RECY...what I see in the charts....
I agree that for the long term RECY has what it takes. But I have to point out that in the *short term* RECY could be in for a significant drop. I know you disagree but I see RECY reaching as low as 4 1/2 - 5 1/2 before the possible correction is over. (that's my conservative estimate.)
Ok, here's what I see in RECY's chart:
1) RECY established an accelerated growth line at the end of august/beginning of september. Basically it represents the change in dynamic of this company as realized by the investors in this stock. This is the beginning of the tremendous growth cycle that we have been seeing recy traveling in since then. We have seen this line retested the day after the october correction.
To me, this was a reaffirmation that this accelerated trend line was still valid -- at bare minimum no one is going to sell RECY stock for less than what everyone perceives it to be worth right *then*.
Usually a stock will trade higher than the trendline because people expect the stock to go higher. Every so often, whether it be because of profit taking or market conditions or unexpected news, people will sell off. In almost all cases, you will see a drop that will bounce off the original accelerating trend line. Why? Because this is the perceived worth of RECY with no discount, assuming the fundamentals that got the original acceleration rolling in the first place are still in tact.
2) On 12/12, RECY traded significantly below this accelerated trendline. This means that a lot of people felt that recy was no longer worth what the accelerated trendline was predicting.
3) On 12/15, 12/16, 12/17 RECY closed *below* this trendline while trading on both sides of it.
4) On 12/18 & 12/19 RECY rallied back above the trendline but on less than average volume. Both days recy traded at the trendline at least briefly. Check out the volume on 12/18 especially-- extremely small.
Furthermore, RECY was not able to even touch the downtrend line that had been established by its prior two highs made on 11/21 & 12/8.
Notice that RECY has actually been in a decline since 11/21 (one month).
5) 12/22 -- recy falls back below the ACT, again trading on both sides of the ACT.
6) 12/23 -- for the first time, recy trades *completely* beneath the accelerated trendline. The high of the day didn't even touch the line. (FYI the ACT is now just under 7...)
7) since 11/26, volume has dropped off significantly. even during the small rally the other day, volume did not pick up. To me, this means that there's a slow exodus out of the stock...notice that the overall downtrend coincides with the large decrease in trading. There just don't seem to be anymore buyers to push this thing up.
My guess is that lots of people in the know found out something on 12/12 (though the downtrend had already been established before that.)
8) in about 1-2 days, the downtrend line will cross the accelerated trendline (at about 7)...making it even harder for recy to rally.
9) since recy accelerated since septemeber at such a breakneck pace, it really has no support lines other than those established before the acceleration.
The bottom one sits at about 2 3/4; the one that connects the tops of the prior channel recy was in is at around 4 1/2 now.
I don't think recy will fall to the old trendline of 2 3/4 since like Jim has pointed out, recy is certainly worth more than it was then.
But the problem is, it's hard to know where recy will fall now, if it does. IMO the TA is increasingly pointing toward a fall. But where?
Remember everyone, this is just my interpretation of what I see -- everyone should look at the information through their own eyes, consider many points of view, and come to his/her own conclusion. Don't use me as a reason to sell recy & then complain to me if it explodes up the next day. I'm just trying to give another point of view; it's this point of view that has kept me out of recy until I can see it establishing a new uptrendline. If it makes it back up to the old one again, that would be great, and I won't mind missing out on some potential gains, since we know recy for the longterm is going up. But since I can't measure what the downside risk is right now, I'd rather watch from the sidelines.
good luck all,
dave |
