MG, Speaking of Catastrophic Gradualism
You know what really amazes me, as the gold bugs are out in force this weekend, is that no one is discussing the absolute collapse of the energy stocks this past week.
As I have been analyzing the charts of the Big Boyz for over a week, the striking revelation is the number of stocks that began trading above their monthly trading channels. Moreover, some of these stocks begin trading at a 25-30% discount, or more, from their highs, and those of us that get caught up in the ticks and tocks reflect that a greater bargain could not exist. Yet, in many cases, the LTL of the monthly channel could be 25% below us.
T is an excellent example. As I connect 10/89, 6/93, and 1/98, it reflects an UTL of about $49.50. While $42 seems like a fantastic B&H entry point, I reflect that the LTL is at $32.50. Even a conservative reading of the broken pennant points to about $38. In any case, the stock appears to be going into hibernation, and it could be years before we witness its lofty highs in the $60's again.
The hypothesis is that the hibernation is required until the LTL catches up with the previous dramatic price movement. From a trading perspective, it seems that we should focus on those stocks that have remained in their trading channels. That said, and kind of heavy, this research tends to suggest when to buy and not when to sell.
Just A View from the Swamp
TB |
