Tuesday, June 16, 2009

How not to do Technical Analysis: A-Power Edition (APWR)

APWR: 9.98 -3.11‎ (-23.76%‎) Jun 16 4:00pm ET

From time to time SolarFeeds picks up one of our posts.
[why so modest today? two weeks ago you were bragging: HT: SolarFeeds (where five of our posts are either most popular for the week or the month!) -ed].

Today A-Power collapsed and I remembered a post from another site that SolarFeeds had put up six days ago:
Technical Look At APWR
APWR enjoys an earnings growth of 197% and is over 400%% off its bottom. It experienced a pennant, which was also a high, tight flag, and is now retesting that level. The retest reached a level of 12.20, while the high point of the pennant was 11.80, but close enough. Volume has been fading on the retest, verifying this is indeed but a retest with a lack of sellers. The uptrend line reaches the 12.20 level today, another verification of this is the short-term bottom.

A high, tight flag gives a target of (11.80-3.00)+7.79 = 16.59. Point & Figure charting indicates a 26.75 target, supporting at least the high, tight flag target. The high, tight flag is the most reliable pattern, with a breakeven failure rate approaching 0% and a target success rate of 90%. Such retests, as currently experienced, happen 54% of the time, and give a welcome second entry chance....
It goes on in a similar vein for a couple hundred words, with four nice charts.
I've been at the market for pretty much my entire adult life and beyond the fact that the analyst seems quite bullish, I'm not sure what is being said.

I, as our long suffering readers know, have a different approach. I try for short and sweet.
Here's SolarFeeds grab of today's FSLR post.
Here's an example for new readers, our April 9 post "Chart Talk: Gold":

I'm no chartmeister [but you play one on the internet? -ed], preferring the "Low I.Q. Approach" [which you've refined to .999 purity -ed], something that drives dyed-in-the-wool technicians* crazy. I can talk the lingo in very short bursts, at great effort. Here goes:

Gold double-top setting up test of $800 support, if the nascent head-and-shoulders should form, a retest of the October 26, 2008 spike low of $681 is possible.
Whew. I won't be doing that for a while, I think I hurt myself.
Since that post gold made another run toward $1000 (I think it got to $989) before dropping back to the high $920's this morning.
Why short and sweet? This stuff can drive you crazy if you dwell on it too much. Again, from our April gold post:
*I am reminded of the analyst I mentioned in early February:
It's all about money flows. (and information asymmetries)
Some years ago I knew a retired analyst who had been able to make a meagre living by tracking the flow of funds in smaller western U.S. equity markets, Spokane, Salt Lake City, Denver, etc.

He was insane by the time I met him.

He'd made up his own language to describe what he was doing, the gist being that it is the marginal dollar going into (or coming out of) a market that makes the move.

His problem, well two actually, was that:
a) no one knew what the heck he was talking about and
b) there wasn't enough data to really capitalize on what he had been trying to do....
Last year the top performing investment newsletter was run by an astrologer, Arch Crawford. Here's how the investment astrologers talk (this is Raymond Merriman):
Short-Term Geocosmics

The huge run up in precious metals and currencies against the U.S. Dollar ended June 2 and 3, right after the transit of heliocentric Mercury in Sagittarius ended. As stated in our last column of two weeks ago (written May 29), “If the correlation to this strong surge was heliocentric Mercury in Sagittarius, then any market that has rallied sharply since May 19 may be in for a rude fall in the next ten days, as this planet will now enter the more sobering sign of Capricorn until June 9. Whereas the influence of Sagittarius can be very optimistic and speculative (some might say it is the sign of “the gambler”), Capricorn can be more demanding of hard evidence to support such sudden price increases.”

The next days are very critical, and filled with Jupiter-type of signatures. On Monday, Jupiter turns retrograde. On Wednesday, the Sun trine Jupiter and Neptune occurs, as mentioned above. Next Sunday, June 21, Venus and Mars will be in conjunction, and both will trine Saturn the next day, June 22. If you are looking for love or agreement, this is the time to find it. If you are looking for a top in stock markets, this may also be the time to find it. Just don’t get married to your position. The attraction is more of an infatuation – or the result of an “irrational exuberance” – than reality, as will likely be discovered once the bloom of Jupiter and Neptune fades away....

Now that I can understand.

If you're interested, here's the A-Power story.