Some of you are too young to remember the Enron debacle during the 2000-2003 market crash. That broad stock market collapse ended when the United States announced the war against Iraq. War is big money.
In the 1990's, Enron was an energy company that began branching out buying many diversified businesses leading into the dotcom bubble top in 2000. Enron grew into a massive conglomerate and was not only a huge energy company but owned entertainment companies, tech stocks and all kinds of other goofy investments that they paid far too much money to acquire. The frenzy to own Enron stock took on a life on its own. It was one big party until it wasn't. The last fools to buy were looking around and there was no longer any other fools to sell to; ergo, they were the bag-holding fool. Enron went bankrupt. The US was thrown into a major recession and softpatch after the dotcom collapse.
Former Chairman Greenspan at the Federal Reserve cut rates to help the economy in the early 2000's, which then caused the housing bubble in 2007-2009 (which to this day Greenspan will deny creating). When the bombs started dropping in Iraq in 2003, Keystone was buying with both fists. Stocks never looked back. War support machines such as HAL catapulted higher. NOC, LMY and other defense stocks rallied. RTN could not build missiles fast enough.
Fast forward to the present day. SoftBank is an interesting company. CEO Masayoshi Son is a rock star with a cool name. He hobnobs with the world's rich and famous, including President Trump, buying up companies with its big cash hoard. SoftBank is investing heavy and all-in with cutting-edge technologies such as ride-sharing companies Uber, Grab and Didi. SoftBank is throwing millions at the We Company (WeWork). Also Slack. Masayoshi Son may be getting too hip and cool for his own good overpaying for a bunch of trash and garbage.
SoftBank also owns AAPL, QCOM and Foxconn. How's that working out for them in May? SoftBank is developing into a huge conglomerate in many ways similar to Enron. Is it the new present-day Enron? Only time will tell.
Chart-wise, the inverted H&S in late 2015 and early 2016 set the launch pad for the buying spree over the last 3+ years. The inverted H&S is text book with a perfect formation of the shoulders and neck line, then the breakout and back kiss just as 2017 began. The pattern targets 38-ish which was achieved during the summer of 2017.
As SoftBank continues acquiring and perhaps overpaying for all these goofy companies, which some will proclaim as the Second Coming, price is chopping along sideways becoming more violent and volatile in its swings. Pets.com and Webvan were the future in the late 1990's but in a few short weeks they were bankrupt.
The expansion pattern, or megaphone pattern if you prefer, keeps the upside move in price in check. The pattern hints that price needs to move to the bottom rail of the megaphone next. That would be down at 26-29 during the back half of this year. A -30% or more crash from current levels and perhaps -50% or more off the top would get investor's attention. The two gaps below are big enough to drive a truck through and will need filled at some point forward.
SoftBank is currently trying to raise more funds for further investments but the reception is cooling on Wall Street. Masayoshi Son used to enjoy lavish Manhattan dinners since everyone wanted a piece of the pie but now a trip to McDonalds may be the order of the day as he shakes the sofa cushions for loose change. Shrimp and lobster is replaced with burger's and fries. If SoftBank is the new Enron, the megaphone pattern will play out with price in the low to mid 20's at year-end into 2020 and then lower next year. SoftBank collapses -4.5% today but recovers by the closing bell to down -2.6%. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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