Sosmartinov,
The chart formation that got me into PAIR a couple weeks ago has been reconfirmed today. I have no real affinity toward the particular "widget" that any company produces or how that company is structured. I'm about as pure a technical analyst as you'll find on SI. That said, the formation and today's verification project a return to the former alltime high in 4 to 6 months maximum. There will be several option based strategies to employ as well as just outright owning the stock for profit. I noticed there are many folks here that do not recognize what's happening with the chart on a long term basis so I'll probably show up here more often and point some things out if a TA perspective is not anathema to the thread's focus.
I'll try to explain the long term chart circumstance later but first,
over the intermediate term, a head and shoulders pattern was established beginning 10/8/98. Popular TA lore has it that a head and shoulders is a "bearish" pattern. This is not true. It is just a pattern. How the pattern is resolved is what is important. A head and shoulders pattern that breaks out to the upside is one of the most bullish chart circumstances. PAIR has just done that.
In my analyses I always separate the price chart from those of the technical indicators. In my last post I pointed out the PVI/NVI relationship. That continues.
Another technical indicator that is very helpful is the stochastics momentum index (SMI). Every stock develops what I call a bullish threshold for this indicator. Unless the SMI is above the threshold, the stock has little chance of making any significant move. PAIR's SMI is above the bullish threshold and has confirmed its continuation upward. There is a long term overbought threshold as well. PAIR has a very long way to go to reach that.
Another important technical consideration is based on the moving average (MA) as it relates to the moving linear regression line (MLR) . As simply as I can put it, the MLR bisects the price movement in such a way that 1/2 the time the price will be above the indicator and 1/2 the time it will be below the indicator. As the price trends in one direction or another, the MLR will trend with it (hence "moving") on a slightly lagging basis. I have found that an 89 day MA and an 89 day MLR combination is most useful in consideration of the particular long term price pattern that PAIR exhibits.
The salient point here is, if the MLR is above the MA, there will be a much greater propensity for the price to remain above the MA MORE than 1/2 the time thus having a greater tendency to pull the MA up. A rising MA is a key factor in maintaining a positive tone on the price. PAIR's 89 dMLR is above the 89 dMA and both are rising.
One last note for this post. I realize that there is a standard method of selection for choosing the box size for point and figure charting based on price. I have ,however, had much greater success with "customizing" the box size by using one that is 10% of the avg price seen in the most recent basing period. For PAIR that size is 1.25. A P&F buy signal will be seen on a close over 15 1/8. I was not at all surprised to see PAIR stopped in its tracks while upticking strongly at that price today. I expect that buy signal will come soon enough though. Projection methods from smaller box size buy signals show 15 1/8 should be taken out relatively soon.
I'll try not to do this too much but I'll be back from time to time to provide short term targets/resistance levels. Currently 15 1/8...16 3/8 and 22 3/4. Since I use a dynamic system for targets, most values are always moving up slowly. 15 1/8 is a static resistance.
Doug R |
