The elliott wave principle applied in real time and to all markets.
Saturday, February 9, 2013
Novo Nordisk A/S a Textbook Elliott wave five wave rally
Novo Nordisk A/S
Today I would like to present a very interesting chart from Denmark's biggest company Novo Nordisk. If you don't know them they are making Insulin and accounts for about 1/3 of the Danish main index OMXC20 and therefor is more important, that any other stock in the index.
The rally from its low in mid-2002 at 80.50 is an Elliott wave textbook rally of almost 1,400%.
The chart is information packed, but let us take it step by step.
Alone wave 1 from 80.50 to 349.00 in late 2007 is a wonder rally of 433.5% and it took just over Fibonacci 5.5 years. 5 is a Fibonacci number, but so is 55.
Wave 2 was a complex correction combined by first a flat correction and then a zig-zag, which corrected a little more than 38.2% of wave 1 at 248.60. Wave 2 took 1.3 years, which is 23.6% of 5.5 years.
Wave 3 was clearly a much more powerful rally, which broke above the base-channel (in blue) and never looked back. Wave 3 was almost 2 times longer than wave 1 at 724.59. A rally of 300% in slightly less than 2 years (1.9 years to be exactly) a Fibonacci number too.
Wave 4, which alternated with wave 2 in being a simple zia-zag correction, corrected 38.2% of wave 3 at 524.03 in just 6 months. Which was 23.6% of the time it took to build wave 3.
Finally we are at the ongoing wave 5, which we normally would expect to end at either 38.2% or 61.8% the length from the bottom of wave 1 to the top of wave 3 added to the bottom of wave 4. However we have clearly broken above both and is headed towards the 100% length of the distance traveled from the bottom of wave 1 to the top of wave 3. Therefore we have a double extension as both wave 3 and wave 5 is extending and this is where its get really exciting.
When we deal with an extending wave 5 R.N. Elliott said we will get what, he called, a double retracement, but the most important thing to know, when wave 5 is extending is, that once wave 5 is over we should expect a swift decline to wave ii of 5, which would mean a decline to at least 770.00 and possibly even a decline to 648.00 in wave A. But the is more, if wave A was a zig-zag correction the following B wave will not go all the way back to the top of wave A.
Not alone do we know, that we soon can expect a decline in Novo Nordisk of no less than 31%, but it will be swift and give us a possible target where to buy for a large wave B correction.
Would you bet on a continuation higher towards 1,400 (31% up from here) or would you sell you holdings here or even sell-short to gain 31% from near 1,126? By the way take a look at EWO-indicator what a massive divergence on this last rally higher. You choice....
I'm a keen Elliott wave follower. I do use, what you might call, standard technical analysis too, but my main focus is on the Elliott Wave Principel.
I use it professionaly as well as in my private affairs. To give you an example I sold my house in late 2005 and are currently renting a flat, not expecting to reenter the property market before 2012-2013.
I'm very much into long term seasonal cycles and demography too.
Waiver: I will not accept any responsability for any loss of funds because of any investmenst done on the basis of my analysis. The analysis herein are done with the utmost due dilligence, but can from time to time be wrong and point you in the wrong direction.
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