Click chart to enlargeIt put up more of a fight than we thought it would, but TSL finally broke down today. It will most likely establish itself in a new box (a new range), with old support as its new resistance. Perhaps it will trade between $6 and $10 now.
But there is bigger issue than TSL, and that's that the entire market is trading within a downtrending triangle.
14 comments:
I bought some dia Nov. 83 calls @$2.1 at 2pm, Now it's $3.35, also dia is very strong AH. I hope I can sell it @$6
I'm long BGU atm. I will switch back to short as the S$P passes 900. I checked and rechecked my calculations, and I am seeing a top of 930 within the next week or so. I cant believe it is that low, but anything more than that and we're looking at a major rally which I dont believe the market can support. After we bounce off of 930 I think we're headed for the 700's.
TSL might have broken down. LDK is about to become solar leader right next to FSLR.
As far as we know, LDK's higher margins are not due to kick in for quite some time. Why would you think that tomorrow morning's earnings report will be a turnaround event for the company?
I'm going to go ahead and give away my secrets now, since the market is pretty much borked anyway.
First, here is a link to my basic TA for the SPX today:
http://i468.photobucket.com/albums/rr44/iconoclast421/SPX-11-18.jpg
I have added two orange lines based on a strict set of rules. I'm not going to explain what those rules are but hopefully you can intuit them by looking at how they're drawn. It is really very simple. The two orange lines will converge in about 2 weeks. That means we are going to break out of this triangle within 2 weeks. Up or down I do not know, but if you can draw these lines on the daily chart, you will know with near certainty where to put your money once the break occurs. One look at that chart and you'll understand why I'm long BGU. When the RSI hits close to 50, that is when it is time to change positions to BGZ.
Here is my chart for LDK over the last year:
http://i468.photobucket.com/albums/rr44/iconoclast421/LDK11-18.jpg
My analysis is extremely accurate for solars. Most importantly, it really captures the best selling points. I am almost certain LDK will rally tomorrow. That near-horizontal orange line near 50 rsi is where the sell point would be. I say "almost certain" because the rest of the sector does not look so good. I analyze all the solars and TAN to get a clear idea of where the money is going. It isnt pretty, despite how bullish LDK looks. LDK could fall back to that bottom orange line, which would be about a 15-20% drop. That is where I would plan on doing my buying. But I have, for the most part, removed myself from solars now that we have 3X index trading available.
Go on iconclast, give us your rules.
Without them it looks like you just connected the peaks and to be honest you could connect them in parallel lines just as easily as a triangle, except that paralell would indicate a drop rather than a rise.
Also, whats the relationship between channels on the RSI and the stock price. Ive never seen anyone draw channels on an rsi chart beforhand..
Your blog looks pretty good and it lends credibility to what your saying, but to be honest without it the hints of a secret system make you sound like one of the LDK crazy gang! :-)
Dont worry, there arent enough readers of this blog to make your system obsolete if the word gets out, and besides isnt that what we are all here for, to share ideas...
icon,
Good post. Your RSI analysis is very interesting, especially the one on LDK. I'm assuming we'll hit RSI of around 50 when we get to around $25/share?
j
That is all I'm doing. Connecting the peaks. All that is required is for the line to be straight, and that it must connect at least 3 peaks or troughs. I dont know why it works better with the RSI, but it definately does. I can post chart after chart after chart that shows that it definately is not a fluke. It works better for some stocks than others, and I think that has to do with the amount and type of computer trading that is associated with a particular stock or sector. Obviously there is a lot of computer trading going on with solars, and I bet they're running algorithms based on the RSI. My guess is I'm tapping into what they're doing, only on a much simpler level.
I dont look for channels though. Not at all. What I look for is breaks in the lines that I draw. Breaks or bounces. If I see a bounce off an RSI support line, it gives me a buy signal. You can see a few of those buy signals as green vertical lines on the LDK chart. If I see a bounce off of an RSI resistance line, it generates a sell signal. You can see a few of those sell signals as red vertical lines on the LDK chart. Note that the last two sell signals on that LDK chart were both generated by failures to break an RSI resistance line. (Or from the creation and validation of an RSI resistance line.) The sell signal for LDK that was generated on August 29th was from a broken uptrending RSI support line. Because these lines eventually will pass into overbought areas, I am able to calculate far in advance what the likely top for a stock will be. That is how I came up with the top for LDK 2 weeks before it hit it back in august. I was off by 2 days and 2 dollars. Calculating the price is a bit more complicated. But its also based on the RSI.
When you run this type of analysis on the $SPX, you can see clearly the tops that we had in May and August.
It also works with the VIX. Notice how back in early september, the VIX broke multiple uptrending RSI resistance lines. That is a very bearish sign for the market.
This type of analysis has proven extremely profitable with the solars. But I must admit I'd be retiring right now if I had actually followed my own rules. lol. It is easier said than done.
Oh, one other important thing to note is that you can only analyze the closing prices. It gets more complicated during intraday trading. And you definately do not want to make buying decisions based on breaks of resistance lines during the day because the price might come back down and end up generating a sell signal. That's why it is better to stick with the indexes, because they move more glacially.
Snot,
I also agree about LDK. I'm not sure what exactly will happen, but something definitely will. As far as margins, they might slightly increase due to lower polysi cost plus increased productivity and decreased wafer thickness. LDK signs the contracts based on $ figure, so no exposure to euro.
Most important of all, I strongly believe the company will finally announce poly production at the 1000mt plant. This alone is something I have been waiting for a long time. It will be a historic moment for the company and would show how much it has come along in just two years. Peng is a man with a dream, I just hope it wasn't for the market. You are correct that it is still in stage 4 and probably won't break out, but it is definitely a stock you want to have on your watch list.
I have read people on here brag how JASO, SOL... etc will have huge earning gains, yet I watched them fall 20%+. The problem is, none of those stocks come EVEN close to what LDK is becoming. Lets hope my research pays off tomorrow.
I calculate about $19 at RSI 50 for LDK. Because of the way RSI is calculated, you cant just look at the last time LDK was at RSI 50 and use that price. (That's what I'm assuming you did.) It's some pretty complicated math to calculate what the price will be at any given RSI value...
icon,
I assume sell anything higher than 19? What if the market rallies back to DDM 40?
Do you look at RSI of one year in length, or do you also look at other patterns?
hats an interesting concept Icon.
How have you found it holding up over the volatality we have seen lately?
Will you keep us updated on the progress and maybe make the analysis the similr to the way snot is doing it.
Say snot says that the dow is on the bottom of the channel and due a reversal to 9500. You could give your read on the RSI analysis..
Just a thought...
I dont think LDK is going to make it to 19 in this market. I would sell right now at $16, while it is up in pre-market.
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