Post by TradingForGod on Sept 11, 2004 18:27:00 GMT -5
From last time: “…This stock could slip below {trendline support at 20 cents} for a minor dip back toward the break-out point at 16. I am not saying that will happen, but if it does I think that will be a great buying opportunity…maybe the last one for a while…”
It took exactly two days for this to happen. AZMN broke below trendline support on 9/7 and on 9/8 it fell all the way back to 15.5, right at the break-out of the long consolidation. As expected, this retest of very key support held. It was challenged each of the last three sessions and was VERY well bid. The look at the litany of technical reasons 15.5 is important:
1) Range break-out retest (red line on chart below)
2) 20-day moving average
3) 62% (Fibonacci) retracement of rally from 11.5 to 22 cents
4) 50% retracement of entire rally from 9 cents
That’s a LOT of support. The volume on the initial down move was quite heavy, probably because of some weak length getting out on the minor reversal, but volume at the lows was pretty meager. This is a sign that there aren’t really a lot of willing sellers out there right now.
I thought I would take a look at the AZMN chart for a review of our Elliott Wave and Fibonacci analysis basics. I have highlighted the swings from the low at 9 cents in purple. The first leg of the rally went from 9 to 15.25, or 6.25 cents. The pull back from there went to 11.5, or 3.75 cents. That made the pull back 60% of the original rally, VERY near the Fibonacci retracement objective of 62%. It couldn’t be exactly 62% because the stock doesn’t trade in increments that small. The next rally went to 22 cents for a total run of 10.5 cents. 10.5/6.26 = 1.68. So the second rally “extended” almost perfectly to 1.618 of the initial rally. Pretty cool, huh? As I said earlier, the sell off to 15.5 was both EXACTLY a 50% retracement of the whole rally AND EXACTLY a 62% retracement of the rally from 11.5 to 22 cents. You just can’t get a more technically perfect performance than we have had so far.
So what happens next? My guess is that the sell off is very likely over. That’s not a sure thing because the stochastics are not yet close to oversold, but I am heavily influenced by the fact that 15.5 was such an important number. A move back over 20 cents now probably seals the deal for the sell-off. Assuming that happens, the SHORT-TERM targets for the upside depend a lot on what the Elliott Wave count is so far. Remember I said that there are always at least two ways to evaluate a wave count. Because we are so early in the upside move there are actually several possible counts right now. The most likely one is as follows:
The rally to 22 cents completed a three-wave initial rally and the pull back to 15.5 corrected that rally. If this is the right count we should now see a 5-wave advance that at least equals the first rally, and probably extends. The “normal” target is 28.5 cents (15.5 + {22-9}). This is pretty close to the 30 cent target we’ve talked about already. If the rally extends to 1.618 of the initial rally, the target is (drum roll please) 36.5. Yep, that’s right. That’s close to the OTHER target we’ve highlighted at 37 cents.
There are several other possible upside scenarios still in play, and only time and price action will tell which of them is actually right. I’ll know I am wrong about all of this if we get a settlement back below 15.5. If that happens, it doesn’t mean that AZMN is bearish, but it will mean that it has a bit more work to do before mounting a serious rally. I REALLY don’t expect to see that though.
FWIW, I added another 20% to my initial position on this dip. I didn’t do as well as I would have liked on my fill level because, truthfully, I really didn’t expect to see key support hit so quickly. Oh well. Good idea, bad timing. If the fundamentals of Azco are as good as CT and Savant suggest, it isn’t going to matter much whether I bought the bottom of the dip or not.
I still haven’t gotten any suggestions for stocks to look at in future reports. CMKX is really tough to do because there hasn’t been a lot of wiggle in the 18 months save the blip back in June. But I’ll try to work up an analysis on other stocks you are interested in. Just let me know.
God bless,
TFG
It took exactly two days for this to happen. AZMN broke below trendline support on 9/7 and on 9/8 it fell all the way back to 15.5, right at the break-out of the long consolidation. As expected, this retest of very key support held. It was challenged each of the last three sessions and was VERY well bid. The look at the litany of technical reasons 15.5 is important:
1) Range break-out retest (red line on chart below)
2) 20-day moving average
3) 62% (Fibonacci) retracement of rally from 11.5 to 22 cents
4) 50% retracement of entire rally from 9 cents
That’s a LOT of support. The volume on the initial down move was quite heavy, probably because of some weak length getting out on the minor reversal, but volume at the lows was pretty meager. This is a sign that there aren’t really a lot of willing sellers out there right now.
I thought I would take a look at the AZMN chart for a review of our Elliott Wave and Fibonacci analysis basics. I have highlighted the swings from the low at 9 cents in purple. The first leg of the rally went from 9 to 15.25, or 6.25 cents. The pull back from there went to 11.5, or 3.75 cents. That made the pull back 60% of the original rally, VERY near the Fibonacci retracement objective of 62%. It couldn’t be exactly 62% because the stock doesn’t trade in increments that small. The next rally went to 22 cents for a total run of 10.5 cents. 10.5/6.26 = 1.68. So the second rally “extended” almost perfectly to 1.618 of the initial rally. Pretty cool, huh? As I said earlier, the sell off to 15.5 was both EXACTLY a 50% retracement of the whole rally AND EXACTLY a 62% retracement of the rally from 11.5 to 22 cents. You just can’t get a more technically perfect performance than we have had so far.
So what happens next? My guess is that the sell off is very likely over. That’s not a sure thing because the stochastics are not yet close to oversold, but I am heavily influenced by the fact that 15.5 was such an important number. A move back over 20 cents now probably seals the deal for the sell-off. Assuming that happens, the SHORT-TERM targets for the upside depend a lot on what the Elliott Wave count is so far. Remember I said that there are always at least two ways to evaluate a wave count. Because we are so early in the upside move there are actually several possible counts right now. The most likely one is as follows:
The rally to 22 cents completed a three-wave initial rally and the pull back to 15.5 corrected that rally. If this is the right count we should now see a 5-wave advance that at least equals the first rally, and probably extends. The “normal” target is 28.5 cents (15.5 + {22-9}). This is pretty close to the 30 cent target we’ve talked about already. If the rally extends to 1.618 of the initial rally, the target is (drum roll please) 36.5. Yep, that’s right. That’s close to the OTHER target we’ve highlighted at 37 cents.
There are several other possible upside scenarios still in play, and only time and price action will tell which of them is actually right. I’ll know I am wrong about all of this if we get a settlement back below 15.5. If that happens, it doesn’t mean that AZMN is bearish, but it will mean that it has a bit more work to do before mounting a serious rally. I REALLY don’t expect to see that though.
FWIW, I added another 20% to my initial position on this dip. I didn’t do as well as I would have liked on my fill level because, truthfully, I really didn’t expect to see key support hit so quickly. Oh well. Good idea, bad timing. If the fundamentals of Azco are as good as CT and Savant suggest, it isn’t going to matter much whether I bought the bottom of the dip or not.
I still haven’t gotten any suggestions for stocks to look at in future reports. CMKX is really tough to do because there hasn’t been a lot of wiggle in the 18 months save the blip back in June. But I’ll try to work up an analysis on other stocks you are interested in. Just let me know.
God bless,
TFG