Today I would like to present a very interesting chart from Denmark's biggest company Novo Nordisk. If you don't know them they are making Insulin and accounts for about 1/3 of the Danish main index OMXC20 and therefor is more important, that any other stock in the index.
The rally from its low in mid-2002 at 80.50 is an Elliott wave textbook rally of almost 1,400%.
The chart is information packed, but let us take it step by step.
Alone wave 1 from 80.50 to 349.00 in late 2007 is a wonder rally of 433.5% and it took just over Fibonacci 5.5 years. 5 is a Fibonacci number, but so is 55.
Wave 2 was a complex correction combined by first a flat correction and then a zig-zag, which corrected a little more than 38.2% of wave 1 at 248.60. Wave 2 took 1.3 years, which is 23.6% of 5.5 years.
Wave 3 was clearly a much more powerful rally, which broke above the base-channel (in blue) and never looked back. Wave 3 was almost 2 times longer than wave 1 at 724.59. A rally of 300% in slightly less than 2 years (1.9 years to be exactly) a Fibonacci number too.
Wave 4, which alternated with wave 2 in being a simple zia-zag correction, corrected 38.2% of wave 3 at 524.03 in just 6 months. Which was 23.6% of the time it took to build wave 3.
Finally we are at the ongoing wave 5, which we normally would expect to end at either 38.2% or 61.8% the length from the bottom of wave 1 to the top of wave 3 added to the bottom of wave 4. However we have clearly broken above both and is headed towards the 100% length of the distance traveled from the bottom of wave 1 to the top of wave 3. Therefore we have a double extension as both wave 3 and wave 5 is extending and this is where its get really exciting.
When we deal with an extending wave 5 R.N. Elliott said we will get what, he called, a double retracement, but the most important thing to know, when wave 5 is extending is, that once wave 5 is over we should expect a swift decline to wave ii of 5, which would mean a decline to at least 770.00 and possibly even a decline to 648.00 in wave A. But the is more, if wave A was a zig-zag correction the following B wave will not go all the way back to the top of wave A.
Not alone do we know, that we soon can expect a decline in Novo Nordisk of no less than 31%, but it will be swift and give us a possible target where to buy for a large wave B correction.
Would you bet on a continuation higher towards 1,400 (31% up from here) or would you sell you holdings here or even sell-short to gain 31% from near 1,126? By the way take a look at EWO-indicator what a massive divergence on this last rally higher. You choice....
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