On January 8, 2016, we posted the following chart:
That red line that says 150 was our projected downside target based on the historical average from as far back as 2004. The update to this chart is below (Altimeter levels adjusted for dividends):
Apple is on the cusp of hitting that downside target. What happens if the stock breaks through on the downside, then you’d want to consider the investment merit of the stock based on conservative fundamental data. Keep in mind that the current P/E ratio of 10 should jump before the stock marches higher.
Do you remember that article we posted on September 23, 2012, about how adding Apple (AAPL) to the Dow Industrials would be “not so great”? Yeah, well, since being included into the index on March 19, 2015, Apple has declined –28% and the company that it replaced, AT&T (T), has increased +19%. True to form, the inclusion of Apple into the Dow Jones Industrial Average coincides with decline in the stock price. The adjustment period should be coming to an end. Let’s see how this plays out.
On April 30, 2015, we presented downside targets for LinkedIn Corp. (LNKD) when the stock was trading at $199. In our concluding commentary we said the following:
“Those interested in LNKD should consider the stock in stages at or below the ascending $139 level with an acceptance of a decline to the ascending $92.06 level.”
Between the closing price of $192 on February 4, 2016 and the opening of February 5, 2016, LinkedIn Corp. had declined nearly –30% in after-hours trading. The opening price on February 5th was at $125. Below is an updated price chart applying Edson Gould’s Speed Resistance Lines.
As indicated nearly one year ago, at nearly double the price, the extreme downside target of $92.06 was a distinct possibility. Additionally, anyone willing to take the risk at $139 or below has had favorable prices from which to choose. What should be noticed is the fact that LNKD managed to hit the extreme downside target and then bounce above it, for the time being.
There is incredible pressure for this company to be turned around or absorbed. It is with luck that the stock has managed to bounce at the level we outlined. However, further marginal failures by the company could result in a retest of the $59.07 price.
According to Yahoo!Finance, Ecolab Inc. (ECL), “…provides water, hygiene, and energy technologies and services for customers worldwide. The company operates in three segments: Global Industrial, Global Institutional, and Global Energy. The Global Industrial segment provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries.”
Since the bottom that occurred in the stock market in March 2009, Ecolab Inc. has outpaced the recovery in the Dow Jones Industrial Average by +94% and the S&P 500 by +66%. At some point the pendulum needs to swing in the opposite direction. It is our goal to point out the potential scenarios that are most plausible for the reaction that is to come for ECL. First, we’ll cover some important fundamentals and what they indicate and then we’ll cover the topic of technical aspects of downside risk.
On February 5, 2016, we executed the following transaction(s):
On February 25, 2015, we posted the following chart for Boston Brewery Company (SAM):
Our summarizing commentary at the time was as follows:
“Our expectations for SAM are not very high as the last time that the stock was able to achieve the conservative downside target of $70.13 was in 2011. Since that time, SAM has faltered but not fallen. In spite of this fact, we’ve outlined the conservative downside target of $180.12 and the extreme downside target of $107.99. Investors should note that a decline to the ascending $180.12 level is an ideal buying target with a follow-up purchase below $141.25.”
Fast forward nearly one year later and we’re looking at a pending recession and a declining stock market. Everything is negative and going to get worse, according to some experts. With this in mind, As SAM falls below $180, it is time to consider the investment fundamentals of the company. Below is the updated SRL.