Carbo Ceramics Altimeter

Below is the Altimeter for Carbo Ceramics (CRR) which is ranked number 7 on our May 25, 2012 U.S. Dividend Watch List (found here).  Using Edson Gould’s Altimeter, we have arrived at the conclusion that Carbo Ceramics (CRR) should be bought (green line) any time the Altimeter declines to 260 and below and should be sold (red line) whenever the Altimeter rises to 400 and above.

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Below is a table which outlines the actual price and date when Carbo Ceramics’ Altimeter rises or falls to the indicated levels.

Date Altimeter level stock price buy/sell % change
6/13/1997 257.40 12.87 buy 59%
10/2/1997 410.80 20.54 sell -41%
8/27/1998 239.00 11.95 buy 67%
4/24/2000 399.60 19.98 sell -22%
8/20/2001 258.33 15.50 buy 56%
1/3/2002 403.00 24.20 sell 27%
10/3/2006 256.16 30.74 buy 82%
6/23/2008 401.50 56.21 sell -21%
10/6/2008 258.35 43.92 buy 65%
4/15/2010 403.55 72.64 sell ????????
???????? 260.00 62.40 buy  

Based on the current dividend for Carbo Ceramics, we have anticipated that the stock price will decline to $62.40 before the next buy indication is triggered.  However, as we’ll describe below, there are some careful considerations of what you give up when deciding to buy Carbo Ceramics based on Edson Gould’s Altimeter.

First, it is important to note that in all except one instance, January 3, 2002, Carbo Ceramics had reasonable gains when a buy indication was triggered and avoided losses when the sell indication was triggered.

As an example, if you bought in October 6, 2008 and sold on April 15, 2010 (at crosshair below), you only gained 65% and you would have missed the additional 143% rise in the stock’s price, as seen in the following chart:

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Likewise, the June 23, 2008 sell signal at $56.21 didn’t account for the –53% decline that occurred afterwards.  Instead,  Carbo Ceramics declined -21% from the $56.21 level by the time the next buy signal was indicated on October 6, 2008 (at crosshairs below).

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So what does all this mean, “buy at the 160 level” and “sell at the 400 level” in the Altimeter?  For the New Low Team, it means that if we can gain an average of +60% in 1-1/2 years with each buy and sell cycle then we will do quite well if we can avoid all of the huge losses, at the expense of missing the huge gains.

Who is Edson Gould?

“Edson Gould spent over 60 years working in and studying financial markets. Gould studied the arts at Princeton, engineering at Lehigh (from where he graduated in 1922), and finance at New York University. In 1922, after working for a short time at Western Electric, he joined Moody’s Investor Service as an analyst and later was editor of Moody’s Stock Survey, Bond Survey, and Advisory Reports. In 1948, he began at Arthur Wiesenberger & Company, where he developed and edited the well-known Wiesenberger Investment Report and became a senior partner. He also was Research Director at E. B. Smith (which later became Smith Barney), and worked for Nuveen.”

(source: Market Technicians Association. Gould, Edson Beers, Knowledge Base. Accessed April 26, 2012. link MTA reference.)

“Market technician Edson Gould always laughed at the idea of having a significant influence on the stock market, but his predictions were the most precise around. He pinpointed major bull markets and prophesied bottom-out markets as if he had his own peephole into the future. But in place of a crystal ball and wacky off-the-cuff schemes, his were smart, intensely researched and time-tested theories that made him a legend in the investment community.”

(source: Fisher, Kenneth L.. 100 Minds That Made the Market. Business Classics, Woodside, CA. 1993. page 320.)

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