Motorola- MOT- I want to first say that this is a stock that has sold off down to its 200 week moving average. When a stock sells down to its 200 week moving average then this indicates serious issues with the company. Right now we sit just above the 200 week moving average which is 17.48. If the stock is not able to pivot from this point upwards, then there will be worse news to come. The company might even go bankrupt. Notice for this equity I used the weekly chart (not the daily). The weekly chart gives you the best picture on what is going on. In June, there was a climb in price but the ADX shows us this was not a strong climb. Then there was the pivot point in October where the stock started selling off. Now I will get into Dow Theory. Dow Theory suggests there are three parts to any bull market. I submit there are also three parts to any bear market. From October to November, the smart money exited the stock. Then from October to December, the astute public decided it was also time to exit. Lastly is the third wave which is a wild selloff down to the 200 week moving average. I believe we are in the third wave as volume and strength indicators tell me that this selloff was very strong. In fact, looking back at the last few years there has been no stronger trend then the past few months. This downtrend was legitimate. There are two macro trend boxes as I have demonstrated on the chart. The price has now placed itself into the lower trend box. I have also drawn a few rough triangles at the end of the chart. The height of those triangles will be the price target of the next downturn. Current price-height of the triangle= roughly 14 which would put us at the bottom of the second macro channel. Conclusion- Two possible scenarios exist... 1. The price will pivot off of the 200 week moving average and the upside target price will be 22. The reason why I say 22 is because Bollinger Bands have dictated great pivot points for Motorola in the past. If the price does rise from here, then pay attention to the pivot point. In order for this chart to become healthy again, then it must pivot over 26 or then we start forming greater descending triangles which will point to disaster. 2. The price violates the 200 week moving average and then the target becomes 14 dollars. This target is derived from the height of the smaller descending triangles and the lower trend box. Bankruptcy- When a stock sells off below its 200 week moving average, then the street is saying that bankruptcy is an option. Buyout- Companies are not usually bought out until they sell way below their 200 week moving average. I say the company wont be considered a buyout target until it gets below the lower trend box. I feel if it gets below the lower trend box then a buyout would be likely. This is because when a company this large goes into bankruptcy it will still operate and it will dramatically slash prices on its products in order to move it. Competitors will not want to compete with Motorola while it sits in bankruptcy court. Motorola is also a company in which the government has a national security interest. Bankruptcy will be a touchy issue and Im certain the government would rather see Motorola being purchased then fly off into bankruptcy. My final thesis is that if you want to consider a long position at this point then watch and see if it pivots off of the 200 week moving average. However, if it violates that average then I would expect the price to drop to 12-14 dollars in which at that point the company will be purchased. The risk with Motorola is very high. This last selloff was very strong under heavy volume. The ADX, OBV and A/D lines all demonstrate a trend that was stonger then any other in the last few years. I wouldnt trade this stock because there are easier stocks to trade and with much better upside. I would actually only consider a short position when it violates the 200 day which I highly suspect it just might. Imagine a police officers or a firefighters job. If you were employed in that role, then would you want to be shot at everyday or running into burning buildings everyday? As a trader, you shouldnt expose yourself to this type of risk. You should be chasing the easy money and not stocks that selloff down to their 200 week averages on high volume...
Michael, check your 200 week MA, I also have been using that average but my 200 week simple MA is 17.72 and that is why I shorted the stock because of this so we do agree on the short side and I thank you for your opinion and BTW I am also short XMSR and for these stocks to exhibit weakness within the last week when the market was quite strong although on light volume is one contributing factor for my decision. JP
SIGA- SIGA is a bio-technology stock. These types of companies carry high risks and can easily be cut in half with one bad press release. They also can double in price with one good press release. Technical analysis on such stocks is therefore difficult and target prices are not so easily estimated. I looked back at the history of the stock and this isnt its first time up to these levels. In October 1997, it traded over 5 dollars and then in November 1998 1.50. In 2000 7.50 and then in 2002 85 cents. It appears SIGA pivots around the Bollinger Bands and the 50 day MA. Everytime the price went over the top Bollinger then it became a clear short. You can see where the stock pivoted around the middle Bollinger line and the 50 day MA. The target price is anyone's guess. One press release can send it in any direction. If I were going to trade a stock like this (which I wouldnt because I like the easy cash), then I would wait for it to pivot off of either the middle Bollinger line or the 50 day MA. Care has to be taken to make sure that the price is respecting those lines.
Overbought/Oversold indicator with some price filter works great. My target is $7.25, STOP below $4.80. If it starts consolidating here, I'll get out.
thanks for the great thread so far, hope it continues. this stuff is really helpful for someone trying to learn to analyze charts.
AMG Here is a good one. Stockcharts doesnt allow me to chart so far back, so I had to use the Google charts. There is a certain relationship that has been going on since 1998. Those are cup/handle formations in the picture. In this case you take (118-82.9)/2= 17.55. 118-17.55= 100.45. It came close to reaching this target price from the peak, it went to 104. 104+35.1=139.1 139 should be the 12 month price target. **12 month price target** This is a slow moving chart. The google chart is over the course of years.
GROW REVISED THESIS I had to revise my thesis on GROW. It appears Grow has formed a deep cup. (34.95-17.39)/2= 17.56 17.56/3= 5.85...Target price= 29.1 17.56/2= 8.78...Target price= 26.17 There is a gap underneath so it makes sense to me that the retracement should be to 26.17. 26.17+17.56= 43.73 29.1+17.56= 46.66 Previously there was a similiar formation that I circled on the chart. I see this going down in a similiar way. The end result in any event will be a price north of 40.
REED This is a classic structure that I thought I might post up here. You can see the big u in price. The classic formula that I have used here several times is the following and as you can see it worked perfectly. 7.25-5.75= 1.5 1.5/2=.75 7.25-.75= 6.5= price to enter target price=1.5+7.25= 8.75 Lets see if it gets to the target.
Update on RIMM Rimm just popped through an important barrier which is 145. Normally, I would probably go long at this point because my calculations put it at 170. However, there is an earnings event ahead...