RY - Time to Close Long Positions and Short the Banks?

Is the largest bank in Canada, Royal Bank of Canada, able to have another push to the upside considering the looming recession or is it time to eject and reverse to short positions?

Fundamental indicators:

• Revenue and Profits - demonstrated consistent long-term earnings growth over the past 10 years
  
• Profit margin - impressive 32% last year
  
• P/E - reasonable ratio of 11.5x
  
• Liabilities - although debt has increased in the last 5 years it is still reasonable for the bank industry
  

Technically:

• The sharp fall in March 2020 completed the global correction since the great financial crisis in 2007
  
• Since then the bull run has been clearly formed by an impulse where the last 5th wave is currently developing with Ending Diagonal (Elliott Wave structure)
  
• The remaining part is the zig-zag ABC to update the historic high of $119.41
  
• Thereafter, it is possible to observe a lengthy and very deep correction to the level of the previous correction $49 or even deeper
  

Note - in order for this scenario to be viable the price cannot go higher than $122.39. This is because wave 3, following Elliott Wave rules, cannot be the shortest in impulse, hence the constraint on the price level of the fifth wave

Looking at both fundamental positive indicators and potential wave structure what do you think about this scenario?

Are you planning to trade Royal Bank of Canada?

Please share your thoughts in the comments and like this idea if you would like to see more stocks analysed using Elliott Waves.

Thanks