NOR Elliott Wave analysis
I didn't get much positive feedback or intellectual curiosity in the response to my long term monthly chart and weekly charts that I posted here a few days ago. The analysis just seemed to generate aggravation and dismissal as “lunacy” and the like. I therefore thought I better take the analysis a bit further and post the Elliott Wave position of the stock, to try and give people a bit more confidence in my initial charts.
Technical analysis works better on bigger, more liquid stocks and is a bit tricky on these smaller spec stocks that haven’t made any profits yet. It tends to be retailers involved rather than fund managers in these who behave a little differently. Nevertheless, there is a clear Elliott Wave pattern formed, sufficient at least to guide trading if not perfect.
The Elliott Waves are marked by the black solid lines. Basically stocks typically move up in 5 waves and down in 3 waves. There are some standard extension and retracement targets that help define the waves, but the shape of them is the important thing for trading. The main benefit of EW is that Is tells you direction, a big picture road map for the unfolding price action.
In my view, the second peak at $17 is the top of Wave 5, i.e. the end of the run up. We’ve then moved into a three wave distribution phase. The initial drive down to $0.057 to the point of maximum pain as well expressed on these threads was the end of Wave A. It was the point at which buying could begin for a relief rally, which normally goes to between 50% and 78.6% of the initial fall, in this case a just over 50% retracement at $0.12 forming the top of Wave B.
Once Wave B is complete, in that as much new buying has been induced to push it back up as best can be done, then distribution can start again into Wave C. This is where we are at now. Elliott Wave doesn’t tell you precisely the final low and how long it will take to get there, but the $0.02 - $0.04 zone would make sense for a typical Wave C projection and is consistent with my earlier analysis posted.
Timing to get there is going to depend on how much stock has to be distributed in the current drive. It may be dumped or may have to be fed out slowly with some buying support along the way to hold it up. Given the fact that Wave 5 and Wave B are a bit truncated compared to normal targets, this stock appears to be in quite a weak position.
The main uncertainty on the chart is whether Wave B is actually complete at $0.12 or it does get a another push up to higher levels, as there is some headroom to the normal projections here. I don't think so given the way it's behaving but it's still a long-shot possibility. But that will only defer the final Wave C downmove anyway. Just need to monitor this alternative as it unfolds.
Hopefully all that makes sense and adds a bit more clarity to my initial charts.
(Note I'm not holding, I'm charting it as I'm finding the price action really interesting to date).
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