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
On January 6, 2015, we said the following of the Oil and Gas Stock Index (XOI):
“The conservative downside target of 1,454.79 has been constructed while the mid-point of 1,015.10 is also indicated. However, we did not include the extreme downside target of 575.41. We did indicate in red the 812.08 level which was the extent of the decline in the period from the 2008 high to the 2009 low.”
On September 7, 2015, we said the following of the XOI:
“…lurking in the background is the extreme downside target of 575.41. Since our experience has been that the extreme downside target is commonly achieved, we hazard to guess what would happen globally to the oil market in order to decline to such a low point.”
Unfortunately, we made the following mistake on December 27, 2017 regarding the XOI:
“Assuming that the primary movement is still a bear market, then the expected upside target should have been from 1,210.15 (3/8) to 1,313.37 (½). With the XOI above the 1,313.37 level, Dow Theory suggests that a bull market is on the way as the balance of losses sustained by the buyers near the previous peak is giving rise to optimism that breakeven on their investment is possible.”
We incorrectly interpreted Dow Theory in the belief that a bull market was on the way. It could be argued that as the prior peak was not achieved then a bull market wasn’t signaled and therefore the analysis was somehow right. However, we’d like anyone who uses both Dow Theory and Speed Resistance Lines to know that it is the interpretation that is incorrect and generally not the tools.
XOI Index: 2008 to 2020
The descending 575.41 level on the XOI Index is the equivalent of 375 (it continues to decline over time). That will likely be the point when the XOI bounces. From the 375 level it is uncharted territory. However, that is the point when values will come into play and investment can be done with relative abandon. Keep in mind the effort for many countries to phase out oil consuming vehicles.
Posted in Dow Theory, SRL, XOI
On January 30, 2019, we said the following:
“The rebound has been exceptional but requires one last step in the process of confirming that the trend is actually up. In order for the trend to be CONFIRMED as up, the price of TPL needs to retest the $409 level and hold. Without holding at the $409 level, TPL would be expected to test the ascending $290.66 target, at minimum.”
Since January 30, 2019, Texas Pacific Land has had the following activity:
We’ve updated the Speed Resistance Lines because the peak in the price increased from our prior level at $871.99 to $901.04. Unsurprisingly, TPL has achieved our lowest downside target after bouncing at the $410 level.
Now our concern is how far below the $300 level that TPL might go. We seem to be in the early stages of the current market decline so we’ll have to update the downside risk as we go.
Posted in Edson Gould, SRL, TPL
Below are the downside targets for the SPDR Gold Shares (GLD).
The $124.16 level is not an “official” downside level as it is only an intermediate point on the way to the actual level of $106.27. As we’ve seen in the past, the extreme downside target is always the concern. For GLD the extreme downside target is $52.60.
Top three stocks, commodities, or indexes that achieved our downside targets by year:
2020
2019
2018
2017
2016
How do we use Speed Resistance Lines? Once a target is achieved we assess the possibility of investment. If the target is not achieved we move on to the next stock.
There are approximately 15% to 20% of the SRLs that we’ve run that haven’t come to fruition, yet. However, in this current market decline, many that weren’t fulfilled are now getting completed.
Posted in Edson Gould, GLD, Speed Resistance Lines, SRL
When Tesla (TSLA) was trading at $734.70, we said the following:
“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.”
At that time, February 5, 2020, we provided the following downside targets:
Seventeen days after our downside price targets, the price of TSLA increased as high as $917.42 on a closing basis. The increase in price marginally affected the downside targets for TSLA. So far, Tesla has achieved two of the three downside targets and looks to easily achieve the last target (extreme downside target).
Below are the updated downside targets for Tesla Inc. (TSLA).
Pendulums swing from one extreme to another. We’ll watch to see if the extreme to the upside is matched on the downside.
Posted in Speed Resistance Lines, SRL, TSLA
Below are the downside targets for Acceleron Pharma Inc. (XLRN).
Posted in Acceleron, Speed Resistance Lines, SRL, XLRN
Below are the downside targets for Virgin Galactic Holdings (SPCE).
Virgin Galactic Holdings (SPCE) is creating a scenario where the extreme downside target could easily be achieved while being considered a normal “bounce.” The price would have to rise to above $60 before the above downside targets are no longer valid.
These situations don’t end well but in case the price doubles from the recent peak we provide the following downside targets.
Posted in Edson Gould, SPCE, Speed Resistance Lines, SRL
Below are the downside targets for WorkDay Inc. (WDAY).
The downside targets are based on the peak price of $224.30. In our view, WorkDay failed to achieve the minimum downside target of the ascending level at $140.86. In many respects, this reflects the strength of buyers. However, this failure would not have allowed us to take advantage of the reversal that has occurred since the $152.29 low.
With this in mind, we have posted the upside resistance targets based on the October 23, 2019 low. These target are meant to confirm the strength of the rise and the potential for additional gains/losses going forward.
Posted in Speed Resistance Lines, SRL, WDAY
Below are the downside targets for Sea Limited (SE).
If you’re impressed with the increase of Tesla (downside target here) in the last few months then a look at Sea Limited should put that into perspective.
Since the name change of the company from Garena Interactive Holding in 2017 (cough), Sea Limited has outpaced Tesla on the upside.
Posted in SE, Speed Resistance Lines, SRL
Below are the downside targets for DexCom Inc. (DXCM).
DexCom Inc. has had a healthy increase of the last 2 years and requires a reset. When will that reset occur? We don’t know, however, we suspect that the conservative downside target is the best level to watch for.
Posted in DXCM, parabolic, Speed Resistance Lines, SRL
Below are the downside targets for Paycom Software Inc. (PAYC).
If extended to the IPO date in 2014, we would have generated much lower downside targets. In an effort to be reasonable about expectations, the targets have been set from 2018. The forecast is that PAYC will decline to the ascending level of $224.12.
Posted in parabolic, PAYC, Speed Resistance Lines, SRL
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
Below are the downside targets for Luckin Coffee (LK).
The strong rise in the price from November 2019 to January 2020 is being matched by the current decline. We expect that the decline to the $25.78 level should be accomplished as a natural reaction to the prior dramatic increase.
Posted in LK, Luckin, Speed Resistance Lines, SRL
In our early October 2019 posting, we outlined the parameters for what we expected for the Hang Seng index. In spite of the recent increases, everything is lining up, so far. Continue reading