Moving averages is the domain of conventional TA,
which I do not practice. There are several posters,
here (Technical Tom comes to mind) who are
knowledgable about this.
My own expectations were for
mid-to-high 30's right around earnings time. This was before
the acquistion announcement. Although 38 is a fair
price for this stock at earnings time, with the
acquisition, an argument could be made for 45 as a fair price
in October. Perhaps investors are jumping the gun?
At some point the momentum crowd is going to come
back. This stock has run up 70% in less than 2 months.
Remember that this stock got to 54, against a fair value
of maybe 30, how high could it rise against a fair
value of 45? So what we are seeing could be speculation
in the event of the return of the momentum
Either way I am mightily pleased with 38, now 5 of my 6
purchases I made are in the black.
If you can do this kind of
predicting, why not quit your day job? :)
If it turns
out that I can, I will :)
But seriously, I
only got the idea for this sort of analysis early last
month (see post 572). I used it on ANLT, of course, to
predict a bottom at 24, which was about 10% high. I used
it on CCF to predict a bottom at 14 (so far its been
as low as 12 1/2), once again, about 10% high
(unless CCF goes down further-ugh!). With CHSE it was
about 15, actually got to about 14 1/2--3% high.
Finally INTC is predicted to bottom just below 60. The
lowest it has gotten was 65, so I'm about 10% too low
there (INTC is at 77 now, so I don't know if it will
fall further, but it might).
So far everything
has been bottoms. The projection for AOL is my first
attempt at a high. Let's see what happens.
The 50 & 200 day MA act as resistence and when
pierced going up it is a good sign for accelerated upward
price movement. The most difficult part of investing is
when to sell. For a high momentum stock such as ANLT
one guideline is to take profits at 50% above the 50
day MA or 100% above the 200 day MA. Some may want to
sell a portion of their holdings prior to that level.
The real strong momentum stocks sometimes climb
higher that these levels, but not many. Good
What is the significance for
ANLT now that it is above the 50 and 200 day MAs?
Seems like the stock has moved so quickly that
somewhere along the line people should start taking
profits. But technically speaking, does it add strength to
the current price of 38.5 that the stock has just
come back to the "average"? Looking at the yahoo 1-yr
chart vs averages, it looks like the price has kept
about $10 above 200 day MA. Is this a reasonable
expectation for the future?
>How long do we hold?
am working on a very specific answer to questions
like these. Employing a statistical approach to
historical prices I attempt to ascertain what is a low price
for a stock (i.e. a bottom of a dwontrend) and what
is a high price (the top of an uptrend). I then
calculate a reasonable estimate for low price (based on
past experience) during a downtrend to project the
bottom, or an estimate for a reasonable high price during
an uptrend to project a top.
ANLT is just in
the beginning of an uptrend. I can't make projections
for ANLT's top except that it will very likely be
over 60. Suppose we pick a stock that has been in an
uptrend for a long time and may be (finally) nearing the
top. It should be possible to test this statistical
approach by predicting a top for that stock and then
seeing if it actually comes true.
I have picked
AOL, which has been in an uptrend since October 1996.
It is currently at 107. The statistical model
suggests a top around 110. So we will not have long to
wait to see if it works. I'm going to be on vacation
over the next few weeks, so I'll be checking in fairly
Especially in light of the recent performance
gratifying to see the gain. Patience is rewarded.
30K in my coffer, but more than enough of a return on
my initial investment. How long do we