Difficult time for most stocks that were in market favor for the bounce of the March lows. There are always stocks that are trading up, but I think TC will be trading down in a large wave 2 pattern off its daily chart from the March lows. Here’s what could be happening.
From October 2007 to December 2008 the stock appears to have completed a very large wave 2 ABC correction in its monthly chart. Take a look at a 20 year monthly chart to see this. From the trading low of 2.44 Dec. 1, 2008 to the trading high of 15.63 on August 3, 2009, TC has completed a 5 wave daily sequence and what could have been wave 1 of the parent wave 3 forming on the monthly chart. If the correction of this wave 1 daily chart holds its retracement levels and the trading lows of its internal wave 4 levels, then TC should begin a much larger wave 3 trading higher.
Wave 1 on the daily chart started at 2.44 and ended at 5.69. This puts our trading high for wave 5 daily at 14.1985. As we said the stock topped off at 15.63 and the closing trade from that daily high was 13.98. These numbers seem to be good reference points that the stock has finished trading higher, and so a 38% fibonacci retracement from March low would be 10.5976, a 62% fibonacci retracemtent would be 7.456. The 62% retracement may be out of reach however, for if we must maintain our internal wave 4 level to move higher in the parent wave 3, 8.85 on June 23, 2009 appears to have been the wave 4 trading low to maintain.
This could be a long correction or a very volatile one. If your interested in possibly playing this set trade signals at the 38% fibonacci retracemtent and see how the stock reacts. Most ABC corrections will trade close to there pervious wave 4 trading lows so maintain this idea with the understanding that if it breaks these trading levels then the downtrend is in control and two more waves must be completed lower before TC recovers.