The CSL pattern, page-671

When CSL's share price was breaking all time highs around this time last year, the prevailing commentary was overwhelmingly rosy and bullish.

By contrast I'm now read plenty of gloomy comments like the following:


"I’ll wait for the low 200s almost certain now, no point buying today just like yesterday it has further too fall."

"...now that it has broken $250 to the downside where is the new channel and lower limits."

"CSL has broken its 4 years bull run today & very ugly candle today."

"...if it doesn't come back to $275 then it will be confirmation of down and unfortunately only short play."

"wow ... didn't think CSL will go down this much.  if it breaks tru 243, it'll go down to 222"

"CSL is gone. The worst thing is that it has never retraced more than fib 0.382 & now it is almost touching fib 0.618"



While the sentiment towards CSL is not quite a rock-bottom, the needle on the sentiment dial is coming close the BUY region (corresponding to maximum negative sentiment):





Still not quite at the vomit trade stage currently, but if bonds continue to poo in their pants, as they have been doing over the past 6 months, the vomit trade might not be too far away.

Valuation-wise, $220 per share [*] always felt to me like buying territory.

We are now not too far off that level.


[*]  Corresponds to a P/E multiple of ~34x, less say 5 P/E multiple points to account for the degree of capitalised R&D, so "R&D Adjusted" P/E = < 30x, which is what I would be happy to pay for a company like CSL  a far cry from the ridiculous >45x P/E multiple at which it traded some 12 months ago.

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