In after-hours activity, Advanced Micro Devices (AMD) had declined approximately -17% from the closing price of $22.79 to $17.69.
The history of AMD suggests that the stock will decline as low as $6.30 and possibly to the sub-$2.00 level. For the time being, we have outlined the following downside targets:
Posted in After Hours, AMD, Edson Gould, Speed Resistance Lines, SRL
On August 2, 2017, when Lumber Liquidator (LL) was trading at $36.75, we said the following:
“Thus far, LL has a minimum reaction to the violent rise at the $27.03 price. However, the very fact that the stock has had such a dramatic rise in such a short period of time that a normal reaction could take the stock to $19.64.”
Since August 2, 2017, Lumber Liquidator has declined to the current price of $12.32, a decline of –66%.
We also said the following of lumber futures and Lumber Liquidator (LL):
“These reactions are in place regardless of whether the price of Lumber Futures continue higher. If Lumber Futures decline then the $12.25 level becomes an active downside target.”
From August 2, 2017 to May 14, 2018, the Lumber futures contract nearly doubled in value. However, from May 14, 2018 to October 19, 2018, the Lumber futures have crashed nearly –50% and have help push, in our view, the price of Lumber Liquidator to the current levels.
There is a clear relationship between the price of lumber and Lumber Liquidator. However, we can’t say with conviction which is the leading indicator.
See also: February 25, 2015 Lumber Liquidator downside targets.
Posted in LL, lumber, Speed Resistance Lines, SRL
Ebix Inc. (EBIX) is described as a, “…software and e-commerce solutions to insurance, finance, and healthcare industries. It offers software development, customization, and consulting services to various entities in the insurance industry, including carriers, brokers, exchanges, and standard making bodies.”
The recent decision of Ebix to change their accountant is explained for the recent drop in the stock price. Although, to our mind, the stock price peaked in February 2018 which set the declining trend in motion. Below are the downside targets for EBIX.
At the current rate, EBIX appears destined for the $41.98 downside target. The relative nature of the increase in the stock price from around the $10.00 level to $86.90 makes the $28.97 price a distinct possibility.
Posted in downside, EBIX, Speed Resistance Lines, SRL
On September 13, 2018 when Tilray Inc. (TLRY) was trading at $118.00, we said:
“Below we outline the downside targets for both current price of $118 and $236 for when/if the stock doubles from the current price. The conservative downside target is fairly assured to occur in either case. From the $118 level, a decline to the $66.67 level would be a natural retest of the $77.89 level set on September 7, 2018.”
Since September 13, 2018, TLRY has increased as high as $300 on an intraday basis with a closing high of $214.06. From what we can tell, the runup has dissipated for now. On the downside, we see TLRY declining to the $102.92 target at minimum and it may achieve the the extreme downside target of $66.67 as outlined in our previous posting.
The nature of a parabolic rise is the manifestation of the price going to extremes. Speed Resistance Lines are the best measure of the extreme on the way down. It is the same going down as it is for going up. Therefore, we would not be surprised to see TLRY go as far down as $$42.42.
Posted in parabolic, Speed Resistance Lines, SRL, TLRY
W.W. Grainger (GWW) is a stock that we currently hold and has run-up significantly in the last year. In this post we will review Edson Gould’s Speed Resistance Lines [SRL] and Altimeter for GWW.
Speed Resistance Lines are most often used by us to estimate downside targets. Based on the increase from the August 28, 2017 low and the August 21, 2018 high, we have arrived at the following downside targets.
It should be noted that the chart above does not include the extreme downside target. If the August 21, 2018 price is the peak then our best guess is that GWW will decline below the August 28, 2017 low. Our interpretation on the SRL may not play out for a while, however, the Altimeter adds significant insight.
Posted in downside, Edson Gould, GWW, Speed Resistance Lines, SRL
According to Morningstar.com, Harsco Corp. (HSC) “… provides industrial mill services to steel and nonferrous metal producers in more than 30 countries, including the United States.”
The history of Harsco’s (HSC) price history is important to the current activity in the stock price. In the review, we cover the history of the stock price based on the Edson Gould’s Speed Resistance Lines [SRL] with Dow Theory.
Downside Target Review
In the period from 1982 to 1990, the price of HSC rose from a low of $2.50 to a high of $9.66. Based on this information, we arrived at the following downside targets:
We’ve highlighted the point made in Dow Theory that a stock will often retest a previous low after a prior peak in the stock price. In this case, the retest level was the $5.88 price which was ultimately penetrated to the downside to the ultimate low of $4.50 in 1990.
In the period from 1990 to 2000, HSC had the following downside targets:
The Dow Theory retest after a major decline lasted over a period of two years from 1998 to 2000. All of the downside targets were achieved.
In the period from there was a decline that appears worth mentioning because it occurred within a rising trend that culminated in peak price that was three times the 2002 high. In the runup from the 2000 low to the 2002 peak, HSC had the following downside targets:
The Dow Theory retest after the peak was consistent and could have been at either of the two points indicated on the chart. If you missed the first indicator then you had a second shot at getting the retest at the second major low in the stock.
Worth pointing out is the fact that the extreme downside target of $7.33, from a technical standpoint, was suggesting much lower levels than could be indicated on this chart. We wonder if the low of HSC in 2016 at $3.67 might have been indicated in the SRL of 2000 to 2003.
2000-2018: Upside and Downside Targets
Below are the upside and downside targets based on the low of 2000 to the peak of 2016.
According to Yahoo!Quotes, Advance Auto Parts (AAP) “… provides automotive replacement parts, batteries, accessories, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks.”
Below are the downside support targets based on the high of $199.38 and the upside resistance targets based on the $79.26 low.
Posted in 50% principle, AAP, Edson Gould, Speed Resistance Lines, SRL
According to Yahoo!Finance, ShotSpotter Inc. (SSTI) is, “…provides software-as-a-service based gunshot detection solutions for law enforcement officials and security personnel in the United States, South Africa, and internationally.”
ShotSpotter IPO’d on June 7, 2017 and was priced at $11. In the last 15 months, SSTI has managed to increase the share price +471%. Based on the closing price of $62.81, we have the following downside targets:
The downside target for SSTI are included in case the stock were to double for the current level. SSTI could increase to $85.65 and still be within range of the $35.06 downside target.
Posted in Edson Gould, parabolic, Speed Resistance Lines, SRL, SSTI
AeroVironment is described on Yahoo!Quotes as:
“AeroVironment, Inc. designs, develops, produces, supports, and operates a portfolio of products and services for government agencies and businesses.”
Below are the downside targets as a consequence of the parabolic rise that has occurred since the September 2015 low.
The conservative downside target of $62.26 is a lock in our view. To put this in perspective, AVAV would have to increase to $160.62 before the $62.26 level isn’t a normal “dip.”
Posted in AVAV, Edson Gould, parabolic, Speed Resistance Lines, SRL
The recent IPO and explosion of Tilray Inc. (TLRY) has investors both worried and excited. Tilray is in the emerging corporate cannabis industry, which has high prospects. Below we outline the downside targets for both current price of $118 and $236 for when/if the stock doubles from the current price.
The conservative downside target is fairly assured to occur in either case. From the $118 level, a decline to the $66.67 level would be a natural retest of the $77.89 level set on September 7, 2018.
Posted in Speed Resistance Lines, SRL, TLRY
In this posting, we’ll covered the topic of downside targets for Tesla (TSLA). We’re going to apply Speed Resistance Lines [SRL] and George Lindsay’s “Three Peaks and a Domed House.”
The SRL downside targets are fairly conservative, in our view, while the 3 Peaks and a Domed House model (3PDh) appears fairly drastic. We’ll do our best to introduce the 3PDh concept in the most general way possible, leaving out some of the nuances that we believe inhibit the qualitative elements to the overall concept.
Posted in 3PDh, Speed Resistance Lines, SRL, Tesla Motors
Review
On February 6, 2017, we took a position in Dentsply Sirona (XRAY). Dentsply Sirona is a leading manufacturer of dental products provided to dentists throughout the world. By February 8, 2018, we said the following of XRAY:
“At the time of the purchase of XRAY on February 6, 2017, we sold our shares of UNM Group (UNM) which had increased exceptionally from the February 5, 2016 purchase. XRAY did not meet our goal [gaining +1.14%] and while UNM has gained +5.19% in the same period of time.”
On February 8, 2018, we sold our holdings of XRAY and the stock has subsequently declined –31.30%, a staggering loss in such a short period of time.
Downside Targets
According to Charles H. Dow, co-founder of the Wall Street Journal, a stock should be viewed from the context of when it last performed the worst. Dow has the following to say (emphasis ours):
"The point of importance for those who deal in industrial stocks is whether the capitalization of the companies into which they propose to buy is moderate or excessive, when compared with the aggregate earnings of the various concerns forming the combination in a period of depression. It is probable that consolidated companies will be able to earn as much in the next period of low prices as the companies forming the combine were able to earn in the last one; hence the very foundation of investments in industrials should be knowledge of what these companies earned, say in 1893 to 1896, making, perhaps, reasonable allowances for economies under consolidation. Where the earnings so shown would have provided dividends for industrials now active, the fact must be regarded as a very strong point in favor of those stocks (George W. Bishop Jr., Charles H. Dow: Economist, Dow-Jones & Company,Princeton, 1967, page 11.)"
Without seeing the reported earnings, dividends, debt and shares outstanding, the price of the stock is the best quick take on the downside risk. In theory, the price reflects some or all of the news and fundamental data on a given stock. Looking at the price and applying the work of Edson Gould, we have estimates for the downside target.
Below are the downside targets for Starbucks (SBUX) based on the work of Edson Gould.
On June 16, 2012, we posted the following commentary on The Buckle Inc. (BKE) when the stock was trading at $36.79:
“We are very interested in this stock at the right price. We believe that BKE will be a buy at $30 and below. However, prior price movement based on Gould’s speed resistance lines indicated that the conservative downside target is $24.47 and the extreme downside target of $16.68.”
Since that time, The Buckle (BKE) managed to increase as high as $56.07 by January 12, 2015. However, since January 2015, BKE fell as low as $13.70 on August 2017, on a closing basis.
One of the fascinating elements of the work of Edson Gould is that it can be extremely accurate in spite of incomplete data. When we ran the figures for downside targets, BKE’s peak price was $48.39. The peak price is part of the equation that helps to generate the downside targets. In spite of this fact, BKE managed to decline below the extreme downside target based on the speed resistance lines (SRL).
Posted in BKE, Edson Gould, Speed Resistance Lines, SRL