Greetings THQI shareholders,
I probably shouldn't post this in my own interests, but no one has discussed THQ's chart recently so I feel it may be pertinent. I posted this message earlier today in the Fool message boards. The chart is indicating further weakness.
>> Recently I've conversed with Vic about THQ's action. I thought those interested in the technical front might find what's below interesting.
Last week THQI was in a narrow trading range between $19 and $22. Of particular importance was $22 where the 200 day moving average is. In the last 5 years, THQI has rarely traded below this average (5 times) and when it did, it only traded below it briefly.
Vic kept asking me what I felt about the action. My response was the following: THQ must close 2 consecutive days above $22 to repair the action. The first close came Monday but unfortunately THQ couldn't make it 2 in a row.
Now we are in a precarious situation. Why? THQ's major bull market began in July of 1995. From roughly 70 cents, THQ began its amazing rise which has brought us here. During this rise, THQI has retained a constant rate of rise, or in technical terms, a trendline. Beginning from the lows of 1995, we can draw a trendline that measures THQ's ascent. Never has THQI closed below this line on a weekly basis.
And as some of you may have guessed by now, THQI is now below this critical support line. The spurt you saw yesterday was an attempt to break back above the broken trendline. However, as is usual in technical analysis, broken support becomes resistance. So the trendline provided resistance for THQI which is a negative sign.
Everyone here feels that the current sell off is just like all the other declines in THQI's stock. Most here are accustomed to the wild swings. I certainly tried to profit from them in the short term. However, this move isn't just any old regular decline. It has now broken below its long term rate of rise that was initiated in 1995. In other words, what we are witnessing is a long term trend ending. This does not imply THQI will continue falling.
Sometimes strong stocks manage to climb their way back to their trendlines and regain posture. But strong companies (the leaders like MSFT, CSCO, GE, etc.) don't break long term trendliness.
Thus, the long term implications are negative. THQ's attitude is changing. Investors no longer believe it is deserving of the constant rise we've seen in the last 5 years. As such, I have sold much of my long term portfolio (I have no short term holdings). The sentiment is changing on Wall Street and I see no reason to risk my capital in hopes of THQ turning around.
I've posted a chart of THQI to give you a better feel of what I'm talking about. I'm sure many of you are now heated and raged but the chart doesn't lie. Look closely and you'll see why this current move is not a regular sell off:
stocktrendz.com
I just read this comment today which I believe is dangerous:
>>read the posts of Mciainjk, bonzo3, wildman Ltltt, and others who educate about the fundamentals of this stock. the post of McIainjk 3 back of yours was excellent. you got in at a good price and will be rewarded in the next year with a 50-100%+ return if you just sit on your shares. Buy more if you have $, this price is a steal!!!!!<<
Perhaps what is most troubling is the statement, "you will be rewarded 50-100% return if you just sit on your shares."
Look, no stock has a guaranteed return of 50-100%. In any of the past 5 years, the comment probably would not have bothered me that much since THQI was still on track in its long term chart. However, since that has changed, this statement is very subject.
Conservatively Yours,
Raymond J. Norris |
