This posting will cover the downside targets for the Dow Jones Industrial Average using Dow Theory and Edson Gould’s Speed Resistance Lines [SRL].
Dow’s Theory: 2020-2021
Applying Dow Theory from the March 23, 2020 to September 2, 2021 period, the downside targets for the Dow Jones Industrial Average are: Continue reading
Below are the downside targets based on the work of Edson Gould.
Using the Speed Resistance Lines of Edson Gould is ideal since it is a relative scale for every stock no matter the price AND TIME. Additionally, parabolic increases have been consistent in achieving the conservative target in the past (except in the case of Telsa).
See Also:
Posted in downside, Edson Gould, SRL, TCEHY
Below are the downside targets based on the work of Edson Gould.
Using the Speed Resistance Lines of Edson Gould is ideal since it is a relative scale for every stock no matter the price AND TIME. Additionally, parabolic increases have been consistent in achieving the conservative target in the past (except in the case of Telsa).
Posted in BABA, downside, Edson Gould, SRL
Review
On February 5, 2018, we outlined the similarity in the level of increases between Bitcoin and Ethereum. At that time, we said the following:
“The periods in question happens to have the same percentage change, approximately +13,400%.”
We then surmised that if Ethereum could increase the same as Bitcoin then it wouldn’t be far fetched to consider the prospect of Ethereum declining to the same level of -93%, after such an increase. We said the following:
“As with the same percentage increase, it is reasonable to expect the same percentage decreased that followed. For the price of Bitcoin, it plunged –93.07% from June 8, 2011 to November 18, 2011.”
By January 10, 2019, we published an article titled “Ethereum: Stunning -93% Decline”. In that piece, we said:
“The difference between the high of $1,385.02 and $84.06 is equal to –93.93%. This decline was similar to the decline experienced by Bitcoin in 2011.”
DogeCoin Downside Targets
Below are the downside targets based on the work of Edson Gould.
The targets, based on the $0.41 peak, are:
The -93% downside target for DogeCoin from the $0.41 level is $0.03. We have intentionally excluded the potential upside target of $1.41. Our emphasis is exclusively the downside risk.
Posted in DogeCoin, downside, Edson Gould, Speed Resistance Lines, SRL
Below are the downside targets for the Nasdaq Composite. Continue reading
Based on the work of Edson Gould, we have determined the downside targets for GameStop Corp. (GME) covering data from the last two years. To arrive at conclusions that are reasonable, we first must determine precedent for the potential declines.
2002-2012
In the period from 2002-2007, GameStop Corp. increased to a high of $63.30 which established the following downside targets:
The actual low was $15.73 in 2012.
2012-2020
In the period from 2012-2020, GameStop Corp. increased to a high of $57.43 which established the following downside targets:
The actual low was $2.80 in 2020.
2020-2021
In the period from 2020-2021, GameStop Corp. increased to a high of $39.91 which established the following downside targets:
If GameStop were to replicate the rise of 2002-2007, the price could easily achieve a level of $47.40 before a significant decline ensues. However, achieving such a high price would still relegate the stock to the conservative downside target of $21.26.
The only action we take on downside targets is re-examination of the company fundamentals with an eye for acquiring a long position in the company in question. We do not attempt to short the stock in any form.
Posted in downside, Edson Gould, Speed Resistance Lines, SRL
Below are the downside targets for Tesla Inc. (TSLA) as of July 7, 2020.
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.
see also: TSLA downside targets achieved
Posted in downside, parabolic, Speed Resistance Lines, SRL, TSLA
What if Texas Pacific Land Trust (TPL) were to retain a dividend policy that was in place from 1982 to 2016?
This means that we took the dividend in 1982 and 2016, determined the compounded annual growth rate and applied it to Edson Gould’s Altimeter until 2020. The outcome provides an alternative view to our prior work on the downside risk to TPL and supports the claim by a commenter on SeekingAlpha.com that TPL could decline to approximately $25.
1982 to 2013
2009 to 2020
How We Did it
see also: All Prior reviews on TPL
Posted in downside, risk, Texas Pacific Land, TPL
Markets are built on precedent. For this reason, we will display the downside targets in two prior periods to establish the history for Simon Property Group before getting to the most recent decline. We also provide the upside resistance targets for those hoping to “play” the move to the upside.
To get yourself familiar with the work of Edson Gould’s Speed Resistance Lines, we recommend that you review the our article titled “The Power and Lesson of Speed Resistance Lines” dated February 4, 2018. Since that article, approximately 90% of the Speed Resistance Lines that we have run have come to fruition.
Simon Property Group Downside Targets
1993-2000
The mid-range target is a point to watch as it generally defines the balance of the direction of the stock price. Notice how SPG managed to rise and then decline below the prior low.
1999-2009
As should be expected, the decline in the run from the 2007 peak was almost down to the prior starting point as the decline was generally a result of the malinvestment in the real estate sector. As noted in the chart, SPG managed to not replicated the prior cycle of decline from 1998 to 1999. However, it did get pretty close.
2008-2020
The decline from the 2016 peak should not be unfamiliar since it is almost a replication of the decline from 2007 to 2009. If the current decline were to replicated the 2007-2009 decline, it would bring the price of SPG to $34.16. This number is not too far from the $36.04 level indicated by the price-to-dividend ratio as outlined in the 10-Year Target that was previously posted.
Upside Resistance Targets
2016-2020
Assuming that the $34.16 price is the downside target and investors are willing to accept such a risk, the upside targets are very compelling. The first upside target is $135.81, or nearly 100% above the current price of $70. However, anyone willing to participate in the potential decline to $34.16 need to accept that rising to $197.31 is still within the declining trend which could conceivably result in a decline back to the $44.01 price.
Our primary concern is with downside risk and therefore if a real estate investment trust must be bought at this time then we’d prefer a position in the Vanguard Real Estate Index Fund (VNQ) over individual names where the volatility is far above our tolerance levels.
see also: U.S. Realty from 1918 to 1945
Posted in downside, REIT, Speed Resistance Lines, SPG, upside target
Below is a chart of Simon Property Group (SPG) from 1994 to 2019 reflecting the year-over-year (YoY) percentage change. This assessment reviews the probability of performance in the coming year.
Below are the Speed Resistance Lines for Microsoft (MSFT) from 1990 to 2002.
From 1993 to 2002, Microsoft experienced a similar parabolic peak to the 2009 to 2020 period. In that time, MSFT hit all of the downside targets that are generated by our Speed Resistance Lines.
Below we outline the Speed Resistance Lines for Microsoft from 2009 to 2020. Continue reading
In our posting of March 22, 2020, we said the following:
“Since the low in the stock market on March 9, 2009, Boeing (BA), (as of March 20, 2020) has gained approximately +206%. In the same period of time (March 9, 2009-March 20, 2020), the Dow Jones Industrial Average has increased +192%.”
If we were to match the performance of Boeing to that of the Dow Jones Industrial Average from the 2009 low to the April 3, 2020 close, Boeing would be trading at approximately $65.04. However, we already know that Boeing has been booking future sales to current earnings. This basically means that there were no earnings in the prior years.
The details of Boeing’s accounting is outlined in our March 23, 2020 posting titled “Boeing’s Accounting: Legal but Questionable.”
Numbers to Watch
As we continue to say, price reflects fundamental and fundamentals reflect price. In the chart below, which includes the last remaining downside targets, we have highlighted the fact that in the prior recessionary period from 1999 to 2002, Boeing reached a low of $25.06.
In the recovering from the low in 2002/2003, Boeing achieved a high of $107.23 and then fell to a low of $29.51. It is not necessary for Boeing to actually replicate the move of going back to the prior bear market low of 2002. However, we should not be surprised if Boeing were to go to the prior low of $29.51.
For the time being, we will attempt an unusual approach to using the Speed Resistance Lines. Typically, our downside targets are based on the most recent all-time high. In this case, that would mean basing the current downside targets on the $440.62 price. However, the current decline has been so disastrous that we’re going to utilized the 2015 peak price of $158.31 as the basis of our downside targets.
Below is the updated downside targets for Boeing (BA) based on the peak price that was set on February 20, 2015.
The downside targets based on the 2015 peak at $158.31 are:
Remember, the decline in Boeing started in early 2019. Additionally, Boeing began trading in a range starting in early 2018. For this reason, the idea of connecting the current decline with the coronavirus is generally a mistake.
That Boeing has managed to achieve the downside targets of a prior peak ($110.31) is astounding and speaks to the extreme low that it needs to achieve relative to the Dow Jones Industrial Average.
Summary
The current earnings were an illusion and should easily bring Boeing to $83.54, $65.04, $52.77, and possibly to $29.51.
On November 20, 2015, we posted the Speed Resistance Lines for Mercury General (MCY). The downside targets were:
The chart below highlights the date the SRL was published and the price action that has transpired since November 20, 2015.
Our lurking worry? That the $20.10 target will be achieved. This leads to a downside range of $18-$20 from the current price of $38.88.
Posted in downside, Edson Gould, MCY, Speed Resistance Lines, SRL
On February 3, 2018, we said the following:
“In the past, we would normally apply the more passive Dow Theory downside targets instead of Edson Gould’s Speed Resistance Line. However, with the late stage parabolic move in the Dow Jones Industrial Average, the more aggressive downside targets are necessary in this instance.”
Our decision to utilize the “more aggressive downside targets” has proven to be well founded. However, since the February 3, 2018, a new peak has been achieved which provides different downside targets. This leads to an update of the downside and upside targets.
Below are the updates with extensive review of what to watch for (skip to the bottom for the Summary). Continue reading
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