Great Technical Outlook For Chicago Bridge And Iron Company (CBI)
Published January 21, 2018
By: Chris Guthrie
Chicago Bridge And Iron Company (CBI) has been in a well-defined Grand Supercycle Elliott Wave since 1998. All of the major waves and almost every single minor wave have been noticeable and predictable. Right now the stock has just begun its final stretch of this Grand Supercycle. The stock will rally at a macro level but corrections will occur along the way. At present, a short-term drop is expected through the middle of March. All projections in this article will be updated and refined as each minor wave ends. The image below lays out where the stock has been and where it is intended to go over the next 9 months.
Our following projections use the terminology and symbology from this chart
Grand Supercycle Wave
We project the stock to reach 85 by Mid to Late 2022. When a top is reached, the Grand Supercycle will be completed. This will allow for a new trend to begin. The projected move would result in a 348% gain from the close on January 19, 2018 which was 18.97.
The Supercycle in the fifth wave of the current Grand Supercycle is in its infancy. We do not expect wave 1 of the Supercycle to conclude until September 2018 at the earliest. The stock is expected to move above 25 by the end of this first wave. This would be a 31.7% gain for the stock within the next 10 months. We currently project the stock to drop toward the 15 mark by March of this year. If the stock drops to this point and indeed rises to 25 by September, this would be roughly a 66% gain in a 6 month period.
The Cycle in the first wave of the aforementioned Supercycle is currently believed to have just completed its first wave on January 16. This assessment could change over the next few weeks if wave 1 has not officially finished. With this assessed wave 1 completion, wave 2 has begun and should take the stock down toward 15.04 no later than the middle of March 2018. Once wave 2 ends, wave 3 should aid the stock in its journey to 25.
The Primary wave is believed to have been completed on January 16, 2018 with the conclusion of wave 1 of the Cycle wave. If this assessment is inaccurate, Primary wave 5 will be reassessed.
Finding Cycle Wave 2
Based on the assumption that Cycle wave 1 has ended, as well as its subordinate Primary wave, it is time to project the movement for wave 2. The image below has boxed in the most likely location for the bottom of Cycle wave 2 (identified with cyan dot). The outermost lines bounding the box are composed of averages, medians, standard deviations of retracements and trading days elapsed. A retracement can be determined by calculating the movement in wave 1. Plot the location where wave 1 began as 100% and the location where wave 1 ended as 0%. The retracement is the distance down from the end of wave 1. I like to look for retracements between the two Fibonacci points of 23.6% and 61.8%.
Over the course of this Grand Supercycle there have been 12 completed impulsive Cycle wave 2s. On these occasions, the average retracement from Cycle wave 1 has been 50.03%. When adding and subtracting the standard deviation of these retracements (19.46%) to the top and bottom of this mark, levels 66.49% and 30.57% are recorded. Lastly, the median retracement is 44.58%. Of note, the 50.03% level is very close to a key Fibonacci level at 50.00%. This will give us 4 levels of interest: 16.42, 15.04, 14.50, and 12.57.
The final pieces of information regard trading days elapsed over the course of this Grand Supercycle. The median days elapsed are 19 with an average of 32. The standard deviation is 35. Applying the standard deviation on the low-side of the average would result in a negative number so it is ignored. When added to the average, the result is 67 days. This gives us 3 dates of interest: February 13, March 1, and April 19.
If Cycle wave 1 has concluded, wave 2 will most likely occur between February 13 and April 19. The stock will likely drop between 12.57 and 16.42. We are leaning for the bottom to occur around March 4 around 15.00.
The following chart displays with high confidence that Cycle wave 1 has ended. The stock reversed course 3 times at Fibonacci levels to end Intermediate waves 4 and 5 as well as Minor wave 4 in Intermediate wave 3.
All current projections are displayed on the interactive chart below
Continue to check back as we ride the waves to the end of the Grand Supercycle. This article will be updated as new minor waves are completed until the Grand Supercycle has finished its Wave 5.
DISCLOSURE: We currently do not have any positions in the mentioned stock. We may initiate a position in the next 72 hours. This article is for reference only and should not be solely relied on to predict future movement. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. You should not take a risk without fully understanding the system, market, and having established trading discipline. Make sure appropriate research is conducted prior to taking any risk in a marketplace. The author and Limitless Life Skills LLC do not have a financial relationship with the companies mentioned in this article and all expressed views are that of the author.