Esterline Technologies (ESL)
1/31/07 Update

We take an updated look at ESL, which had earlier achieved a forecasted high at the 46 area back in May, before falling into a nasty $16 sell-off that ended in August.  The long and intermediate term wave patterns suggest another run at that high is very likely.

The longer-term Primary wave trend indicates an incomplete 9-wave rally since 1990 is in effect, and the corrective decline from 46.65 also supports the likelihood that one more price high is probable.  The current 21-day Put/Call ratio is also dropping from a high peak, often a sign of buy interest, and an indication that the stock is far from oversubscribed.  40 has been acting as price resistance, but the pullbacks have all been corrective, and this area could and should therefore be violated.  You may want to await a break of 41, with 37 as a stop.  Minimally, we'd be looking for a retest of the 46.65 high, with potential targets for a top at 48, 50 or 52.

For an option play, you might consider the August $40 Call (symbol ESLHH), which is currently selling for $4.00 with the Delta at 0.59.  

©Copyright 2007 Tony Carrion.  All content presented is the exclusive property of Market Harmonics. com, which is owned & operated by T. Carrion & Co., LLC, and may not be duplicated or distributed without the express written consent of the author.