Below are the Speed Resistance Lines for Microsoft (MSFT) from 1990 to 2002.
From 1993 to 2002, Microsoft experienced a similar parabolic peak to the 2009 to 2020 period. In that time, MSFT hit all of the downside targets that are generated by our Speed Resistance Lines.
Below we outline the Speed Resistance Lines for Microsoft from 2009 to 2020. Continue reading
In our posting of March 22, 2020, we said the following:
“Since the low in the stock market on March 9, 2009, Boeing (BA), (as of March 20, 2020) has gained approximately +206%. In the same period of time (March 9, 2009-March 20, 2020), the Dow Jones Industrial Average has increased +192%.”
If we were to match the performance of Boeing to that of the Dow Jones Industrial Average from the 2009 low to the April 3, 2020 close, Boeing would be trading at approximately $65.04. However, we already know that Boeing has been booking future sales to current earnings. This basically means that there were no earnings in the prior years.
The details of Boeing’s accounting is outlined in our March 23, 2020 posting titled “Boeing’s Accounting: Legal but Questionable.”
Numbers to Watch
As we continue to say, price reflects fundamental and fundamentals reflect price. In the chart below, which includes the last remaining downside targets, we have highlighted the fact that in the prior recessionary period from 1999 to 2002, Boeing reached a low of $25.06.
In the recovering from the low in 2002/2003, Boeing achieved a high of $107.23 and then fell to a low of $29.51. It is not necessary for Boeing to actually replicate the move of going back to the prior bear market low of 2002. However, we should not be surprised if Boeing were to go to the prior low of $29.51.
For the time being, we will attempt an unusual approach to using the Speed Resistance Lines. Typically, our downside targets are based on the most recent all-time high. In this case, that would mean basing the current downside targets on the $440.62 price. However, the current decline has been so disastrous that we’re going to utilized the 2015 peak price of $158.31 as the basis of our downside targets.
Below is the updated downside targets for Boeing (BA) based on the peak price that was set on February 20, 2015.
The downside targets based on the 2015 peak at $158.31 are:
Remember, the decline in Boeing started in early 2019. Additionally, Boeing began trading in a range starting in early 2018. For this reason, the idea of connecting the current decline with the coronavirus is generally a mistake.
That Boeing has managed to achieve the downside targets of a prior peak ($110.31) is astounding and speaks to the extreme low that it needs to achieve relative to the Dow Jones Industrial Average.
Summary
The current earnings were an illusion and should easily bring Boeing to $83.54, $65.04, $52.77, and possibly to $29.51.
On November 20, 2015, we posted the Speed Resistance Lines for Mercury General (MCY). The downside targets were:
The chart below highlights the date the SRL was published and the price action that has transpired since November 20, 2015.
Our lurking worry? That the $20.10 target will be achieved. This leads to a downside range of $18-$20 from the current price of $38.88.
Posted in downside, Edson Gould, MCY, Speed Resistance Lines, SRL
On February 3, 2018, we said the following:
“In the past, we would normally apply the more passive Dow Theory downside targets instead of Edson Gould’s Speed Resistance Line. However, with the late stage parabolic move in the Dow Jones Industrial Average, the more aggressive downside targets are necessary in this instance.”
Our decision to utilize the “more aggressive downside targets” has proven to be well founded. However, since the February 3, 2018, a new peak has been achieved which provides different downside targets. This leads to an update of the downside and upside targets.
Below are the updates with extensive review of what to watch for (skip to the bottom for the Summary). Continue reading
Below are the downside targets for Tesla Inc. (TSLA).
Parabolic increases rarely go unchecked. This typically means that a decline to the conservative downside target is the norm, at minimum. However, Tesla has had a history of defying the “norm” when it comes to price change.
Posted in downside, parabolic, Speed Resistance Lines, SRL, TSLA
In reviewing the price history of Palladium and in light of the most recent parabolic increase, we have outlined the current increase in the price and compare it to the 1996-2003 rise and decline.
1996-2003
In the period from 1996 to 2004, the price of Palladium increased +837% and subsequently declined from the peak by -86.05%.
The chart above includes the Speed Resistance Lines (SRL) based on the work of Edson Gould. In this specific instance, the price of Palladium declined through all of the downside targets. In addition, the continued until it reached a low of approximately $150.50 or -58% below the $359.67 Speed Resistance Line.
In the following review of the most recent increase in Palladium, we’ll compare the 2016-2020 run-up to the increase from 1996 to 2001 to identify the signs of what might come in the price going forward.
Then v. Now
Technically Speaking
When looking at the price of Palladium in both periods, we have identified the most important points contributing to our analysis.
The start to our review is the first intermediate peak after the low. In the case of the 1996-2004 period, that first peak was at $397.50. For the period of 2016-2020, that peak was $1,119.90. The subsequent lows that followed, $272.20 and $877.80, helped to establish the downside targets.
Worth noting is the decline from the initial peaks to slightly below the mid-range downside targets before a continuation of the rising trend to the second intermediate peaks at $718.50 and $1,520.35, respectively. In both cases, the decline from the second intermediate peaks are situated around the conservative downside targets at $631.87 and $1,627.93.
In both cases, the parabolic move ensues after the second intermediate peak, which is a considerable distance from the level of the conservative downside target.
Conclusion
Because of the precedent set in the period from 1996 to 2001, we expect that the conservative downside target of $1,627.93 will be achieved.
We could consider it luck if the price of Palladium were to decline to the mid-range level of $1,189.03 or the extreme target of $750.13. However, if the period from 1996 to 2003 is truly a precedent setting period then it would not be surprising to see Palladium decline to $750.13 as a normal reaction to the parabolic increase.
Posted in downside, Edson Gould, palladium, parabolic, Speed Resistance Lines
Below are the remaining downside targets for the Hang Seng Index when applying Dow Theory: Continue reading
Posted in Dow Theory, downside, Hang Seng Index, HSI
Below are the downside targets for Netflix (NFLX).
Below are the downside targets for Roku Inc. (ROKU).
Our experience with all Speed Resistance Lines is that the conservative target is going to be achieved, no matter the reason. The targets are as follows:
Posted in downside, Edson Gould, ROKU, Speed Resistance Lines
According to Coindesk, Bitcoin achieved a high of $13,884.77 on June 26, 2019. Based on the data provided by Coindesk, we have the following downside targets: Continue reading
Downside Targets Continue reading
On September 13, 2018, when Tilray (TLRY) was trading at $118.00, we offered downside targets for $118 and $236 price points. Unsurprisingly, TLRY closed at a price of $214 on September 19, 2018. At the time we said:
“The conservative downside target is fairly assured to occur in either case.”
The conservative downside target at $118 was $66.67 and at $236 was $102.92.
On September 25, 2018, when TLRY was trading at $114.00, after the stock traded as low as $99.50, we gave upside targets of $156.78, $176.26, and $195.16. Our closing commentary was as follows:
“Upside retests determine if the price of the stock will continue on the move beyond $214.06. This is where speculators make their money, on the prospects of an +86% increase.”
TLRY made it as high as $165.64 on a closing basis. The failure to achieve $176.26 target suggested that the downside targets from the closing price of $214.06 would be the extreme downside target of $78.67, as noted in the September 13, 2018 posting.
Currently, TLRY trades below $75. Although the extreme downside targets have been acheived, there are indications that TLRY will retest the pivot level at $34.
Downside Targets
The downside risk from the current price, is as follows:
Simply by declining to $60.72, speculators should build in plans for TLRY to go to the $34.00 price point.
Posted in downside, TLRY, upside target
Below are the downside targets for Facebook (FB) based on the decline from the July 25, 2018 peak at $217.50. Continue reading
Posted in downside, Edson Gould, FB, parabolic
On April 14, 2012, we provided the following downside targets for Apple Inc. (AAPL):
| pre-split price | post-split price |
| $424.15 | $60.59 |
| $297.43 | $42.49 |
| $212.08 | $30.30 |
| $117.05 | $16.72 |
Along with the downside targets we included a charting of the expected levels, as seen below on a split adjusted basis:
On July 17, 2013, we said the following of of Apple:
“Currently, Apple is demonstrating a basing pattern that if successful, could result in a breakout to the upside. At the current levels, we wouldn’t be opposed to buying some shares of Apple with the expectation that the stock could decline an additional –25% to –35%.”
Since July 17, 2013, Apple’s price has seen the following breakout to the upside:
Below are the Speed Resistance Lines based on the work of Edson Gould as of November 19, 2018. As has been the case in the past, we can only be confident of the conservative downside target being achieved. Continue reading
Posted in AAPL, downside, Edson Gould
On November 21, 2015, we said the following:
“While a Fed rate increase is what everyone is waiting for, history suggests that Fed policy (government regulated) follows short-term Treasuries (market driven).
“In a barely perceptible way, the chart above demonstrates that all Federal Reserve rate increases were preceded by a rise in the 3-month Treasury. The blue arrows indicate the reversal in the declining trend before 3-month Treasuries increased. From this point, we can easily see that the Federal Reserve’s discount rate follows to the upside not long after. We’ve only included the point in the interest rate cycle that corresponds to the phase that we are entering, coming from an all-time low to an eventual all-time high.”
We are clearly in the early stages of a secular rising trend in interest rates. As noted above, the direction is up for the foreseeable future. What concerns us now, as always, is the cyclical declines which can be dramatic. Below we trace out the first decline in the previous secular trend and see what that would look like in the current rate environment. Continue reading
