Time to go bearish on power company ABB
The stock of ABB peaked on June 4 last year following a nice spike higher. The subsequent decline came in what appears to be five waves lower into a low on January 21.
The decline took 231 calendar days and since it came in five waves, we are alert to a situation where we get signals of a completed three wave structure higher.
We are at an inflection point here. To really prove it's worth as a stock that is going substantially higher, it has to advance for more then 231 days - and it hasn't yet.
If this has only been a bounce in a bear market, a 180 degree alignment is where we would expect a reversal. Having said this, higher prices above the time peak of August 12 and the price peak of August 15 means we are most likely going higher still.
Management and risk description
The conclusion here is that the stock of ABB could have peaked and that risk/reward favours shorts on many time frames. Given the completed five wave pattern off the July 6 lows, we are looking for at least a short-term pull back.
Entry: Sell below SEK 188.
Stop: Daily close above SEK 190.
Target: SEK 180, SEK 176, SEK 169 and SEK 163.
Time horizon: One to six weeks depending on target.