Saturday, February 11, 2017

Sears [SHLD] explosive rally is confounding Wall St.

Friday's headlines read that Wall St is confounded by Sear's huge rally.  Well of course they are.  That's because Wall St. doesn't use Elliott waves.  But the sudden move up was predicted by me in the backlink just one day prior.

No, really.

In the backlink I expected a rally that would kiss the lower rail of the falling wedge from below.

Current actual shows that it moved a bit higher than that.  So should we panic buy?

Maybe but I don't think the wave count is complete yet.  I think that another downstroke is ahead. 

Now, here's where it gets interesting.  I actually have a reason why I believe this and it's not because of gut feel.  It's because the 4th wave (green 4 above) stopped short of going back up into the region of the first (green 1) wave.  Once it goes up there we know that it can't be a 4th wave anymore because that is a hard and fast Elliott wave rule.  Also, if we zoom in per below, the quick rally to ~$8.50 was likely a 3 wave deal so a-b-c.  We'll know very early on Monday what the truth is but I think the odds say lets wait to see if it gaps down on Monday and then that would be 3 of 5.  Once we see that we go on high alert waiting for 4 of 5 and 5 of 5 to buy.

Alternatively, a higher high than black C says that the short squeeze has likely already begun.  Other outcomes are certainly possible and an experienced Elliottician will see them happening in real time and be able to set intelligently placed stops whose values are determined by the Elliott wave principle instead of Kentucky Windage.  This is what I do for my subscribers every day.

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