Below are the downside targets for Paycom Software Inc. (PAYC).
If extended to the IPO date in 2014, we would have generated much lower downside targets. In an effort to be reasonable about expectations, the targets have been set from 2018. The forecast is that PAYC will decline to the ascending level of $224.12.
Posted in parabolic, PAYC, Speed Resistance Lines, SRL
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
Below are the downside targets for Luckin Coffee (LK).
The strong rise in the price from November 2019 to January 2020 is being matched by the current decline. We expect that the decline to the $25.78 level should be accomplished as a natural reaction to the prior dramatic increase.
Posted in LK, Luckin, Speed Resistance Lines, SRL
In our early October 2019 posting, we outlined the parameters for what we expected for the Hang Seng index. In spite of the recent increases, everything is lining up, so far. Continue reading
In our previous work, we have outlined the impact of dividends and the historical precedent related to the qualitative elements of Anheuser-Busch InBev (BUD). Why have we put so much focus on ONLY one fundamental element as it relates to a stock and its future prospects. As stated by Geraldine Weiss in her book Dividends Don’t Lie:
“The philosophy that the dividend yield of a quality company can reveal volumes about a stock’s future performance does not lend itself merely to a certain tax climate or a particular market cycle. It is a basic principal. one that serves as a faithful guide through even the most confounding stock market phases (page 10).”
Many argue that such a narrow perspective on esoteric points regarding the dividend doesn’t tell the whole story. Our writing on this topic since calling the bull market in 2009, and starting this site, highlights the exceptional consistency of the perspective that we have offered.
Price Reveals Fundamentals, Fundamentals Reveal Price
According to Charles H. Dow, co-founder of the Wall Street Journal and creator of the indexes that bear his name:
"The one sure thing in speculation is that values determine prices in the long run. Manipulation is effective temporarily, but the investor establishes price in the end. The object of all speculation is to foresee coming changes in values. Whoever knows that the value of a stock has run ahead of price and is likely to be sustained can buy that stock with confidence that as its value is recognized by investors, the price will rise (Dow, Charles H. Review and Outlook. Wall Street Journal. February 25, 1902.)."
With this in mind, we will venture into the indication that are provided by the activity of the price for Anheuser-Busch InBev.
Downside Speed Resistance Lines
Below are the Downside Speed Resistance Lines (SRL) for Anheuser-Busch InBev (BUD) covering the period from July 2009 to November 2019.
The downside targets based on the data from 2009 to the present are:
We can see that BUD has managed to decline through the conservative and mid-range targets. All that remains is the extreme downside target of between $44.48 and $47.70. The lack of historical precedent does not allow for the richer analysis of the price that we’d normally like to do. Such analysis makes for what we believe would be better interpretation of the price activity.
Three Steps Rule
In addition to Gould’s Speed Resistance Lines, there is the theory of the Three Steps Rule. According to Gould:
Our Three Step Rule (not to be confused with our Three Step and Stumble Rule, Which refers only to monetary conditions) has been helpful over the years in our attempt to project stock market moves and to anticipate stock market tops and bottoms.
Our Three Step Rule says: In any stock market move, up or down, large or small or in between, expect three steps but be prepared for a fourth.
It applies to large moves as well as small moves.
Three steps up in an advancing market and three steps down in a declining market usually exhaust the bullish potential accumulated at the bottoms and the bearish potential accumulated at tops- but sometimes there is a fourth step (Edson Gould Reports. Edson Gould’s 1975 Forecast. November, 1974. page 8. ).
We have included, in the chart above, the Three Steps (red circles). In this case, the third “step” cannot occur unless it is at some point below the second “step.”
Upside Speed Resistance Lines
Below are the Upside Speed Resistance Lines (SRL) for Anheuser-Busch InBev (BUD) covering the period from September 2016 to November 2019.
The upside targets based on the data from 2016 to the present are:
As with downside prospects there must be upside resistance. From the all-time low set in late 2018, BUD has managed to climb as high as $101.58. However, not achieving the $111.00 upside resistance and then falling below the $99.44 upside resistance level suggests, at minimum, a re-test of the $65.43 level.
Speed Resistance Lines are based on the work of Edson Gould who was famous for precisely calling market tops and bottoms and widely quoted in Barron’s throughout the 1970’s. How powerful are the indications provided by Gould’s SRL?
Among the many posting we have on the topic, our April 26, 2012 on the downside risk for Chesapeake Energy (CHK) titled “A Warning for Chesapeake Shareholders” suggested that although the stock was trading at $18.10, CHK could potentially decline as low $0.67 as a normal reaction to the prior peak. On November 12, 2019, CHK had a closing price of $0.67.
Posted in BUD, Edson Gould, Speed Resistance Lines, SRL, three step rule
Below are the upside resistance targets for the Shanghai Composite Index for both the short and long-term moves.
Short-Term Targets
Based on the price action since January 2019, the Shanghai Composite Index has conformed to the upside resistance targets ranging from 3,012.38 to 3,378.93.
The short-term upside resistance target determines market sentiment for achieving the 3,559.47. So far, the market appears on course to achieve a re-test of the prior low at 2,464.36. The theory of the re-test is known as a double top, or in this case a double bottom, as described by Charles H. Dow in 1901.
"Another method is what is called the theory of double tops. Records of trading show that in many cases when a stock reaches top it will have a moderate decline and then go back again to near the highest figures. If after such a move, the price again recedes, it is liable to decline some distance (Dow, Charles H. Wall Street Journal. July 20, 1901.)."
The expectation should be that after obtaining a new low or a new peak, the price will trend in the opposite direction and then re-test the prior extreme level. In this case, it is the 2,464.36. This makes the 3,012.38 upside resistance level a reasonable level for expectation on the way to the down from the current level as diagramed in the chart above.
Long-Term Targets
The most important factor to watch for is the long-term trend in the Shanghai Composite. The chart below outlines the long-term prospects for the index. Continue reading
Below are the downside targets for Netflix (NFLX).
On May 22, 2019, Citi analyst Itay Michaeli suggested that Tesla Motors (TSLA) could decline as low at $36.
Meanwhile, on May 21, 2019, Morgan Stanley has put a decline to $10 on the stock price into play.
Our work of September 8, 2018 laid bare the technical attributes that were likely outcomes for Tesla Motors. The upside of using technical indications is that it leaves out the narrative and only includes precedent, both positive and negative.
In that 2018 posting, we offered two types of technical review, Speed Resistance Lines (SRL) as outlined by Edson Gould and “Three Peaks and a Domed Housed (3PDh) as presented by George Lindsay.
Already, Tesla has achieved the $200.17 price target that was set by the SRL analysis. We’re curious to see if the $76 target is achieve as outlined in the 3PDh analysis.
As a reiteration of the more conservative downside analysis from September 8, 2018:
“The extreme downside target of $128.33 would be the last stop before a retest of the $100 level. In all the prior history of stocks that we’ve tracked using the SRL, 80% eventually go back to the extreme downside target before the bottom drops out or the stock attains new highs. Based on this observation, we’re highly confident that given the nature of Tesla, declining to the $150 to $127 level is a lock.”
Posted in 3PDh, Edson Gould, George Lindsay, SRL, TSLA
On November 25, 2018, we offered up the following downside target for Texas Pacific Land (TPL):
“The minimum downside target is in a range of $397.12 to $401.00. Going back to the period of 2007 to 2009, if TPL were to decline in a similar magnitude, the downside target from the $871.99 peak would be $244.16.”
From the peak of $871.99, TPL has declined to the intraday low of $409.00, which is exactly at our ascending $397.12 downside target.
The rebound has been exceptional but requires one last step in the process of confirming that the trend is actually up. In order for the trend to be CONFIRMED as up, the price of TPL needs to retest the $409 level and hold. Without holding at the $409 level, TPL would be expected to test the ascending $290.66 target, at minimum.
A review of the November 25, 2018 posting shows the 2003 to 2016 period when a retest of a a prior low was achieved.
Posted in parabolic, SRL, Texas Pacific Land, TPL
In the period from October 3, 2018 to November 23, 2018, the price of Texas Pacific Land Trust (TPL) has declined from a recent high of $871.99 to the current level of $551.99, a decline of –36.69%. The question on everyone’s mind is, “how low will the price go?”
Using past as precedent, we looked at the Speed Resistance Lines [SRL] as outlined by Edson Gould in the period from 2003 to 2016. First, we remind our readers that under the extraordinary period of panic, from June 29, 2007 to March 9, 2009, TPL saw a decline of -72%.
Using the 2009 low, we see the $25.65 level as the pivot and the $230.82 level as the parabolic peak. Those points give us the following SRLs:
The entire decline was –53.87% and saw the price of TPL achieve the conservative downside target of $102.59 and with the passage of time the price almost accomplished the $89.77 mid-range target.
Fast forward to November 23, 2018 where we see the peak of TPL at $871.99. If we allow for only the conservative downside target to be achieved then TPL will go as low as $397.12. However, remember back in December 9, 2010 when we said, in an article titled “Real Estate: The Verdict is In,” “…we feel that real estate has a six to nine year stretch of rising prices or ‘trading’ in a range and decreased foreclosures.”
“…we feel that real estate has a six to nine year stretch of rising prices or ‘trading’ in a range and decreased foreclosures.”
Since our prescient article in 2010, in the face of shadow inventory claims that were supposed to keep prices down, we have seen a clear rising trend in the price of real estate and a significant decrease in foreclosures. Now, with the passage of 8 years, we believe that TPL will push the limits of downside action and achieve the extreme downside target as seen in the chart below. Continue reading
Posted in Edson Gould, parabolic, real estate, SRL, Texas Pacific Land, TPL
From the stunning peak of $8,700 in April 2018, Swiss National Bank has declined –36.78% as of November 13, 2018. What might be different about this time, versus when SNBN was at $4,449 or $5,940 is that when the price declined it never achieved the conservative downside target of the Speed Resistance Lines [SRL].
| peak | extreme | mid-range | conservative |
| $8,700.00 | $2,900.00 | $3,657.00 | $4,414.00 |
| $4,449.00 | $1,483.00 | $2,240.00 | $2,997.00 |
| $5,940.00 | $1,980.00 | $2,737.00 | $3,494.00 |
The latest decline has hit the conservative downside target at $4,414 and is in the process of retesting that level, as seen below.
Watch the $5,500 level closely as a continued decline could have broad reaching impact on some popular tech stocks.
Posted in Edson Gould, SNBN, Speed Resistance Lines, SRL
On October 25, 2018, in after-hours trading, Amazon.com (AMZN) was trading down to the level of $1,664.00.
We’ve tried the Speed Resistance Lines on this stock in the past and it is one of the few that has not achieved the conservative downside target. In spite of previous failures, here we go with the minimum downside target for AMZN, let’s watch as it defies (again), our minimum target of $969.28.
Posted in AMZN, Edson Gould, Speed Resistance Lines, SRL, The Study of Failure
Below are the downside targets for Align Technologies (ALGN) based on the high of $392.98.
The price movement of ALGN from the 2008 low to the current level is staggering. This partially explains why the reaction is, and should be, devastating for those who bought the stock within the last several months. Our experience has been that the $156.64 will be achieved, at minimum.
Posted in ALGN, Edson Gould, Speed Resistance Lines, SRL
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