More Pain For Polycom Inc (NASDAQ:PLCM) Investors Below $8.80 -$8.85

Denver, CO, 07/25/2013 (Avauncer.com) – Polycom Inc (NASDAQ: PLCM) (Closed: $9.49, Down: 15.07%) crashed on Wednesday on the news of an investigation against it regarding potential securities claims. The volume was of a climactic scale at 14 million against an average of less than 2 million.

To put the Wednesday crash in a proper perspective, we must check the long term chart which shows that the first long term top was established at $36.12 in 2000. The lowest point since then was reached at $3.22 in 2002 and then a rally of 9 years took the price to $34.30 by 2011. This whole setup looks like a perfect Flat pattern correction, as in Elliot Wave Theory parlance. We can see both the 2000 – 2002 fall and 2002 – 2011 bull run to be clearly subdivided in 3 legs, which proves that both the rally and the correction were of a corrective nature and not impulsive. In that case, another down leg remains to be finished before we can speculate that the secular bear market since 2000 has ended. That leg seems to be going on since the 2011 top but the final bottom perhaps is yet to be made.

Since the September 2012 high at $12.03, the price is stuck in a range of about $3 for the last 7-8 months and that range is not broken yet. The upper boundary of the range is at $11.80 for this week. The price hit $11.71 levels for two consecutive days and started dropping. Yesterday’s crash has brought the price from the upper boundary of the range to the lower boundary, currently at $8.80 -$8.85, in two sessions only. But the lower boundary must be breached for final confirmation of a fresh down trend; otherwise more range bound price action will take place. Some Elliotists might argue that the whole upward correction from the 2012 bottom of $7.45 got over at $11.72 on Tuesday, but we would still like the confirmation by the break of the range.