Category Archives: downside

Bitcoin Downside Target

“The four most expensive words in the English language are ‘this time is different.” –John Templeton

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Walgreens Altimeter

Below is the Altimeter for Walgreens Boots Alliance (WBA) with fair value (FV) overvalued and undervalued targets.

Synopsys Downside Targets

Since the beginning of the bull market in 2009, Synopsys Inc. (SNPS) is a stock that has perform in line with the Nasdaq Composite Index until early 2016.  Since February 2016, SNPS has accelerated well outside of the historical trend for the stock.  While there are many fundamental reasons for excessive gains in the last two years, the gains are still excessive and therefore should, at minimum, revert to the mean. 

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The challenge with reversion to the mean is that the stock price will likely overshoot on the downside.  With this in mind we have provided the Speed Resistance Lines indicating the conservative, mid range, and extreme price targets below.

Adobe Systems: Downside Targets

In determining downside targets for Adobe Systems Inc. (ADBE), we have applied Speed Resistance Lines [SRL] to the stock price over multiple periods of increase and subsequent decline. Starting in the 1986 to 1987 period, we see Adobe Systems Inc. increase from $0.21 to as high as $1.69.  In the decline that followed, the SRL indicated that the downside targets from the peak price of $1.69 were as follows:

  • $0.93
  • $0.75
  • $0.56

As seen in the chart below, ADBE declined as low as $0.46 from the $1.69 high.

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Much of the decline could have been attributed to a new company and speculative fervor for the stock taking it up +700%.  However, the inevitable decline was due and took investors down –72% before a recovery was seen in the stock price.  The stock achieved the conservative ($0.93), mid range ($0.75), and extreme ($0.56) downside targets.

In the period from 1987 to 1997, we see ADBE stock price increase from the $0.46 low to a high of $9.00, a whopping increase of +1,856%.  In the subsequent decline, ADBE fell “only” –58% from 1995 to 1996.  Adobe achieved only the conservative downside target ($3.97).

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In the period from 1998 to 2002, Adobe rose as much as +1,264%.  In the decline that followed, ADBE notched a –79% drop. In this instance, ADBE achieved all of the downside targets of $18.90 (conservative), $16.39 (mid range), and $13.88 (extreme).

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The next period that we track is from 2002 to 2008.  In that period, ADBE rose as much as +474%.  The decline that followed saw Adobe slide –66%.  Again, all downside targets achieved at $33.20 (conservative), $24.60 (mid range), and $16.00 (extreme).

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Worth noting is the fact that in all cases, Adobe Systems (ADBE) declined at least to the conservative downside target. Additionally, in 3 of the four cited examples, ADBE managed to fall to the extreme downside target as established by the Speed Resistance Lines.

Is the past a fair indication of what to expect in the future?  What do we believe the future to hold?

Our take on the future prospects for ADBE stock price are that we can reasonably expect the price to decline to the conservative downside target in accordance with past declines.  However, expecting that ADBE will achieve the extreme downside target is overly ambitious at present.   After all, ADBE is a mature, well-established company that dominates several categories in their respective product lines (by a wide margin as compared to the next closest competitor).

With this in mind, after an increase in price of +881%, from the 2009 low, we have outlined the Speed Resistance Lines from 2009 to 2017.

Review: O’Reilly Automotive

On July 5, 2017, O’Reilly Automotive (ORLY) suffered a substantial decline in share price when the company reported that same store sales decline –1.7% as contrasted with consensus expectation of +3.90%.  Below we outline the downside targets and a Coppock Curve analysis.