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Correction and elaboration. Bear with the numbers. SFE did not in fact break 38% correction of move up. That number is $88. SFE's low for the day, $88. Will it hold? We'll see, but SFE action has so many parallels with CMGIs, only delayed, I looked at what CMGI did moving to $330. CMGI went from around [approx #s] $35 to $155 quickly. Then the first selloff began. It started with a huge down day on record volume. SFE today had record volume and record point down.. CMGI sliced through 38% correction level. The next Fibonacci retracement level is 62%. CMGI over two weeks went from the $155 high to an $80 low which retraced almost exactly 62% of the move up. It then bounced to $140 then $85 from which it commenced a run to $330. If SFE retraces 62% of its move up [I'm using $36 as starting point], then the pullback would bring it back to $68. So my best guess is $88 or $68. Which one? The most likely-[remember, just a semi-educated opinion all based on probabilities] would be $68. Why? Partly because of the parallels with CMGIs previous action, and partly because of the nature of the move up. A lot of hot-trader type money has entered since $50, and it could be more susceptible to letting go in a downdraft. This wasn't slow steady accumulation by long term investors who will put it away for years-those are firm hands as opposed to weak hands. Several scenarios. 1. $88 was it and it goes up. 2.$88 provides a springboard for a short sharp rally to around $100 then heads back down breaking $88. 3.SFE slices right through $88 first thing tomorrow, then hits support at 50% retracement $78 or 62% at $68 within the next week or two. One action I would not take it chase a quick rally and buy close to $100 if it should occur. The lower risk entry points would be buying at the support levels or conversely, buying on a $120 breakout if good volume is present. Stops would be a good idea, as the underlying valuation does not give one a cushion to buy and ignore. Would also not panic sell in a further sharp downdraft, as once support is reached, a sharp and meaningful rally will ensue, there-by allowing for a better exit point for those inclined. This is just my take on the technical side. Guidelines only to help keep upcoming volatile action in some perspective-and allow real time decision making with a minimum of dangerous emotional reactions. Hope you all do well, Mike |
