@heraclitus, I saw your note on SHM today in XSO and thought I’d take a look as an exercise.
Firstly, Casio products. Really? I remember at school 40 years ago using Casio calculators or something. I would tend to group that brand with Sony Walkman’s, VHS video cassettes and DeLorean cars. I guess the fact there is still a business making money from Casio products is amazing in itself, so if there’s a market today then I guess it’s not going away. Where they get any growth from or attract big money is hard to imagine. Presumably there’s more to this story.
But this post is about the technicals.
The stock has only been listed for twenty-five weeks. So that almost precludes any reasonable technical conclusions. However to try and assist there are some observations that can be made about how it is unfolding, and this also has relevance as a follow on from my post on Price Analysis above.
As noted two days ago on here, there is a Fib level in charting of 78.6%. The only time I see that consistently occur is at the top of an Elliot Wave B. That is, when a stock is in a long bearish phase, the first retracement after an initial fall will react to 78.6% then fall away. This level has been hit twice in the very short listed history of this stock. on both of the two retracements that have occurred. At point 1 these was a mini initial retracement before falling away, and then at point 2 this looks like the main Wave B peak, suggesting we are now a Wave C. Hitting this 78.6% level is a big clue that this is a bearish chart with further down to go.
There is also some clues from Trend and Counter-Trend Analysis. From Gann’s work, trends are confirmed on a weekly chart after a move of 12 or more weeks in one direction. The main move here from Point 1 to the low marked with the number “13” was 13 weeks. This is a confirmed downtrend.
Counter-trends, the reaction moves against a primary up or down trend are typically 1, 3 (+/- 1) bars or 9 bars (+/- 2). You can count the next three bars up from the low to the peak at point 2 and then a down move. So that’s typical of a counter-trend. You can also see the retrace at point 1 was 1 bar.
So since listing, it’s unfolded with a 1bar Counter-trend, a confirmed downtrend, then a confirmed Counter-trend. That all fits within technical definitions of a down-trend, and in fact is one of the key types of confirmation I use to short a stock.
Considering Support/Resistance levels, $1 is a big round number and the opens and closes on four bars landed there. Point 2 also retraced to that level and was rejected and closed below, so I think we can put that down as reasonable overhead resistance.
I’ve run down the right hand side in green with levels of the All-Time Range. The current price is sitting below the 50% level, so again its modestly bearish that its currently down in the bottom half of the chart.
Volume. There was massive volume of 16 million in week one, and then an average of about 900k per week since. So it’s become a bit dull. Volume will have to come back in to push it back up and reverse the downtrend.
Bull Case:
The only somewhat bullish indicator I can find is that the current week’s bar bounced off 50% of the prior range, marked at point 3. As discussed in my previous post on price, charts tend to be mean reverting. So you can see this ran up from the major low to point 2, then reverted to 50% and bounced. This might then have a bar or two up now through December, but then the bigger trend should take hold.
I’ve marked in thin black lines the key Swings. If next weeks bar is green, and I’m not suggesting it will be, I don't know, but you would then have a counter-trend that way, with 4 bars down from point 2. It's how an uptrend starts and would look like Point 1. This would be the first potential bullish move, but you then want to see volume come it and it push on above the high at peak point 2.
Summary:
This is unquestionably a bearish chart to date, drifting down on low volume. I wouldn’t be in it.
However, because there is such a short history, we don’t know whether the 17 bars down to the low at $0.78 is not just a reaction move within a larger bullish trend. FA might tell you this, if it was expanding its revenues and the underlying business was on a growth path then you might take this view. The technicals can’t tell you that.
For an entry here, the stock firstly has to get back over that ATR50% level at $0.93 and close above it. The stock then has to get through $1 and this will take some volume coming in, and above the last peak at $1.01. It needs a weekly close above it by a couple of cents to make sure it can hold.
Conclusion:
It’s a buy on a weekly close at $1.03 or above (if you’re keen enough on the underlying business)
If you own it then it looks poor but is a hold between $90 and $1.01 to let it play out a bit more
If it breaks below that last blue bar at $0.895 (particularly next week meaning that potential counter-trend pattern has failed) just get out and go do something else. This is my most probable case.
(20min delay)
