Leap Wireless was a laggard in the projected seasonal move for telcom stocks, however it certainly has made up ground targeting both short and long term price targets this week.
The trading with probability post has likely been proven successful, as LEAP is now 37% higher than it was when Piper Jaffray downgraded the stock only 24 days ago.
Meeting the projected price of 14.31 completes what was speculated to be internal wave 5 of parent wave 3 from the triangle trade analysis written in early November 2010.
The parent wave 3 target using the price zero point of 9.51 on 8/12/10, and the parent wave 1 price of 11.77 on 8/25/10, projects to a parent wave 3 target of 14.56. So far today LEAP has traded to 14.50.
The parent and internal wave structures of the current move were previously mapped out in this chart.
LEAP will likely correct from these price levels to a wave 4, and continue to follow its seasonal patterns. Parent Wave 4 price targets range from 12.62, for a flat correction, to 11.45 for a triangle correction, using 9.51 and 14.56 as parent wave 3 magnitude. Parent wave 2 was a simple correction, so parent wave 4 could be a flat correction if a 5 wave pattern is to develop.
A parent wave 4 is likely to be a drawn out trading pattern if it follows a triangle. Momentum to the upside is often a slow process for wave 5, which is why divergence is apparent between waves 3 and 5 in the MACD. Parent wave 5 target is 17.68.