JDS Uniphase Poised for US $160
Medium
Term, $280 Within Seven Months
The S&P Data service does a very good job of hiding which stocks are going
in and out of the S&P 500 index, which is the index most followed around the
world by professional money managers. I say this because if you believe as I
do that the market reveals all that is known about a stock, both in the public
domain and not, then JDS Uniphase (NASDAQ: JDSU, TSE:JDU) should
not have been selling off earlier this week before its inclusion in the index was
announced late Wednesday. Based on the level of selling that was occurring,
JDU did not appear as a stock about to head into the index.
How does this event skew the technical picture and how does the future shape
up for JDU? We can look at this from a longer-term perspective and also bring
in the medium and short-term picture.
The long-term view is positive
JDS is on a very powerful upward move with tremendous momentum behind it.
The old saying is, the trend is your friend, and in the case of JDU, the current
trend suggests that the stock will continue higher for some time to come.
Based on the DAWT principles, upside price targets are a function of buying
and selling pressures. In the long term, JDU has no sell wave on which to base
future price appreciation other than this recent sell wave of March, 2000. I
would suggest, however, that this is really an intermediate wave. In fact, JDU
has yet to undergo any long-term sell wave.
When would a long term sell wave come in? In order for me to determine when
this might occur, we can use this intermediate-strength swing low to give us an
intermediate price target going forward. The chart above shows JDU has
completed one intermediate up wave and one intermediate down (counter)
wave. The wave ratio structure on this cycle is very bullish. Although the recent
selling was steep, which reduces the PX ratio, the %RT ratio (logarithmically
adjusted) is very bullish and so is the cycle balance ratio. The combination
gives us a composite ratio greater than 3:1, which is essentially the highest a
stock can register. This indicates that the buy/sell force on intermediate
strength or time horizon is 3 times as strong on the buy side as the sell side.
With a strong ratio like this, the projected ALR of this new wave would be very
similar to the previous wave and this gives me price target on this next up
wave of US$280 (C$414) over the next seven months.
Whether JDU hits that target will depend on how well the stock tracks the
projected target line shown in blue. Currently, the stock is slightly below this line
but this still equates to a seven-month target price of over US$260 dollars.
Medium-term picture suggests a move to US$160 by the end of
September
The medium-term picture is likely to see JDU trade up the US$160 (C$236)
level and this should occur by the end of September or earlier. The recent sell
wave did have some intensity, as measured by its steepness (negative ALR
value). But the bounce back has been even steeper. The overall wave-ratio
structure, however, has been very positive and $160 should be a likely
termination point.
Short term, I think there may be some consolidation from these levels as the
buying Thursday was mainly by index fund managers being forced in. Given the
steepness of the rally over the past few days, however, I do not think the stock
is likely to go much below US$120.
Dave Poxon, formerly a proprietary stock trader, is now president of an
institutional research firm that provides proprietary technical research
services to institutions with in excess of $100 million of assets under
administration.
David's proprietary indicators are components from an advanced proprietary
technical theory he has developed through years of analysis and trading
experience. The result is the Dynamic ALR Wave Theory™ or DAWT. This
theory uses proprietary analytic methods to overcome the weaknesses of
traditional technical analysis. The theory and its indicators have been
designed to help predict turning points in securities more accurately and
sooner than traditional technical tools. For a description, see Technical
Indicators.
Contributed by Stockhouse.com
my apologies if this was posted before, I didn't see it.
Yonsu |
