The Shell Answer Man

I get questions...

Ouch, what happened to IRIS today (Monday)? How does today's action affect your view/interest of that [former?] member of your winning list?

Good lord, you do not think I am long each stock? It seems you did not read the post to its conclusion, so I quote again its real message...

"Of course, there is this post's subject header. Qui vive means "alert, lookout" -- I am on the lookout always for changes. Negative change occurs in the market now, as former bullish patterns creak under the weight of their uptrends... These declines represent warning shots over the bow, or so goes my interpretation. Thus, I position my portfolio more defensively..."

The list includes stocks that have yet to complete their setup within a yet to be determined pattern. So I seek the process, the continuum, that I prefer among the thousands of stocks, and then wait only for the setup; the pattern reveals itself as it unfolds. This is different than 99.99999% of other investors who require a trend be revealed (read, obvious) before acting.

In a long ago post, I mentioned that the 50 day (+/-) simple moving average (sma) is final support for a continued intermediate term up trend, whereas the 200 day (+/-) sma is final support for an intermediate term base within a long term up trend. Stocks breach each sma quite regularly; if, as in the case of IRIS, the breach is of the 50 day sma, then I adjust accordingly my interest and time frame to the appropriate periodicity, if still interested. (That is, I can be 'comparatively' indiscriminate for my trading opportunites, but remain very discriminating for my long term investments. In fact, right now, only one company/stock passes that filter.)

Nonetheless, this is a good question, which provides generally applicable rules within the specifics of its answer... Thank you.

Now that you've revealed that your trading price objective for GOOG was 600 a long time ago, would you please explain the method by which you arrived at that target whenever it was that you did. I look forward to studying your annotated charts whenever you post them.

Long, long ago, when I was in elementary school, I learned the alphabet as did everyone else, including parts of speech (nouns, etc) and pronounciation, etc. Once learned, I suffered from the mistaken notion that we next would be taught how to read, to put together all the lessons into a unified whole. But no, we were taught only the rudiments; it then was up to us to place the lessons within a meaningful context.

In other words, keep reading this blog; the lessons you seek are included herein. And, if important to you, you will make the attempt at synthesizing these lessons.

Would people really complain if your target of 600 is off by a bit? I hope not. Actually, being off by a lot ~100 or more is still a bit. Most analysts will need to be raising their targets a few more times between now and 600 or so.

You misunderstand the role of cause and effect. Unfortunately, you also misunderstand the intent of my comments, even though I stated them quite clearly. Or so I believe :-) Alas, misunderstandings such as yours are why I typically do not 'reveal' these price objectives. For the record, I figure ~75% of my trading objective has been reached, although not my investment objective, which is higher. GOOG has rallied to ~$450 from its IPO of $85 -- which itself is after my first recommendations of the investment. Try to lose this concept of predictions, correct and incorrect, and focus instead on your satisfaction. At what price are you satisfied?

I was hoping to get your thoughts on a company that I have followed for a long, long time. The company, named Inphonic/INPC...

[click to enlarge]

Each bar highlighted in yellow is the stock's opportunity to cry, "Uncle" -- to reverse finally to up from down. Alas, it has failed in each instance, and does not appear this dynamic will change soon. Consider the cluster of bars in area #1, which manifests as horrible stochastics: the tendency for each day's bar to close on or near its lows. This down trend does grow long in the tooth, so I would monitor for that key reversal day. It has yet to arrive, however, so continuing new lows seems its near term destiny.

Speaking of key reversals days...

I was wondering if the up opening, peak pricing and lower close on GOOG was the signal you were discussing that might indicate an exit point is at hand. Or, was all that volatility just about the entry in the NASDAQ 100?

Yes... and no. What you note is correct -- yesterday does qualify as a reversal day -- but is not the key reversal day I seek. GOOG
● Opened higher yesterday but only marginally,
● Not at a new high,
● The shares reversed from their early morning highs, yes, but did not take out the low of the prior three days
● Yet -- which means the possibility remains for a weekly reversal pending this Friday's closing price.

However, I see nothing in the chart that tells me either the short term or the intermediate term up trends are kaput; yesterday qualifies, to me, as mere intra-trend volatility. I suspect GOOG will stabilize today, and then resume its uptrend in the days and weeks ahead. Get used to the volatility, however, because it will become increasingly prevalent as this trend matures.

An interesting commentary for those interested can be read here...

"I think the worm is about to turn on Google. The company's ascent has been too rapid, its successes too extravagant. As I wrote this sentence a few days ago, Google's stock price was $416, up more than 300 percent since the company went public a mere 16 months ago... Regular people look at that run-up and say: "Nice work, Google, you must be doing something right." Media people look at the same numbers and hear a little voice: Somebody's got to stop this."

I find articles of this type to be silly; having missed making the bullish call, everybody and his or her uncle want now to make the bearish call. Yes, the share price will reverse, but we expect that. Please do not be surprised when it does finally occur.

Finally, I was told privately that I am wrong re the Google/AOL deal; that this deal should be perceived as a defensive move on the part of Google to protect the company's turf from Microsoft/MSFT. I accept that reality and, truth be told, had factored that in to my estimation; however, I retain my perspective. This moment is a perfect example of how one investor's opinion can differ from most of Wall Street's, and still make money.