The Chart du Jour

Lucent Rhythm

Aug 3,2000

By, Barclay T. Leib

Way back on January 24th, we suggested that the decline in Lucent would not be complete until that stock reached 40 1/8. After much backing and filling -- false starts both up and down -- that level is finally now quickly being approached. Hence we have updated our first chart from January (leaving our original wave count and Fibonacci bands in place) and simply adding a new set of Fibonacci bands on the most recent section of the decline. The same level of approximately $40 1/8 - 40 1/2 looks like a natural target once again.


Chart produced using Advanced GET End-of-Day

So to anticipate the rhythm here a bit: 1) Look for at least 40 1/2 sometime perhaps in the next week; 2) once such a downside target is achieved, then look for a substantive bounce into early September back toward the $50 level which may represent a possible neckline in a huge head and shoulders top; 3) then in September, we'll see whether we have a real bear market on our hands, or not. A failure at $50 and a renewed decline at that time will make this stock look like the next Amazon horror story in the making. Conversely, strength back above $50 would argue that the entire year 2000 decline has just been a huge A-B-C correction, and the bulls will be back in control.

The fact that the Feb-March bounce took Lucent back up to intersect what we originally labeled as a 1-wave down in what we would have expected to be a less extensive 4th wave rally, actually argues AGAINST that original wave count. A huge A-B-C correction count is now more likely -- although it's still too early to tell for sure.

If we've lost you in that last bit, don't worry. Suffice it to say, we're buyers of Lucent at 40 1/4 for now, and sellers at $50. If we get that much right, then we'll take a long hard look at the price action as it transpires into September and make a longer term prognostication at that time.

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