Hi UE,
I'll take the other side of that.
When Macd has reached that low level in the past, it has reversed:
The first time around January 28th, which marked the end of the A wave in a corrective ABC zig zag.
It then formed a counter trend three wave B, topping out at $34.29 on February 9th.
The following C wave down was in 5 waves down. Note that two days after the B wave topped out a huge volume spike occurred on 2/11 of 1,275 million shares - that juiced the final C wave down.
It has now gone down in 5 waves. Thepossible 4th or probable fifth wave is ongoing right now.
Note that the three of C which occurred on 3/8/22 hit a new low @ 25.89, also on big volume of 914,387 shares. Note the low 6 day RSI of 30.96, and 12 day RSI 35.12 - not enough to suggest a final bottom.
The upward 4th wave resulted in a high of $32.26 on 3/21/22.
We now are in the final 5 of C, where a new marginal low came in @ 25.46 last Friday 4/14.
Note that the marginal new low did give us a 6 day rsi of 26.28 and a 12 day rsi 33.27 , again not suggestive of a final low all by itself.
But like the 5 of the A wave, the rsi low of 30.26, the 5 of the C wave low 6 day rsi was lower at 26.28, showing aa continued decline in RSI.
Since April 5th the 6 day rsi of wave 5 of C has been in the 20's for 6 of the last 8 days.
HERE"S where the price action gets interesting. The RSI at depressed levels grinds on for 8 days BUT DOES NOT DRAW INCREASED SELLING (as the 5 of the A wave did).
The sellers are gone. If you were manipulating the stock, new lows are supposed to bring out fear selling. The volume of each of those low RSI days started at less than 400,000 and ended up with a new low in price on Friday on lower volume (256.000 shares).
So we are at a point where those manipulating the price have decided to grind out a 5 wave and not put another million shares short to cascade another price decline.
Now I'll admit that a crappy webcast on earnings might just do it for them for free.
That being said a long period of low 6 day RSI vs 12 dat RSI is a bottoming formation.
When low prices don't bring selling, the next step is buyers coming in and buying the discounted price (usually at first they want a new low, but it never fills - the insiders are gladly buying at the ask and covering).
When that happens, those shorting the stock, start buying at the ask to cover the shorts they made to drop the price.
Ted Warren always said, the only time to get excited about a stock is when it gets quiet and slows down in volume.
Check out the 50 day EMA volume on this stock chart:
stockcharts.com
Note the only recent volume spike occurred on a white doji day of a higher close (covering shorts?). All other volume spikes are on down days (where I believe big shorts or just sells were implemented).
If you look at Thursday (before Fridays down 97 cents on the lightest volume of the last 8 days) it was the other day of RSI being up over 30, it looked like some buying going on again.
When the insiders see their work not benefitting them, they quit the excessive selling and start accumulating and getting ready for the price mark up cycle.
Low RSI and quiet volume with price falling on marginal new lows not generating sales with macd curling sideways is a reversal pattern in my book.
I do like to see the 6day RSI be 1/3 to 1/4 of the 12 day RSI for that final day spike down.
I'll take the current price action to be a bottoming action.
Keeping in mind that C waves are often 5 waves down, BUT the 4th or 5th of a C-wave can truncate. They truncate because those powering the price action get anxious and are seeing bidders come to the discount window and literally are competing for the low priced shares.
After doing all the heavy work, they do not share the discounted cheap shares.
My bet is with a growing back log and supply disruptions slowing deliveries with push outs, Cohu will deliver at least 75 cents and an annual EPS of $3.00.
That's trailing 12 month EPS of $3.00/ $25.49 = an 8.49 multiple with a 5 year CAGR of 26%. That's supposed to be a 78 Dollar stock. Really a bit more if you add the cash per share after eliminating the low debt on the books.
Value stock or GARP, whatever you want to call it. At a price above $20.00 and below $25.00, it's an "ADD TO" with my dividend revenue stream. Not crazy wild adds just a percent or two. I've added 2.25 percent on this 50 % cut in price.
As a point of interest the 78% retrace is $25.29. CLOSE ENOUGH TO "ADD TO" FOR ME.
If we get a $20.00 to $21.00 price, I'll gladly add another 2000 shares.
The uglier the better as this stock is going to pay off like a slot machine when the insiders want to distribute it.
I'm talking a 3 to4 bagger from here!
I view this long term growth machine as a long term investment.
Who out there thinks that there will be fewer integrated circuits and chips out there to test in the future?
I've been believing that premise since I first bought shares in Cohu in 1988.I still have my hand written charts on Cohu going back to 1988
Going back some to my records from a light year back LOL, I note that the Q1 of 1992 - a mere 30 years ago announced revenue of $12,253,000 and a net income $608,000 or 30 cents a share. The dividend was 8 cents per quarter and that quarter was the 58th consecutive quarterly cash dividend paid. sigh
Back then Cohu was a very friendly shareholder company.
The current leadership has lost that status, as their employee stock ownership program now pays themselves millions every 90 days. In lieu of the dividend management announced a 70 million dollar stock buyback plan, a plan that closely covers the dilution of management's stock options plan.
No doubt a contributing factor to the stock's slide of late. Capital goes where it is treated well!
Cohu needs to return to the days of Barnes and Schwann and well paid shareholders who hold and don't sell.
At that time Cohu ranged between 10 and 11. That price would today be $2.50 to $2.75. They've had two 2 for 1 splits in 1995 and 1997.
So we're sitting on a 10 bagger now. <smile>
Hold with confidence!
Bob |
