Category Archives: speed resistance line

Apple meets NLO Upside Target

On August 19, 2014, Apple (AAPL) stock price rose as high as $100.66.  When Apple was trading at $61.61 on March 9, 2013, we said the following with the accompanying chart:

“Apple Inc. (AAPL) is at the top of our watch list as it is within 5% of the one year low.  In our April 14, 2012 test of the quality of Edson Gould’s Speed Resistance lines, Apple fell from $636 [adjusted price of $90.85] to our projected level of $424.15 [adjusted price of $60.59] (found here).  Now that the stock has achieved our downside target, we expected that a reaction to the upside is likely.”

image

On July 17, 2013, when Apple was trading at $61.47, we re-affirmed our view of the upside potential for Apple with the following commentary:

“Currently, Apple is demonstrating a basing pattern that if successful, could result in a breakout to the upside.  At the current levels, we wouldn’t be opposed to buying some shares of Apple with the expectation that the stock could decline an additional –25% to –35%.”

The work of Edson Gould has proven to be astounding when considered in its context.  On April 14, 2012, we posted an article titled “Considering the Downside Prospects for Apple”.  At that time, we were revising the previous estimates of downside risk done on February 5, 2012 (third party source available here).

What was mentioned on February 5, 2012 is critical to understanding how Edson Gould’s downside projections work.  At the time, we said:

“The very first thing that we look for, to determine speed resistance lines, is the most recent peak in the price. Because AAPL is continually making new highs, we only need to use the latest price of $455.68 [post split price of $65.09] as our starting point….As the price of Apple increases, so too does the SRL lines based on the work of Edson Gould.”

This means that as long as the price of the stock increases to a new high the speed resistance lines are expected to increase as well.  Only when the stock starts on a declining trend can we expect that the stock price might go to the conservative and extreme downside targets.

image

On April 14, 2012, when Apple was trading at $90.89 (pre-split price of $636.23), we said the following:

“…we believe that, based on the current speed resistance lines, no one would expect Apple to decline to our conservative downside target of $424 (post split price of $60.57)…”

The strength of Gould’s downside risk estimates is that we didn’t even have the peak price of $100.71 set on September 18, 2012 but we were still able to see the conservative downside target of $60.57 achieved.  Had we used the peak price, we would have achieved the $67.14 conservative downside target much earlier than the $60.57 level.

Nu Skin Meets Our Downside Target

On January 16, 2014 at 8:40am EST, we said the following of Nu Skin Enterprises (NUS):

“If the stock closes below $79.28 then the price should vacillate at or below the rising conservative SRL in the medium-term.  If the stock manages to close above the $79.28 level then the upside target is $118.92.  Additionally, the extreme downside target of $46.83 is just on the horizon.  In theory, this stock should achieve the extreme downside level before hardened speculators will jump in.”

On August 6, 2014, NUS declined as low as $43.50 and closed at $46.52.  An updated Speed Resistance Line is included below:

image

NUS has met our January 2014 call for the extreme downside target of $46.83.  It is at this point that NUS becomes interesting to hardened speculators.  Based on Gould’s SRL, NUS has an upside targets of $82.73 and $118.92. 

Gold: Reassessing the Risks

On March 3, 2013, we said the following about the downside prospects for gold (article and chart found here):

“The prevailing controversy, among gold bugs, is whether or not gold stocks have bottomed.  As our Gold Stock Indicator has indicated, so far, gold stocks have a long way to go before reaching lows similar to what occurred in 2008, on a relative basis.  This debate about gold stocks only arise out of the fact that they have fallen so much while the price of gold has been ‘stable.’

“However, when the price of gold is viewed from the perspective of Edson Gould’s Speed Resistance Lines (SRL), we see that there is a lot room for gold to move to the downside.

“We can’t be certain that the price of gold has any further to fall. However, our experience with the work of Edson Gould cannot be ignored.  We’ll have to assume that if gold breaks below $1,531 then it would be wise to build $1,179.25 into our expectations.”

The above commentary was based on the March 1, 2013 price of gold.  Since that time, gold has declined from  $1,582.25 to slightly above Edson Gould’s ascending conservative downside target at $1,195.25 on December 20, 2013.  This was within 1.35% of the estimated target.  Additionally, gold stocks as represented by the XAU Index declined –37.72%.  Below is our updated review on the price of gold.

Continue reading

Bitcoin: Downside Targets Met

On December 18, 2013 (found here), we gave an assessment of the downside risk for Bitcoin in the following commentary:

“With the conservative downside target being achieved, the extreme downside target of $412.65 and the worst case level of $152.83 are all that remains.”

On February 8, 2014 (found here), we reiterated downside targets for Bitcoin:

“In many previous examples of Edson Gould’s Speed Resistance Lines, once at the extreme downside target of $412.65, the price usually reverses to the upside.  However, failure to do so (reverse at or above the extreme downside target) would mean that Bitcoin could reach $385 before reversing to the upside.  If the $385 level fails on the downside then $200 is assured.”

As we speak, Bitcoin sits at the $246 level. 

image

The data that we’re using to plot the price is from Mt. Gox (found here).  However, Mt. Gox has put withdrawals on hold until security issues are resolve.  Because Mt. Gox put withdrawals on hold they likely avoided illegal activities like the most recent hack afflicting Silk Road 2 as reported by Techcrunch.com

While there are other Bitcoin exchanges offering higher bid and ask prices, they cannot avoid the reality of the problems that currently plague the Bitcoin market.  Leaving aside the possible arbitrage opportunity, Mt. Gox offers up the most extreme and negative price data and appears to be protecting their constituents.  These are necessary attributes that make the data being offered by Mt. Gox most realistic and applicable to our attempt at analysis.

In the final review, either the other Bitcoin exchanges will drop to the quoted Mt. Gox level or Mt. Gox quotes will rise appreciably.  Regardless, at the current level of $300-$200, Bitcoin is fairly valued.

Anyone venturing into the world of Bitcoin for the purposes of speculation should assume that all funds put forth will be lost.

Bitcoin: Retests Downside Targets

On December 18, 2013, we said the following of Bitcoin (found here):

“…in the last 24 hours, Bitcoin has declined as low as $455.  This suggests there there could be a significant appreciation from the current level as the conservative downside target has been achieved.”

The rise in Bitcoin from the low of $455 by +123% in less that one month seemed substantial enough.  However, the recent declines in Bitcoin require us to reassess the potential risks and rewards going forward.

image 

In the last few days, Bitcoin has experienced extreme volatility in its price when it fell -32.7% from the intermediate peak experienced on January 5, 2014 at $1,015. We’re now faced with the potential for Bitcoin to achieve the ascending downside target of $412.65 (now at approximately $570) followed by the worst case level of $200 (ascending red line). 

In many previous examples of Edson Gould’s Speed Resistance Lines, once at the extreme downside target of $412.65, the price usually reverses to the upside.  However, failure to do so (reverse at or above the extreme downside target) would mean that Bitcoin could reach $385 before reversing to the upside.  If the $385 level fails on the downside then $200 is assured.

Finally, the extreme upside target is $1,606.95 and the conservative upside target is $1,071.30.  These upside targets are only valid if the price of Bitcoin is on the rise above the $412.65 ascending line. 

***Anyone venturing into the world of Bitcoin for the purposes of speculation should assume that all funds put forth will be lost.