powerful this kind of insight can be.  If you want to see more of this kind of thing, click the subscribe button at the top of this page to learn how to join the growing number of people who get my daily trading insights on metals and miners, the oil patch and broader market indices.

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