<<Could not read read the tea leaves and did not call the turn in SEPR, though they had ample opportunity. Some thought it would hit the teens.>>
Irwin:
Lets take a look at SEPR’s weekly chart and see what kind of useful information we could find on it.
(By the way SEPR May’s bottom at 23.45 was below its May 1999 L of 27.5 but right at the “support” level from 1998 {the August 1998 L and the April & May 98 double-top} You can check that on its monthly chart. To go down to the teens it had to go through that support into the next one from the September 97 H at 18.5)
siliconinvestor.com
You should be able to notice that the short term average crossed above the longer term (green line above the red) in November 99 as the price got over the 39 level. That in my book is a “buy signal”. You should also notice that the price (blue bars) remained above the green average line until March 2000 as the stock remained on a very strong up-trend.
Now print that chart and draw a line connecting the top of the blue price bars of the first early minor up-trend that you see (the one where the price went over the red average line, but the green did not cross over) and project that line upward until it intersects the price bars. Do the same with the next up-trend (the one that gave the “buy signal”)
You should notice that the slope of the up-trend increased after the point of the intersections at the same time that there was wider separation of the two average lines. That was a signal that SEPR was “overbought” and due for a correction. But as Jesse used to say: “It is not wise to try to sell at the top, sell after a reaction if there is no rally or it fails” .That was at the week in March 2000 when the price pierced below the green or short term average, notice that after that the attempt to rally failed as the top of the blue bar on the following week remained below the previous week’s close. Before that point the rules that were applicable were: “In a bull market your game is to buy and hold. Do not sell too early if the stock is acting well.” “It is the big swing that makes the big money for you”.
But notice also that on that “correction” as the price dipped from its early March H of 126.8 to the early April L of 57.75 (a correction of 54.7% in just 3 ½ weeks) although the price dipped below the red average line, the shorter average remained above the longer (green line above the red.<g>) so theoretically the longer term up-trend was not broken and the stock was able to stage a rally up to the early July H of 140.(That was a better than 100% move and a good part of it could have been picked by watching the averages cross-over on its daily chart. The present “daily chart” doesn’t go back that far.<g>)
Notice again the wider separation of the average lines before the top and how the price has remained on a down-trend after the short term average crossed below the longer term at the 103 level in October 2000.
Yes there have been some good rallies, as you mentioned,(looking now at the daily chart) the stock made a double bottom at the 23.5 level in early May and that was a 73% return to today’s closing price of 40.81 in less than 3 months. (Not bad.<g>)
siliconinvestor.com
But remember that the stock has not broken its longer term down-trend (weekly chart).It is on a near term up-trend (daily chart) that will remain in effect (at present) if the price remains above 35.9. (This may change as time and the stock price move on.<g>)
<<Can TA - tell me where stocks are going before they do it ?>>
I think TA can point to good “entry points” in stocks you are planning to buy based on your other DD. It is also useful to warn you when a stock seems to be “overbought”. (It is not that easy to determine the right time to take profits and TA helps )
You can use a lot of TA tools ( stochastics, momentum, RSI, Bollinger bands, OBV, money flow, point & figure charts, candle stick charts, etc.etc.). I try to keep it simple and pay attention mainly to three averages (short, intermediate and long term), RSI and OBV. (In that order).
I think it is a good tool to increase the odds of being RIGHT. <g> (And remember that “It doesn’t pay a man to be WRONG”)
Coming back to SEPR, it gave a near term buy signal in May. I would stay long (from a TA stand point) if the short term average remains above the longer one (green line above the red on the daily chart).Keeping in mind that it has “resistance” at the 47 level ( where it dropped from the April 19 H of 46.2) After that the next “resistance” is at the 55 level (the L of February 2001 and the Hs of December 99, {look at the weekly chart} <g>)
So , “Can TA tell where the stock price is going ?” I think the answer is NO, but it is does increase your odds of being RIGHT.
Can you tell where SEPR stock price is going based on other DD ? I think probably not. If you think you can, please let me know where it is going to be in a week, a month or by the end of the year.
It is bullish that the insiders and institutions have reportedly been buying ( and insiders hold 60 % and institutions 84%{209% of the float} ) Also bullish that reportedly there is a 36% short position (giving it a chance for a possible s.s.<g>) Also bullish that it has a good cash position and it recently raised another 22 million on its sale of BioSphere stock. Also bullish that its revenues increased more than 100% for the 1st Q ended in March and that its net loss was somewhat lower, but for the 2ndQ ended last month the increase in revenues was not that impressive and the net loss was somewhat wider.
It had good news on its recent announcement of the start of a phase III for (S)-oxybutynin for the treatment of overactive bladder.But not so good on Schering-Plough's failure to get approval on Clarinex or that J&J halted trial of Ticalopride,( Of course it still has other candidates for GERD treatment on its Lansoprazole and Pantoprazole.<g>) And of course it has also XOPENEX, SOLTARA and ESTORRA as well as royalties from XUSAL. But with all that and some other information I am still unable to tell where SEPR stock price will be in 3 months. Again if you can, please let me know.
Going back to TA, and see how it can increase your odds of being RIGHT is by comparing it with other ways of trying to predict future events.
Take the weather, for instance, and see how accurately the meteorologists can predict if it is going to rain tomorrow or next week.As the time for the prediction increases, its accuracy decreases. I usually can tell looking at the sky when there are no clouds around that it won’t rain for the next two hours and if there are black clouds all around and some thunder there is 90% probability of rain within the hour. <g> Same thing can be said about predicting the course of a hurricane, charting its course can give you a good idea on the direction it is headed and although many times it may change its course, it is still a good tool to have. Weather reports are certainly far from being infallible. Satellite and radar pictures are good tools that help increase the accuracy of the prediction. They increase the odds of being RIGHT. In somewhat similar way a picture or chart of the stock’s price previous movements can give a good indication of its future course and it is a good tool to increase the odds of the prediction being RIGHT.
Speaking of weather, it has some advantages on some “speculative investments”.<g> For instance down here in Florida, when the price of the orange juice has been steady or low in late November to mid-December, it is good to watch for a possible “cold spell”. The important thing is not only the “temperature drop prediction” but to see the “wind factor”. If we see a strong wind from the North you should buy a few contracts of orange juice. ( It has given me more than a 100% return in just a week’s time on several occasions) And it is always nice to see that you were RIGHT as the price goes through the “limit” for several days while the Dept. of Agric. comes down to asses the damage, which most of the time is quite less than the farmers’ initial estimate.
TA increases the odds in your favor. It is good to know where the “support” and “resistance” levels are at any given time, to know that the stock is on a near term up-trend or down-trend, to know if the stock is “overbought” or “oversold”, etc. You can not tell that just buy looking at price quotations on the paper, but it is not difficult to see it on the stock’s price chart.<g>
RAGL
Bernard |
