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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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.