Boston, MA 09/30/2013 (wallstreetpr) – Hologic, Inc. (NASDAQ:HOLX) (Closed: $20.91, Up: 2.45%) opened weak on Friday and broke the 2 day low by a slight margin before shooting up to a new 2 week high. The long green candle created engulfed the price action of the previous 3 days and then some, emphasizing the bullishness. The volume surged at 5.5 million, way higher than the average of 3.5 million.
The price has found strong support at $20 levels and finally rallied on Friday. The obvious question is if this is going to a new high or is it just a corrective rally? The fall from the August top of $23.24 to the low of $22.01 can easily be marked as the 1st wave down. The sideways action till the high of $23.01 can be marked as the 2nd wave and the fall to $20 as the 3rd wave. In that case, the current rally is the 4th wave going on and the rally from $20.02 is the C wave of that 4th, implying another fall pending as the 5th whenever this rally ends. We could expect this move to reach around $21.40 or $21.80. The invalidation point of this count is $22.01, the 1st wave low and also the 61.8% retracement level of the entire fall.
On the other hand, if the 3rd wave down has ended at $21 and the fall from $21.80 is the actual 5th wave, then the entire fall is getting retraced now and the maximum retracement level can be anywhere between 61.8% to 99% or $22 – $23.23. But even then, another fall would be expected after the current rally. That means going with any of the counts, the trend remains down and another drop is pending, just the degree of the fall varies with the counts. So short term investors could use the current rally to exit the stock.