Saturday, August 20, 2011

Moody's Headed To New Lows

In January I presented the following chart for Moody's Corp, ticker MCO, showing a potentially large wave (C) rally underway with a target of 40 to 44.

The actual high of wave (C) was 41.93, so even though many say "elliott wave analysis doesn't work", this type of result indicates that it can work very well at times.  Since falling away from it's high, MCO has now fallen below the wave (A) high confirming that the entire rally was mostly a 3 wave countertrend move.  The downside target for MCO is below its IPO low of 11.31, but more probably below 5.00.

This final move down in wave [Y] could take 1 to 2 years or more.  There are likely to be definite attempts to defend the 2009 low vigorously.  However, the best trading opportunity should be to short a retracement back to the 30 to 32 zone with a target of 15.  A sustained move back above 32 would negate this analysis.

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