There has been witnessed a "Rising Wedge" pattern in the stock of MOTHERSUMI, the same has been shown in the chart. This rising wedge pattern, at first look, looks like an "Ending Diagonal" pattern. As per the EW Principle such ending diagonal patterns appear either in the final 5th wave of impulsive run or the C wave of an A-B-C corrective pattern of the stock.
Though, I am not sure about at which degree of the stock is currently trading, but the knowledge and experience that I have gained in EW Principles, considering myself still at learning stage, suggest me that the stock is currently trading in its "Intermediate" wave IV of its Primary wave 5 of its Cycle Degree wave 1 which started way behind in the month of October, 1998.
As said before, keeping in mind the rules and guidelines of EW Principles, the stock is currently trading in its Intermediate wave IV and probably forming a complex correction either in double (W-X-Y) or triple (W-X-Y-X-Z) zigzag or threes pattern or combination of corrective patterns.
Also, it could have been termed as a "Flat" corrective pattern being wave W termed as wave A and X termed as wave B, if wave X of Intermediate wave IV, considering the completion of wave C of X, as shown in chart, has retraced beyond or atleast 90% of wave W. But, because the stock has registered an 89% retracement of its total movement of wave W (393.90-205.90) and as it is not fulfilling the requirement of Flat corrective pattern, it shall rather be termed as Complex corrective pattern.
Besides, there has been witnessed a negative divergence in the stock of MOTHERSUMI on daily as well as weekly time bar chart. The chart shown above is daily time bar and the weekly time bar chart has been shared below for the further reference of the readers of this post. Moreover, the stock has registered a minor breach of the support line of Rising Wedge pattern and the histogram of the stock has entered into negative zone which is also an indication of starting its march to southward direction.
The stock on Friday closed at 365.80 per share. One can sell or go short in the stock at or around the closing price, but not below than 360, if stock opens with bearish tone, and not above 373.50, if the stock opens with bullish tone. One can build up a short term (2-3 months) to medium term (4-6 months) 'short position' in the stock for short term target of 278, end of wave B of X, and for medium term target of 205 or below, end of wave C of W.
Though, one can keep 373.50 as stop loss point, but giving a space to the possibility of some remaining upward movement, stop loss of 395 is looking best for short to medium term short position. Any update in this regard will be given as and when felt necessary.
People who wish to go short for few days or weeks can go short in the stock of MOTHERSUMI with the target of 350, 330 & 320 being 100%, 161.8% and 250% extension of its total of 19.40 points (373.50-354.10) from its Friday's top of 368.50. Any move above the price of 373.50 is the trigger level of the stop loss of this position.
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