3SOF

NVLS should be on the 3 Stocks on Fire Portfolio for some time, but I'll use yesterday's small correction to add it to the Portfolio.

Here's the analysis I made on November 15th:

«1. Introduction

The Nasdaq 100 Index made a very important technical breakout yesterday. Now we're almost at 5 year highs on the Nasdaq, and this tells me the technology sector is set to outperform the general market over the coming weeks/months.

NVLS is a technology stock breaking out to new highs with volume above average. I want to know more about it.

2. Profile

Novellus Systems, Inc. (NVLS) engages in the development, manufacture, sale, and servicing of semiconductor equipment used in the fabrication of integrated circuits ... (complete profile here (http://finance.yahoo.com/q/pr?s=NVLS))

3. Technical Analysis
3.1. All History Chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28333;image)

I've seen worse debacles from the 99/2000 tech bubble. In comparison, NVLS held pretty well with just about a 60% decline ::). I like this long term base on the all history chart.

3.2. Medium Term Chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28334;image)

The recent breakout is technically significant on a long term basis.

3.3. Short Term Chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28335;image)

I can see that the breakout is being made with volume above average. Candlesticks are also very bullish, with a two white soldiers pattern. There's absolutely no doubt that TA says «buy». I wonder about the fundamentals.

4. Fundamental Analysis
4.1. Number of Shares Outstanding

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28336;image)

NVLS didn't dilute shareholder value beyond 2001, and this is part of the reason why the share price held up so well. In 05 and 06 the company was actually aggressively buying back shares. This is a positive development, because it reduces market cap (since market cap is stock price*number of shares outstanding) and increases EPS (EPS = Net Income/# of shares outstanding).

Current market cap is 123,603,945*$31.54 = $3.9 B.

4.2. Liquidity

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28337;image)

NVLS has a very, very strong balance sheet, with a current ratio of 3.73 and $1 B in working capital. Cash and short term investments of $663 M.

4.3. Revenues

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28338;image)

Revenues have been growing again since 2002 and 06 is going to be a record year for NVLS, with $1.64 B revenue estimate. The sales multiple is $3.9 B/ $1.64 B = 2.38. The Semiconductor Equipment & Materials industry has an average sales multiple of 1.61. But, the average revenue growth rate for the industry is just 3.6%, whereas for NVLS is 31%.

4.4. Profits

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28339;image)

Wow, analysts, on average, are predicting $1.75 EPS for full year 2006. This matches the company's all time high EPS in 2000, when the stock was trading at $70 (doesn't mean much). The company already made $1.16 in the nine months until September.

The current earnings multiple is something like $31.54/$1.75 = 18. The industry average is 25.3.

5. General Overview

NVLS is not extremely cheap, but it's trading at a below average earnings multiple, and given its recent growth rate, buyback shares plan and strong balance sheet I don't see why. I think it should trade at above average multiples. Say it trades at 25 times EPS, the share price would climb to $43.75.

I'm bullish on the Nasdaq and bullish on NVLS going forward.

6. Trading plan

Buy NVLS today at the open, 6.66% of capital as always.

Here's the updated chart:

The holiday tomorrow probably explains the low volume on today's session in most of the stocks that I follow.

NVLS was no exception. Bought at $32.22 around the open, nice pop near the end of the session.

Nothing to add to the initial analysis made today, except maybe that, of course, I'll continue holding the stock through Friday's session.

Nice pick applause ;)
NVLS could climb above 40 bucks easily ;)
Nothing goes straight up but patience will pay off ;)

I'd like to study Fundamental analysis too, David could you recommend me some good books for Fundamental Analysis? Thanks ;)

Regards,
Alister

QuoteI'd like to study Fundamental analysis too, David could you recommend me some good books for Fundamental Analysis? Thanks

That's great Terliso :)

I recommend these 3 books on Fundamental Analysis:

Mastering Fundamental Analysis (http://www.amazon.com/Mastering-Fundamental-Analysis-Michael-Thomsett/dp/0793128730/sr=8-1/qid=1164376922/ref=pd_bbs_sr_1/104-9523553-3423120?ie=UTF8&s=books)
Buffettology (http://www.amazon.com/Buffettology-Previously-Unexplained-Techniques-Buffett/dp/068484821X/sr=1-1/qid=1164376970/ref=pd_bbs_1/104-9523553-3423120?ie=UTF8&s=books)
One Up On Wall Street (http://www.amazon.com/One-Up-Wall-Street-Already/dp/0743200403/sr=1-1/qid=1164377050/ref=pd_bbs_1/104-9523553-3423120?ie=UTF8&s=books)

Then, if you want to make your work easier and faster, I recommend you subscribe to Alphatrade's "Fundamentals" (http://www.alphatrade.com/) service.

If and when you have done this, let me know, there's more to it  ;)

NVLS isn't a fantastic pick, but I sure think it will outperform the general market. I have nothing new to say at this point, I'll keep on holding NVLS at the 3 Stocks on Fire Portfolio.

Investors sold everything yesterday, especially those stocks where they had good profits. NVLS was one of those and it fell 3.87%, to close at $31.55, right at a short term support.

I think the sell off may continue for a bit today, but then the stock will recover, because the trend is up and it is undervalued.

On December 4 NVLS will give us its mid quarter update: Novellus Announces Availability and Timing of Mid-Quarter Update Conference Call Webcast for Fourth Quarter 2006 (http://biz.yahoo.com/prnews/061120/sfm085.html?.v=73)

I'll continue holding NVLS whatever happens today.

QuoteI think the sell off may continue for a bit today, but then the stock will recover, because the trend is up and it is undervalued.

It happened. I was glad to see NVLS close above the $31.56 support level. The mid quarter update will be on Monday before the open. I want to hold NVLS through that conference call.

I guess there won't be much action around NVLS before the mid quarter update Monday before the open. I expect that update to bring more eyes to see how NVLS is undervalued and bid it up.

Holding and waiting on NVLS.

Today Stifel Nicolaus downgraded this stock from hold to sell and is falling 2%
in the pre-market.
Any ideas??  or just hold like EGHT which was also downgraded today.

Quote from: jorgegr on November 30, 2006, 09:15:31 AM
Today Stifel Nicolaus downgraded this stock from hold to sell and is falling 2%
in the pre-market.
Any ideas??  or just hold like EGHT which was also downgraded today.

Thanks for your question jorgegr, NVLS was downgraded 8 times since September 5, as you can see here:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=29445;image)

Over this period the stock price rose 12.6%. Who are you going to believe, the analysts or the market?

As a rule, I believe the market and my own analysis, of course. My analysis says NVLS will go over $40 over the next 6 months, so I'll continue holding it.

Onde day after another downgrade, NVLS rose 3.6% with 12.1 million shares changing hands. At one point the stock was up 6.6%, but the $33.25 short term resistance level brought in some sellers.

Anyway, bull trends have no resistance and ultimately NVLS will break $33.25 on the upside, as it moves towards $40, despite all the analysts downgrades.

NVLS held Friday's gains and $33.25 are in short sight. If we get a close above $33.25 on volume above average the short technical target would be $33.25 - $30.82 = $2.43 + $33.25 = $35.68 (when there's a breakout of a rectangular formation the technical target is given by adding the difference between the formation's high and low to the formation's high).

Anyway, that breakout didn't occur yet, so, as Melf Elf would say, $35.68 isn't in play yet.

I'll keep on holding NVLS.

NVLS is providing a useful lesson here. Please read this previous update (http://www.3stocksonfire.org/trading/index.php?topic=7435.msg79098#msg79098).

Eight downgrades and yet the stock moved higher. Analysts were saying "sell", but the market kept saying "buy". The market is always right and won again.

This stock has everything in its favour. The chart shows an awesome bullish breakout today. Fundamentals say it is worth at least $43. And the crowd talk is bearish. Ignore the talk, respect the fundamentals and the market to make money.

Ignoring another downgrade this am.  Down in premarket :(

By Aude Lagorce
Last Update: 6:02 AM ET Dec 6, 2006


LONDON (MarketWatch) -- Goldman Sachs cut semiconductor maker Novellus Systems (NLVS : NLVS0.00, 0.00, 0.0%) to sell from neutral, saying it believes fundamentals are poised to be much worse than the market is currently anticipating, driven by NAND weakness that is already becoming apparent. The broker told clients it believes the recent M&A speculation around the stock is nothing short of irresponsible as it thinks it's "extremely unlikely that Novellus will be acquired at these valutions given the lack of synergies with potential byers."

Quote from: magu on December 06, 2006, 08:05:53 AM
By Aude Lagorce
Last Update: 6:02 AM ET Dec 6, 2006

LONDON (MarketWatch) -- Goldman Sachs cut semiconductor maker Novellus Systems (NLVS : NLVS0.00, 0.00, 0.0%) to sell from neutral, saying it believes fundamentals are poised to be much worse than the market is currently anticipating, driven by NAND weakness that is already becoming apparent. The broker told clients it believes the recent M&A speculation around the stock is nothing short of irresponsible as it thinks it's "extremely unlikely that Novellus will be acquired at these valutions given the lack of synergies with potential byers."

Wow, this is interesting ! I never heard of any takeover rumors on NVLS, but now I heard them. Me and everybody else. Every Wall Street analyst has downgraded NVLS and yet the market continues to scream BUY !

Do you trust the word of a man or the $307 million of shares bought yesterday?

Follow the money.

Thank you Goldman :)

I read my initial analysis on NVLS, which says it is undervalued. Then I have 9 other guys saying it isn't. Who should I listen, my independently made fundamental analysis or the advice of others?

I need to have faith on my own judgement. I see the company buying back shares at a fast clip.

The market agrees with me, but these guys have quite an audience (I wonder about their trading performance, or analysis performance), not because they're very good, but because they work at a big firm.

As I see it, big firms are big because they got fat eating small fish. They don't care about credibility, because it's always a new shoal.

They can play the game of saying "sell" while they're buying and saying "buy" while they're selling forever, because they're taking money away from different people at different times and they don't publish any track record on their recommendations.

Have you paid for Goldman's advice? No you didn't, unless you sold NVLS shares.

I'll continue holding NVLS.

Goldman is a powerhouse, no doubt.  But recently they have been making some strange calls regarding tech IMO.  About a month ago they caused a massive selloff in the Nasdaq by stating that PC motherboard demand in Asia had "fallen off a cliff".  I mean, that was their exact languaging, "fallen off a cliff".  CNBC asked other market mavens, and nobody seemed to be aware about this abrupt change of fortune.

To me that is not professional language (i.e. they could have said "an abrupt, severe decline" and still gotten the meaning accross), but instead used something designed to get a reaction, fire up the imagination of those who hear it.  Which causes more panic in the amigdula, the primitive brain?

a.) Fallen off a cliff
b.) An abrupt, severe decline

Clearly the answer is "a.", as it conjures up imagery in the mind that denotes danger and then can be linked to a feeling of fear about losing ones money.  As we all know, fear moves the market faster than even greed does.

I study a realm of psychology called NLP (Neuro Linguistic Programming) and am constantly evaluating the use of language in media etc., that is why I noticed this.  I also take issue with a lot of what CNN reports recently, there is a clear biasing in their choice of words... 

Anyway, going on a tangent there, sorry, but the point is that I agree that often analysts as a group say "Buy" when you should sell, and "Sell" when you should buy.  Cramer is constantly lamenting this fact on his show.  And in addition, I question Goldman's motives in tech recently. 

Thanks for this great post Tokyopua, I wish I could write English like that :)

I also studied a bit of NLP, as it relates to trading. The theme shows up a few times on the "Market Wizards" books.

I'm curious, as I haven't seen any TV lately, what are you "reading" on CNN reports? Thanks.

As for NVLS, nothing new. The trend is up and I see fundamentals as attractive. I'll keep on holding it.

Despite those recent 9 downgrades on NVLS, the stock is holding ascending TL1 on close. The talk says "sell", but the money says "buy". Usually, money talks and bullshit walks.

If NVLS is able to close back above $33.25 you can take for a fact that it is going to $40 plus. Because it will demonstrate to every market participant with an open mind that those 9 powerhouse analysts are WRONG ! (http://mdteague.com/Flushed)

We'll see if I'm not the one to stay like (http://mdteague.com/bowdown.gif) ... time will tell, but I always follow my own judgement, so I'll continue holding NVLS.

Quote from: tokyopua on December 06, 2006, 06:43:36 PM
Anyway, going on a tangent there, sorry, but the point is that I agree that often analysts as a group say "Buy" when you should sell, and "Sell" when you should buy.  Cramer is constantly lamenting this fact on his show.  And in addition, I question Goldman's motives in tech recently. 

Tok,

Great post!  Applause.

I'm thinking that Goldman has been short, and that they've been getting hammered on the DOUBLE Short Squeeze breakout of November 13.

On October 8, NVLS gapped down, and broke below a Rising Channel (pattern in red).  The low of the channel was 26.05; NVLS found support at 26.13.

NVLS then went back inside the channel, formed a neckline (29.43...29.39) of a Bulish Inverse H&S (pattern in blue), put in the Right Shouder, then on November 13, had a DOUBLE breakout of both the Inverse H&S (Short Squeeze #1...S1 on the chart) AND the top of the Rising Channel (Short Squeeze #2...S2 on the chart).

Yeeks...murderous on the shorts, and with Goldman downgrading NVLS so vociferously, I suspect that they might have gotten their you-know-what caught in the squeeze.

Stifel Nicolaus' November 30 downgrade just above support didn't do them any good at all.  NVLS held well above the top of the Rising Channel, then rallied to a new high.

The Inverse H&S Target of 32.68 MADE.

The Rising Channel measured move of 33.47 also MADE, and more.  High is 34.75.

Short-term, Friday's low looks to be Data Point #4 of a Bear Flag.  NVLS finished with a Bullish Hammer on the day, but MACD has a negative divergence, and it went down through its signal line on Friday, so this pattern could break to the downside, and NVLS could sell off and look for support at the top of the Rising Channel, and possibly the Inverse H&S breakout.

Overall chart is bullish, though.

Quote from: Terliso on November 22, 2006, 10:24:43 PM
Nice pick applause ;)
NVLS could climb above 40 bucks easily ;)
Nothing goes straight up but patience will pay off ;)

I'd like to study Fundamental analysis too, David could you recommend me some good books for Fundamental Analysis? Thanks ;)

Regards,
Alister

Quote from: David Randolph on November 24, 2006, 09:08:10 AM
I recommend these 3 books on Fundamental Analysis:

Mastering Fundamental Analysis (http://www.amazon.com/Mastering-Fundamental-Analysis-Michael-Thomsett/dp/0793128730/sr=8-1/qid=1164376922/ref=pd_bbs_sr_1/104-9523553-3423120?ie=UTF8&s=books)
Buffettology (http://www.amazon.com/Buffettology-Previously-Unexplained-Techniques-Buffett/dp/068484821X/sr=1-1/qid=1164376970/ref=pd_bbs_1/104-9523553-3423120?ie=UTF8&s=books)
One Up On Wall Street (http://www.amazon.com/One-Up-Wall-Street-Already/dp/0743200403/sr=1-1/qid=1164377050/ref=pd_bbs_1/104-9523553-3423120?ie=UTF8&s=books)

Then, if you want to make your work easier and faster, I recommend you subscribe to Alphatrade's "Fundamentals" (http://www.alphatrade.com/) service.

If and when you have done this, let me know, there's more to it  ;)

Thanks David... a lot of pages to read :'(

I also think NVLS is in a bullish trend, I guess those downgrades are just bullshit...NVLS is been bullish since the end of July & still bullish...

Quote from: David Randolph on December 09, 2006, 07:14:33 AM
If NVLS is able to close back above $33.25 you can take for a fact that it is going to $40 plus. Because it will demonstrate to every market participant with an open mind that those 9 powerhouse analysts are WRONG ! (http://mdteague.com/Flushed)

Yup, NVLS could hit above $40 before turning back down..

BTW, how did you get that smiley flushing down the toilet? :D ;D

Hehe, check out this thread from SmartWrasse on the "Charts" board:

Emoticon Test (http://www.3stocksonfire.org/trading/index.php?topic=3724.0)

(http://mdteague.com/DancingSmile)

Quote from: David Randolph on December 07, 2006, 06:20:01 PM
Thanks for this great post Tokyopua, I wish I could write English like that :)

I also studied a bit of NLP, as it relates to trading. The theme shows up a few times on the "Market Wizards" books.

I'm curious, as I haven't seen any TV lately, what are you "reading" on CNN reports? Thanks.

As for NVLS, nothing new. The trend is up and I see fundamentals as attractive. I'll keep on holding it.

Yes, NLP is great for the emotional side of trading, because part of it focuses on the idea of "states", i.e. the emotional states we all go through, and the idea that we have all the resources necessary to cause those states at will, instead of allowing them only to happen as the result of external circumstances.  So for example you are good at controling your state as a result of a good or bad trade.   You dont get irrationally excited by a great trade, or deeply depressed by a bad trade.

As for the CNN reports, I dont remember the exact details, but recently there was reporting on the incident where Kramer (from Seinfeld fame) was doing a standup commedy routine and went on a racial tirade and used "the n-word".  The facts were that he did indeed do that, but the report was using a lot of words describing it as "abonimable", etc.  For me, I would like to just hear the news itself as facts, then make a judgement myself about whether its good or bad through without it having to pass first through the filter of the reporters sensibilities.  Lou Dobbs has a whole hour full of this, but I guess that is what the general public prefers or else it wouldnt be on air... so I am apparently in the minority.

Anyway, all that aside, NVLS had a good day in the face of all the recent downgrades, up 2%, chart still bullish   : :)

Your post explains why I'm less and less interested on general TV news as time goes by. The news is presented in such a superficial way that it is more of an entertainment show than an informative one.

Well, for entertainment I prefer to watch a movie. Even better, I like to go to the playground with my kids. Usually people watch too much TV because they don't have the discipline to controll their lives. 

This could be a good debate, but I always lack the words when I get out of the stock market context, and anyway, this is NVLS's thread, so I should write something about it ;D

Well, NVLS isn't boring in any way, in fact, I love this play of mine. All alone (well, some of you, like Terliso, agree with me since the beginning) against 9 investment powerhouses and guess what, NVLS is showing me a profit of 3.72%. This is the kind of play that brings me more confidence to trust my methods.

There's no way I'll let go of NVLS, because, if I'm right, they're wrong, and they have to pay the price !

(unless, of course, their mouth says one thing and their money (which is a lot), says another, which is entirely possible. If that's the case  the people that must pay a price are the ones that listened to Goldman's and others advice, instead of trusting their own analysis)

I forgot to mention Terliso's comments on learning Fundamental Analysis:

QuoteThanks David... a lot of pages to read  :'(

You don't like to read Terliso? I can assure you those are extremely interesting books. Anyway, I may try to write an article explaining the basics of fundamental analysis - just the basics, because that's all I know too. I feel I need to study just a bit more, but now that I know something about FA, it is a lot easier than I thought in my ignorance days. It's almost as easy as technical analysis ;)

Hey Randolph, Toky, etc!

This isn't the same guy that was bashing NVLS ?

http://www.youtube.com/v/iSoecK3u65Q

>:D >:D >:D >:D

 ;D

...what I would pay for some brutal honesty sometimes! 

LOL.

That video clip is awesome Ramsburg, thanks :)

NVLS was down a bit today, but recovered some ground after touching TL1 on the chart below.

I'll continue holding it.

This article explains fairly well what has been happening with NVLS:

Takeover Rumors Drive Up Novellus Shares (http://www.smartmoney.com/Techsmart/index.cfm?story=20061208&afl=yahoo)

Everybody says "sell", "sell", "sell". But I see the company buying its own shares in the open market, as the share count has been reduced over the last three quarters.

Goldman receives money from NVLS every quarter and is a market maker of the stock. I don't think they would come out and bash the stock like they did if it wasn't on the company's request.

Maybe a takeover will indeed happen. Or maybe the company wants to buy back its shares at a cheap price. Either way, with some time, NVLS will trade higher.

I'll continue holding the stock, despite the slight break of TL1.

My fundamental reasoning helped me keeping NVLS, despite yesterday's break of the short term ascending trendline (TL1).

The stock came back above it today, rising 3.44%, so from now on I'll consider the dotted line as the significant ascending trendline (I'll delete the other on tomorrow's update).

I'll keep on holding NVLS.

Beautiful NVLS, with 9 analysts downgrading it since October and the company aggressively buying back its own shares, I would say NVLS is one of the safest bets in the entire Nasdaq:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=30292;image)

The talk says "sell", the money says "buy", in the end, money always wins.

Quote from: Melf Elf on December 10, 2006, 08:11:27 AM
I'm thinking that Goldman has been short, and that they've been getting hammered on the DOUBLE Short Squeeze breakout of November 13.

On October 8, NVLS gapped down, and broke below a Rising Channel (pattern in red).  The low of the channel was 26.05; NVLS found support at 26.13.

NVLS then went back inside the channel, formed a neckline (29.43...29.39) of a Bulish Inverse H&S (pattern in blue), put in the Right Shouder, then on November 13, had a DOUBLE breakout of both the Inverse H&S (Short Squeeze #1...S1 on the chart) AND the top of the Rising Channel (Short Squeeze #2...S2 on the chart).

Short Squeeze #3 was on...S3 on the chart... exactly at the opening price of 33.56 on Friday, which was just a fraction above the December 11 high of 33.557.

NVLS eased off a bit to 33.17, giving the shorts temporary relief, but when it came roaring back above that "stop busting" print of 33.56 , Short Squeeze #3 really was on, pressuring the shorts right into the close.

It was a "stop buster" because anyone shorting the stock this week, and using that Monday, December 11 high of 33.557 as their Buy To Cover stop (which they should), got busted, and was forced to cover. 

If they didn't cover at 33.56, where they "should have," they're under water on the trade this weekend, and they have to worry about NVLS scoring new highs from here.

Never mind about the other TWO Squeezes IN PLAY.  Those players are in an even worse situation if they didn't cover the November 13 DOUBLE breakout.  They've been trapped in their short positions for over one month.

It general, it isn't a good idea to go shorting upside breakouts, or go shorting stocks that are making new highs, e.g. that November 13 DOUBLE breakout at 29.44, and at 30.10.

Quote
Yeeks...murderous on the shorts, and with Goldman downgrading NVLS so vociferously, I suspect that they might have gotten their you-know-what caught in the squeeze.

Goldman likely is in trouble on this one.  If they're short the November 13 DOUBLE breakout (or short before that), they've been dragged higher and are feeling some pain.

NVLS "could" make a Double Top here at/near 34.75 (the high of Red #3), then go down and break below the channel, but again, I'd want to see some kind of failure like that before I'd consider shorting a stock that is acting this bullish.

On the upside, if the 34.75 high gets taken out by very much, NVLS could run.  We've seen in a number of other charts, how Short Squeezes can be merciless, and very unforgiving, e.g., SWIR, NVEC, TZOO, NTRI, GIGM, etc.

If all of the analysts that David has mentioned, who have downgraded NVLS, are short NVLS, there's plenty of fuel for a rally on short-covering alone.
 

Thanks for your analysis Melf Elf (applaud) :)

The Nasdaq 100 was down 0.97% yesterday, yet NVLS was up 0.52%. It tells you something, doesn't it?

I know it's hard to see the market defying such "brilliant" analysis from big powerhouses, but the market always knows better. I like to know what I'm doing, but then I submit my analysis for market approval. If it says "no, you're wrong" I say "thank you sir, I'll close my position immediately".

But when it says "you're right David" like it is saying on NVLS, I say "then I want to be paid, and paid handsomely, for being right". So I'm not trading sardines here, NVLS wants to give me big bucks and all I have to do is sit tight and let the profits run. Because, to win, you don't have to just be right, you need to have the patience to wait for the full reward.

You can learn as much from partial victory than from defeat.

I'll continue holding NVLS.

You're exactly right David.  Sometimes you just have to go with what your gut tells you.........and my gut currently says to buy NVLS.

I was very saddened with letting go of DIVX at this point since I could've pocketed much more if I had let go but "O well", they'll always be an opportunity to jump back in. 

Let NVLS be the next MAMA mia.  Woott wooot!!

Thai

QuoteYou're exactly right David.  Sometimes you just have to go with what your gut tells you.........and my gut currently says to buy NVLS.

I'm happy you joined us on NVLS thai626 :)

My gut isn't talking to me anymore, and I'm happy with that. My reasons for being bullish on NVLS, simply put, are:

1) The initial analysis of this thread, which tells me NVLS is undervalued when compared to its industry peers. I also enjoy the aggressive reduction in the number of shares outstanding, it shows me the company is buying back its own shares, so managers agree with me when I say it is undervalued;

2) 9 downgrades from big powerhouses and the stock is up. This tells me demand is outstripping supply.

So I think I'm right in being bullish on NVLS, and of course I expect to give myself money by having the patience to wait for it.

Good luck for us thai626, but don't expect NVLS to do nearly what MAMA did, just compare the two market caps and you'll see that's pretty much impossible.

I almost forgot, technically the stock seems to be building an ascending triangle formation, which is a bullish technical development. 

NVLS continues to build the ascending triangle pattern. I expect a bullish breakout  of the $34.75 short term resistance level before the end of 2006.

NVLS is showing some short term relative strength as it continues to trade within the ascending triangle pattern. Just a bit of a bullish breeze from the general market and I see NVLS taking off to $36 or so.

Fundamentally, as everyone can read on the initial analysis, I see it going to about $44.

No reason to sell, I'll continue holding.

NVLS continues to build its ascending triangle technical pattern. On Friday the stock touched the $33.55 support level, prior short term resistance. I expect it to breakout above $34.75 next week.

Volume was a bit slow because of the holiday period, but NVLS is just one little step away from breaking out above the $34.75 resistance level. Making 7.3% on this trade, I won't let go of NVLS soon.

You almost can't see it on the chart below, but NVLS did it, it closed above $34.75 :) Just by 2 cents, but it's a start.

People that sold short on those 9 analysts downgrades will need to buy to cover this stock and make it run to $37 or so over the short term.

I read this thread again and NVLS's trade looks easy: I should hold the stock until $43.75 is reached and then make a new fundamental evaluation of the stock. In the meantime I should just patiently hold.

That's what I'll do.

I expected that a solid break above 34.75 would bring in a bit more volume, from the shorts and the technical buyers.   I don't doubt the fundamentals but with the Dow making new highs and NVLS breaking its recent high on that same day, I really expected more.  Maybe the traders are all in the Caymans for the week...combined with recent downgrades and the holidays...maybe just a low volume time of year.  I have more time to analyze since my family is gone for the week and I'm on vacation.  I can stare at the charts a bit longer than usual.

Anyway, the weekly chart tells me we have a pretty clear path up to the $44 range. 

In the end, I'll trust what the market tells me to do...

Hmmmm, where have I heard that before !!!

Quote from: JKN on December 27, 2006, 06:11:01 PM
I expected that a solid break above 34.75 would bring in a bit more volume, from the shorts and the technical buyers. 

JKN,

Good observation.  Applause.

I did, too, and I also expected to see the W-Bottom target of 35.05 get MADE.

The W-Bottom broke out, and Short Squeeze #3 was on, when NVLS printed above  33.557 on December 15.

Notice that the low of December 22 was 33.55 exactly, validating that breakout as support.  That was nice.

Yesterday, however, is a possible Bearish Doji Star Hangman, which is bothersome. 

It's hard to imagine that it is, given the new high in the stock, and particularly given the fact that a TRIPLE Short Squeeze is on, but if 33.55 validated support gets taken down, I wouldn't like it.

NVLS should be able to capitalize on the new high and the TRIPLE Short Squeeze.

If 33.55 validated support isn't support, and if NVLS then also breaks below the bottom of the Rising Channel (pattern in red), that would be another indication of a possible Double Top on the heels of the "possible" Bearish Doji Star Hangman.

Just something to watch for...we always have to look both ways.  :D

The bottom of the Rising Channel comes in on:

December 28 - at 33.36
December 29 - at 33.49
January 2       - at 33.62 (which puts the trendline above 33.55 support)

MACD also looks vulnerable here, which I'll show you next.

JKN,

Negative divergences in a bullish stock like NVLS are common, and they aren't a reason to go shorting new highs.

However, in NVLS, we've got a TRIPLE negative divergence, and with yesterday's new high in the stock, MACD still is below the signal line, so that's a non-confirmation, as it stands.

The shorts in this stock "should be" pressured higher on the new high, and on the TRIPLE Short Squeeze, so you see why I won't like it if 33.55 support gets taken down.

It will cause me to wonder what's going on, that NVLS can't rally.  ???

Thanks Melf.   I noticed the MACD behavior as well.  I always look at volume in various time frames as a key indicator.

Thanks for your technical analysis JKN and Melf Elf, great stuff.

I agree with Melf Elf, $33.55 is key short term support on NVLS. I don't have any reason to suspect the stock will break $33.55 instead of $35 on the upside, because the trend is bullish.

I don't care much thinking about divergences on technical indicators because they are too short term oriented and I've been burned before trusting those indicators.  As I see it, no stock ever makes a meaningful move (no stock above $1 B market cap) without having some periods of weakness and technical divergences.

I'll continue holding NVLS.

Do you think NVLS is just consolidating right now at the resistance? It seems as if it is probably going to continue testing the resistance until a spike in volume occurs which in effect explode it pass the $34.75. Quite possibly right after the Holidays when everyone gets back into the buying mood. Just a thought...

Quote from: Melf Elf on December 28, 2006, 04:40:26 AM
I did, too, and I also expected to see the W-Bottom target of 35.05 get MADE.

Yesterday's high was 35.00 even.  That's close enough to consider the W-Bottom target of 35.05 MADE.  They aren't always exact.

Quote from: kpunarc on December 28, 2006, 04:40:49 PM
Do you think NVLS is just consolidating right now at the resistance?

kpunarc,

Yes, good observation.  Applause.

This has looked like a high level consolidation, which is fine, and it has looked particularly good since 33.55 support got validated exactly at the December 22 low.

Quote
It seems as if it is probably going to continue testing the resistance until a spike in volume occurs which in effect explode it pass the $34.75. Quite possibly right after the Holidays when everyone gets back into the buying mood. Just a thought...

Something like that is what we would expect to see, and that would be very nice.

But, as we discussed yesterday, we want to be looking the other way, too, for any signs that we're topping here, "just in case."

Yesterday's candle looks like another Bearish Hangman.  The tail was twice as long as the "real body" (the open and close).  So, we've got back to back suspicious looking characters on the chart the last two sessions.

MACD ticked down from below its signal line yesterday, while the stock itself put in a nominal new high at 35.00, then sold off.  So, we continue to have a non-confirmation and now a refusal at the signal line in this indicator.

Quote from: David Randolph on December 28, 2006, 04:34:30 PM
I don't care much thinking about divergences on technical indicators because they are too short term oriented and I've been burned before trusting those indicators.

I understand what you're saying about getting burned trusting indicators, David.    They aren't always easy to interpret, and I think it's a good idea to use them in combination with what the chart itself is doing.

Someone mentioned that Frederick likes Texas Hold 'Em, which I've never played, but which I enjoy watching.  I view the candles in the charts and the technical indicators somewhat like knowing what my hole cards are, then seeing what's been bet, then deciding whether to fold, call or raise, then seeing "the flop," more betting, "the turn," more betting, then "the river card."

Bad analogy, but somewhat like that.  :D

What have I got so far in the NVLS trade?

1. I've got a gain.

2. I've got two Bearish Hangmen showing up on the chart, the second one yesterday, after the 35.05 target MADE within five cents.

3. I've got a TRIPLE non-confirmation in the MACD, and now a refusal from below the signal line, which I know "can be" a deadly signal.  Not always, though  (see next post for an exalmple).

4. I know that 33.55 has been validated as support.

5. I know that the bottom rail of the channel (in red) almost is conjunct (at the same data point) the 33.55.

6. I know that a TRIPLE Short Squeeze is on, but that the shorts aren't being pressured higher, as they "should be."

That might get taken care of beginning next week, as kpunarc suggested, when we emerge from thin holiday trading and everyone gets back in the buying mood.

Conclusion: As long as NVLS holds up at this "high level consolidation," I'll "hold 'em," but I'm going to "fold 'em" and take a profit if 33.55 gets busted.  :D

Next post: an example of MACD negative divergences, and refusal at the signal line.

Quote from: Melf Elf on December 29, 2006, 03:03:58 AM
3. I've got a TRIPLE non-confirmation in the MACD, and now a refusal from below the signal line, which I know "can be" a deadly signal.  Not always, though  (see next post for an exalmple).

What I like about using MACD is that it often serves as a "lead indicator," telegraphing the future direction of a stock prior to a breakout, or a breakdown.

Many of you remember AERTA (symbol now is AERT), a 3SOF pick last summer, and my posts on the MACD back then.

All of our upside targets had MADE.  AERTA was at 10-year highs (if not all-time highs...my charts only go back 10 years), but the MACD histogram had a DOUBLE negative divergence, and then a refusal from below the signal line on June 23, after AERTA rallied that day to 3.66, then closed down, at 3.42.

June 28, following the MACD "lead indicator," AERTA broke down below a Symmetrical Triangle.  It then formed a Bear Flag...broke below that, etc.

Upshot: AERTA tanked more than 60% from the June 23 high to the November 21 low of 1.48.

UGH.

That's not in any way a prediction about NVLS.  I don't predict.  I follow.  If 33.55 support gets taken down on the heels of this non-confirmation and refusal in the MACD, I'll sell it and take the money.

Thanks for the great technical analysis Melf :)

Quote from: kpunarc on December 28, 2006, 04:40:49 PM
Do you think NVLS is just consolidating right now at the resistance? It seems as if it is probably going to continue testing the resistance until a spike in volume occurs which in effect explode it pass the $34.75. Quite possibly right after the Holidays when everyone gets back into the buying mood. Just a thought...

I agree with that possibility kpunarc. Asian and European markets were up 1.3 - 1.4% today, so probably the US markets will open with a positive spin tomorrow.

NVLS will have the chance to breakout above $34.75 in a decisive way over the start of 2007. Let's give it until the end of the week.

I don't think NVLS will disappoint, I'll keep on holding the stock.

The general market couldn't hold its gains through the end of the session due to "negative" FED minutes. These are just short term gyrations (of course the market can't go up everyday, or every week, not even every month), but we continue to be in a bull market and probably 2007 will end with another 5 - 10% gain on the S&P 500.

NVLS went down to touch its short term support zone around $33.55, but it came back to close the day at $34.16. I adjusted my ascending trendline and it looks like NVLS still closed above it.

I'll keep on holding NVLS.

Sold NVLS at 34.42.

Yesterday's high of 34.97 was a short-term Double Top.  Although 33.55 support held, we've now got the possibility of a H&S Top (neckline 33.55 and 33.58).  With MACD looking so weak, I decided to sell.

this goes to show that stocks are like women....

two great men using the same methods (TA) yet still come up with two opposing conclusions :P

Quote from: kpunarc on January 04, 2007, 01:40:41 PM
this goes to show that stocks are like women....

two great men using the same methods (TA) yet still come up with two opposing conclusions :P

kpunarc,

David relies much more on the fundamentals than I do, and then beyond the analysis, fundamental or technical, there's always the question of how different people would play each trade.

Think of it in terms of the Texas Hold 'Em analogy that I gave: different players would play each hand (or trade, in our case) entirely differently.  Some would fold right away, and not play at all (not take the trade).  Some would raise.  Some would raise an amount more than other players would, etc.

And, no individual player "gets it right" on every hand.  Far from it! 

In this case, NVLS hasn't broken 33.55 support, so it still could rally and take out the 34.97 and 35.00 highs, and go much higher without doing anything wrong at all, so far, and David could end up with a much better trade than I had.

That isn't the point, though, to compare our performance to someone else's. 

Just as in Texas Hold 'Em, probably no two traders would play each trade the same, but hopefully, we all can benefit from each other's differing opinions and decisions about buying and selling.

In addition to the reasons for selling that I presented this morning, I had 34.55 IN PLAY from the Double Inverse H&S breakout on this 1-minute chart (below).  Given the weakness in NVLS, I sold a little below the the target, at 34.42 since targets don't always get MADE.

Shortly after noon, NVLS printed a high of 34.54, so that's close enough to consider the target MADE.  Whether or not it has more in it on the upside, I simply can't know that (nor can David).  I sold it as a business decision, so to speak, just as David has done in the past, and will do again in the future.   That doesn't necessarily mean that we've turned bearish on a stock.

In my view, the important thing is to share our DD, technical or fundamental, rather than view anyone as "right" or "wrong."  I have many losing trades, and many trades that I "should have" done better than I did.

I'm not making a bearish call on NVLS.   In fact, I don't make calls on stocks.   NVLS is still bullish.  I just play stocks as best I can, and in this case, I decided to "take the money," so to speak, for the reasons given.

Good luck to you and to others who still are long NVLS.  I'm glad to see that it's rallying back toward the high of the day.  ;)

Hi Melf, you really know how to write and explain things, applaud :)

I agree with everything you said. Each man has his techniques and opinions and we can all learn from each other, so long that we keep our minds opened.

Of course, I can be wrong on NVLS, but what I've been learning in my 11 years trading experience (doesn't look like much, but it has been extremely intensive learning) is this simple conclusion:

«If you focus too much on short term indicators you will be a short term trader, and short term trends are pretty much unpredictable»

You say the following:

QuoteIn addition to the reasons for selling that I presented this morning, I had 34.55 IN PLAY from the Double Inverse H&S breakout on this 1-minute chart (below).  Given the weakness in NVLS, I sold a little below the the target, at 34.42 since targets don't always get MADE.

1-minute chart? Come on ... do you really think that stuff is reliable?

I mean, I've done that exact same kind of thing for years (too many, I guess), just to find out that ... it doesn't work ???

The big money, I mean, the only money, is on the big swing, wouldn't you agree? (hehe, I guess this NVLS thread will get even better going forward)

I want to tell you and everybody else that I feel, better, I know, I'm still far away from a sound long term winning strategy. I am. But I firmly believe the path to trading/investing excellence needs Fundamental Analysis.

I've only met one long term successful technical trader, which was an automatic systems trader. He spent a year of his life developing a trading system and then  applied that system consistently for nine years so far. He had a 35% average annual return on his initial investment and is now a rich man (and a very nice man too).

The thing about him that put him head and shoulders above me and others of that stock traders community was that he had a much longer time frame. He made between 10 - 20 trades a year, and caught the majority of the big swings. I wish he was here at Stocks on Fire too ... you know what, I'll invite him to join us :)

Where were we? So, Melf Elf, I can see you're a hard working man, and a firm believer in technical analysis, have you ever thought of developing an automatic trading system? I would like to do that too ... perhaps we could motivate each other on the developing process.

Coming back to NVLS, the stock closed at $34.82, so close to breaking out above $35. I have no reason to believe it won't do that, fundamentals are attractive and the trend remains bullish. I'll keep on holding the stock. 

i was actually trying to make a joke showing how complex stocks can be. lol. but i appreciate the analysis  ;D

Quote from: David Randolph on January 04, 2007, 06:08:25 PM
If you focus too much on short term indicators you will be a short term trader, and short term trends are pretty much unpredictable

David,

I guess that depends on how you want to play the market.  Some people play in the very short-term, so short-terms indicators are appropriate.  I'm more of a pattern player/support-resistance player, so I generally don't use real short-term indicators, except...

Quote
1-minute chart? Come on ... do you really think that stuff is reliable?

...when I want a short-term strategy for an entry or exit, yes, often it's pretty reliable, like yesterday's DOUBLE Inverse H&S target of 34.55.  I used the very short-term 1-minute chart because I was concerned about the possible H&S Top in the hourly, and the possible Bear Channel in the daily chart, and wanted a short-term strategy, to exit.

We got to 34.44 in the first half hour, then to 34.54, within one penny of the 34.55 target IN PLAY, just after noon, so that was a pretty reliable short-term pattern when I was looking for a short-term rally. 

Nothing "always" works, of course, or at least I should say that I haven't found anything that "always" works.  Maybe someone else has.

QuoteI mean, I've done that exact same kind of thing for years (too many, I guess), just to find out that ... it doesn't work ???

The big money, I mean, the only money, is on the big swing, wouldn't you agree? (hehe, I guess this NVLS thread will get even better going forward)

I don't have any way of knowing that, David, however CNBC did a segment last year on some young guys who made millions daytrading off very short-term charts.  I assume that CNBC verified their results, but I don't know.  I can see how it could be done, though, given all  that is available now as far as charting software, etc., but one would have to be very dedicated and disciplined about executing a strategy to be successful, I would think.

But, that type of trading isn't appropriate for 3SOF.   It wouldn't be possible to issue the buy and sell signals fast enough, and besides, most 3SOF members don't have the time to be that active in the market, and are looking for exactly what you're offering: daily signals to buy, sell, or hold.

Quote
I want to tell you and everybody else that I feel, better, I know, I'm still far away from a sound long term winning strategy. I am. But I firmly believe the path to trading/investing excellence needs Fundamental Analysis.

The key there is trading vs. investing.  For trading, no, I don't think that one needs to know anything at all about the fundamentals.   In other words, "Here's the pattern....here's the breakout....here's the target....here's the stop...here's the risk:reward on the trade...." 

In that case, one simply is trading the chart, not the company. 

For investing though, yes, I agree with you about the fundamentals being important.

Quote
I've only met one long term successful technical trader, which was an automatic systems trader. He spent a year of his life developing a trading system and then  applied that system consistently for nine years so far. He had a 35% average annual return on his initial investment and is now a rich man (and a very nice man too).

I've spent hours and hours studying Metastock's Expert Advisors.  They give you automatic buy and sell signals, but so far, I haven't found anything that looks good.   

Most of them look awful, in fact.  A lot of whipsaw signals; the kind you don't like.  :P   ;D 

Quote
The thing about him that put him head and shoulders above me and others of that stock traders community was that he had a much longer time frame. He made between 10 - 20 trades a year, and caught the majority of the big swings. I wish he was here at Stocks on Fire too ... you know what, I'll invite him to join us :)

If I were a younger man like you, I think that I might take an approach like that.  Focus more on the weekly charts of companies that have good fundamentals.

Quote
Where were we? So, Melf Elf, I can see you're a hard working man, and a firm believer in technical analysis, have you ever thought of developing an automatic trading system? I would like to do that too ... perhaps we could motivate each other on the developing process.

I've thought about developing an automatic trading system, but it hasn't gone any farther than thinking about it.  :D

Quote
Coming back to NVLS, the stock closed at $34.82, so close to breaking out above $35. I have no reason to believe it won't do that, fundamentals are attractive and the trend remains bullish. I'll keep on holding the stock.

That was a very, very nice close! 

Basis this daily chart, the bottom rail of the Rising Channel (in red) came in yesterday at 34.07.  NVLS opened at 34.05, a hair below it, rallied to 34.44, then it tanked to 33.74 and looked like it was going to bust the 33.55...33.58 neckline of the H&S Top.

Nope!

NVLS came roaring back in the afternoon and had a very strong close.  That was what I've been wanting see, given that a TRIPLE Short Squeeze is on.  The shorts haven't been pressured as they "should have been,"  but hopefully they now will be, on a takeout of the short-term top, at 35.00 and 34.97.

A print of 35.01 is a Rectangle Pattern breakout, which would put a short-term target of 36.36 IN PLAY as long as NVLS trades above 35.00.

Math for the Rectangle:

34.97 - the more conservative of the 34.97 - 35.00 highs

33.58 - the more conservative of the 33.55 - 33.58 lows

34.97 - 33.58 = 1.39 Points + 34.97 = Target: 36.36

Good luck, David, and to everyone who still is long!

Quote from: kpunarc on January 05, 2007, 01:00:25 AM
i was actually trying to make a joke showing how complex stocks can be. lol. but i appreciate the analysis  ;D

kpunarc,

Oh-h...okay, I misunderstood your comment as one of frustration, that I had sold, and that David hadn't. 

Yes, stocks can be very complex.  Rotten little devils!  :D  >:D

MACD has continued lower, but on Wednesday's selloff in the stock and a new low in the MACD, the histogram made a "higher low," and on yesterday's rally, the histogram ticked higher.

That's called a Bullish non-confirmation, meaning that the histogram isn't confirming the new MACD low and is, in fact, improving in strength by ticking higher yesterday.

As with any indicator, the most important thing is for PRICE now to confirm what the indicator is telling us, by printing 35.01, which would be a breakout  above the Rectangle pattern.

QuoteAs with any indicator, the most important thing is for PRICE now to confirm what the indicator is telling us, by printing 35.01, which would be a breakout  above the Rectangle pattern.

Will you buy back the stock if that happens today? Thanks, have a nice day :)

Quote from: David Randolph on January 05, 2007, 06:26:55 AM
Will you buy back the stock if that happens today? Thanks, have a nice day :)

David,

No, because I can't structure a good risk:reward on the trade.

If I "pay up" and buy the 35.01 breakout, and sell at the indicated 36.36 Rectangle target that would be IN PLAY, my gain on the trade would be only 3.85%.

If I buy the 35.01 breakout, then get stopped out at 33.54, below the 33.55 low of the Rectangle pattern, my loss on the trade would be 4.2%.

NVLS certainly could rally well beyond 36.36, but I wouldn't have any target IN PLAY that would indicate that, and I'd be re-entering on a lousy risk:reward.

Have a good day, too!  ;)

Quote from: Melf Elf on January 05, 2007, 05:25:00 AM
As with any indicator, the most important thing is for PRICE now to confirm what the indicator is telling us, by printing 35.01, which would be a breakout  above the Rectangle pattern.

The Bulls weren't able to take the price higher, and the histogram now is back to confirming the TRIPLE negative divergence in the MACD by making a new low, coincident with the new low in the MACD.

Now, it's The Bears who are needing PRICE to confirm the technical weakness, by taking out 33.55 - 33.58 support (next post).

In late afternoon trading, NVLS tagged this week's low of 33.58, then bounced very quickly into the close of 33.65, which is an indication that players know where support is: 33.55...33.58...which is the bottom of The Rectangle.

But, the weak black candle on Friday presents some problems:

1. At Thursday's print high of 34.92 and very nice close of 34.82, the Bears were extremetly vulnernable to the TRIPLE Short Squeeze that is on, if NVLS had printed a new high of 35.01 in Friday's session. 

In that situation, "buying begets buying."  Bears would have been forced to "Buy To Cover" their short positions, and new buyers would have come in on the breakout to new highs.

So, the down opening not only was a big disappointment to The Bulls, The Bulls now are faced with a similar problem at Friday's close to the one that The Bears faced at Thursday's close: a break of 33.55...33.58...33.58 Rectangle support.

2. A print of of 33.54 in Monday's session will be a downside break of The Rectangle, and not only will that hit some stops (my stop was 33.54), but that will invite more shorting on the pattern break, so "selling begets selling."  Shorts, however, would need an uptick to short.

If 33.54 gets printed, 32.19 would be IN PLAY.

Math for The Rectangle:

34.97 - the more conservative of the 34.97...35.00 highs.

33.58 - the most conservative of the 33.55...33.58...33.58 lows.

34.97 - 33.58 = 1.39 Points.  33.58 - 1.39 = Target: 32.19

3. In addition to the threat of breaking The Rectangle to the downside, NVLS also has broken below the Rising Channel (pattern in red), which was at 34.20 on Friday. 

The bottom of the Rising Channel comes in on Monday, January 8, at 34.33 and it now represents resistance on any further attempt to take out the 35.00 - 34.97 highs of The Rectangle.

The break of the Rising Channel suggests that NVLS could re-test the bottom of the channel, which is 30.82, or horizontal support levels (31.82 - 32.06) within the channel.

If The Rectangle breaks to the downside, and if the 32.19 target that would be IN PLAY is exceeded, next support would be just below that:

32.06 - Data Point #4 (in red) of the Rising Channel

31.75 (roughly)  -  the 50DMA

Thanks for the great short term technical analysis Melf Elf  :)

Probably you're right and the stock will break $33.55 on close, I don't know. It may go down to the ascending 50 days SMA, coming up at $31.52.

I can live with that, because the technical trend remains bullish, despite some short term selling that may occur. Also, my initial analysis on this thread says fundamentally the stock is worth 30% more than the current share price.

I fully understand your short term technical motives for selling, but since I want to hold stocks for longer periods, I have to expect and live with periods of weakness, that's the only way to catch a big swing.

Great technical analysis, though. One day I'll make a video to show you how to make your charts smaller ;D You know what, I'll try to make it now!

I'll keep on holding NVLS.

Ok, as you know sometimes I lack the words in English, but I guess the following video more or less shows how to upload your charts to 3 Stocks in a smaller size:

http://video.google.com/googleplayer.swf?docId=4783812593743604711&hl=en

Quote from: David Randolph on January 06, 2007, 02:51:30 PM
One day I'll make a video to show you how to make your charts smaller ;D You know what, I'll try to make it now!

David,

Thanks for taking the time to make the video, but unfortunately, I only get a big white screen when you post videos, and nothing else.  :(

When I point my cursor at the white screen, a message shows up: "Click to activate," but when I click, the white screen only gets bigger!   :D

I'm lousy at anything to do with computers, so I don't have a clue what the problem is, but thanks a lot for trying.  Sorry that my charts are so big.  When I make them smaller, they get chopped off, but the scroll bar still is there.

I'll tried again (chart below) using your 504 X 459 size (my default width is 800...height is 600), but it didn't work.   >:(

Sorry.

Quote
I fully understand your short term technical motives for selling, but since I want to hold stocks for longer periods, I have to expect and live with periods of weakness, that's the only way to catch a big swing.

I owe you an apology for my short-term technical posts on NVLS (and others), David.  I've been aware that you've become more focused on the fundamentals and on the longer-term, and I almost deleted my posts yesterday, after I read that you've closed the 3SOV portfolio.

I realized that my discussion of The Rectangle pattern in NVLS, for example, has to be frustrating for you to read when you're only interested in catching a big swing.  I understand that now, and I apologize for not catching on to that sooner.  My posts have been completely irrelevant to your purpose.

Here's the failed attempt at a smaller chart:  :P

EDIT: Well, at least the scroll bar is gone, but so are are the last ten days of trading!  ;D  :P

Lol, no, your posts were great because I'm opened to new ideas :) Our debate serves those who are still deciding if they want to be short or long term traders.

That thing with the videos is odd. Don't you have "Windows Media Player"?

Now I'll write everything in text:

1 - Resize your Metastock window. With a stock chart opened, put your mouse on the edge of the chart and click and drag to resize the window. You'll get a smaller Metastock window, it has nothing to do with the resolution of your screen.

2 - Go to the "start" menu, "all programs", "accessories" and then open "Paint"

3 - Over your stock chart in Metastock, press "ctrl"+"c" (this is a copy of your Metastock chart).

4 - Go to paint and press "ctrl"+"v" (this is the paste of your chart to Paint)

5 - Then "Save as" with type ".gif"

6 - Write a post and then "browse" your saved chart.

It will appear on 3 Stocks with the size you've saved. The correct size should be 500X400 pixels.

Make a few tests on the "Charts" board. I hope this helps. If not, of course keep posting anyway (the content is much more important than the form, and the content is great), no problem with a few scrolls :)

Melf, please make your tests on the "Charts (http://www.3stocksonfire.org/trading/index.php?board=7.0)" message board (the type must be .gif, not .png). Thanks.

You have to click here:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=31339;image)

On the right top of your screen to be able to resize charts on Metastock.

David,

Okay, I finally got this chart without the scroll bar, but I don't like it because I can't read any of the numbers or the annotations, like the explantion of the W-Bottom at the bottom right of the chart, or the explanation of the breakouts and the Double Short Squeeze on the Channel Breakout and the Inverse H&S breakout, or the parameters of The Rectangle.

I realize that the scroll  bar is a bit of a pain, but this chart seems useless to anyone as far as understanding the patterns, without those explanations.   

I think I'll stick to my old way of posting charts, if that's okay.

Thanks for your help.  ;)

QuoteI think I'll stick to my old way of posting charts, if that's okay.

Well, you made it, congratulations ! Instead of uploading bigger charts with scroll, you could just increase the font of the text on your Metastock chart, but do as you wish.

Thanks for your participation :)

Quote from: David Randolph on January 07, 2007, 08:08:05 AM

Well, you made it, congratulations !

David,

Thanks.  I guess that proves that you can teach old dogs new tricks, huh?  :D

Quote
Instead of uploading bigger charts with scroll, you could just increase the font of the text on your Metastock chart, but do as you wish.

Yeah, that's what I'd need to do.  I'm using 8 pt. text, the smallest that Metastock offers, but it's stil too big to get all of my patterns drawn and explanations of where patterns broke, and where re-tests failed, etc., like this CPST chart.

If I made the font size any bigger, we'd all go blind looking at this mess.  ;D

Good luck all!

I'm out of NVLS at 33.55

I'll pick a better time to jump back in as it will be on my watch list.

Quote from: thai626 on January 08, 2007, 12:48:28 PM
Good luck all!

I'm out of NVLS at 33.55

I'll pick a better time to jump back in as it will be on my watch list.

Thanks for the info thai626, perhaps you did well, I guess Melf Elf was right in being short term bearish on NVLS.

I think the stock can go down to meet support at the 50 days moving average without damaging the overall bullish technical picture. Volume was very high today as the stock broke down below the $33.55 technical support.

I think it is possible that today's action was just to throw out of board the weak hands (no offense) and the stock rebounds nicely throughout the rest of the week. I guess time will tell.

I firmly believe short term trading won't make anybody money over the long term (I hope I'm wrong and some of you can pull it out :)), so I need long term reasoning to buy and sell stocks. As for NVLS:

- Technical analysis is bullish, despite the very short term weakness;
- Fundamental analysis shows a stock trading at 18 times 2006 earnings, and the Semiconductor Equipment & Materials industry average is 24. NVLS's revenues are growing 31% from the year ago levels, and the industry is growing just 11%. So NVLS looks undervalued.

Technicals and Fundamentals say NVLS goes higher. Candlesticks and short term technical divergences and indicators says it goes lower. They can both be right, but the long term money will be made by people following the first two "schools" because the money is made on the big swings, not in short term fluctuations.

I'm also still learning how to play the big picture, the main moves, so I've made some mistakes recently. But I feel I'm on the right path to accumulate wealth.

I'll keep on holding NVLS.

Quote from: David Randolph on January 08, 2007, 05:12:28 PM
I firmly believe short term trading won't make anybody money over the long term (I hope I'm wrong and some of you can pull it out :)), so I need long term reasoning to buy and sell stocks.

David,

I respect your opinion but I don't necessarily agree with that sentiment.  Once a person sells a particular stock, it's not like he/she cannot buy back in the stock.  So with a little patience and perhaps some luck, the stock may pull back so you can purchase even more shares.  If the stock does not pull back, atleast you played it safe cause the way to make money is to minimize risk/loss not how much you made in a stock.

I may be back in NVLS...............I may not.  But atleast I followed my plan for the short term.  I wish you good luck over the long haul.

Thai

QuoteDavid,

I respect your opinion but I don't necessarily agree with that sentiment.  Once a person sells a particular stock, it's not like he/she cannot buy back in the stock.  So with a little patience and perhaps some luck, the stock may pull back so you can purchase even more shares.

Yes, the problem is more times than not one loses his position and can't buy back the stock. He doesn't buy lower because he thinks: "I was right in selling that stock" and becomes distracted with other "momentum" plays. And he doesn't buy higher because he thinks: "I missed that one, now I'll wait for a pullback to get in" ... but the pullback never comes, or it comes at a much higher level.

QuoteIf the stock does not pull back, at least you played it safe cause the way to make money is to minimize risk/loss not how much you made in a stock.

I agree. But don't forget there are two sides to this game: cut your losses short and let the profits run.

QuoteI may be back in NVLS...............I may not.  But at least I followed my plan for the short term.  I wish you good luck over the long haul.

Thai

You did well in following your plan, but the question you need to ask is: was my plan based on sound technical and fundamental principles?

Anyway, of course I respect your opinion and wish your long term success, just trying to create some debate here ;D

Unfortunately NVLS is going down, so you guys are right over the short term. Perhaps it will go down as far as the 50 days moving average, but I can't lose my position, not until the market proves me wrong. It can do that both ways:

1) The technical trend, which remains bullish (unless you consider a 3 days trend), turns bearish;
2) My fundamentally based case is proved wrong.

Since none of these two happened, as you, I need to follow my game plan, so I'll keep on holding NVLS.

I made a little trick today on NVLS, I hope you don't mind. You see, technical analysis must be dynamic, so lines and indicators can and should change to adapt to the stock's movements. One shouldn't exaggerate and do optimization of indicators, but why should I use a simple moving average if the stock is responding to an exponential moving average?

I had a 50 days simple moving average on NVLS's chart, as I have in most charts. Today the stock traded down quite a lot, made a low at $32.20 and rebounded strongly to finish 0.82% up on the day.

Well, the simple moving average was standing at $31.92, but the exponential  was at ... $32.20 !

So I changed my moving average from simple to exponential, to adapt to what the stock is doing. This way I expect the low to have been made already.

NVLS touched its ascending support, provided by the 50 days exponential moving average and probably is ready to resume its uptrend to highs above $35.

What is the main difference between a simple moving average and an expontenial one as it relates to this stock? And whould that hold true as a rule for all stocks or just certain ones?

Quote from: lancefur on January 10, 2007, 05:33:39 PM
What is the main difference between a simple moving average and an expontenial one as it relates to this stock? And whould that hold true as a rule for all stocks or just certain ones?

A simple moving average gives equal weight to all values of the moving average. An exponential moving average gives more weight to more recent values.

This way the exponential moving average reacts faster to short term price developments, but it also gives more false signals, when compared to a simple moving average.

When considering moving averages as support or resistance levels, you can use one or another, but you can adapt your analysis to use the one the stock is responding to. NVLS reacted positively after touching the exponential MA, and it didn't touch the simple MA, so I changed my MA from simple to exponential.

If you don't have a clue of what a moving average is, don't worry, just ask and I'll be glad to reply. To make professional technical analysis you need Equis Software Metastock.

Quote from: David Randolph on January 10, 2007, 04:40:39 PM
Today the stock traded down quite a lot, made a low at $32.20 and rebounded strongly to finish 0.82% up on the day.

Well, the simple moving average was standing at $31.92, but the exponential  was at ... $32.20 !

David,

And, the Rectangle target of 32.19 MADE, within one penny, at your 50EMA.

Quote from: Melf Elf on January 06, 2007, 04:48:04 AM
If 33.54 gets printed, 32.19 would be IN PLAY.

Math for The Rectangle:

34.97 - the more conservative of the 34.97...35.00 highs.

33.58 - the most conservative of the 33.55...33.58...33.58 lows.

34.97 - 33.58 = 1.39 Points.  33.58 - 1.39 = Target: 32.19

Yes, that's right Melf Elf, thanks for the updated chart.

NVLS couldn't push too high today because $33.55 was a support level, so now it works as a short term resistance. Volume was kind of weak today on NVLS.

I'm already feeling some pain because of selling awesome stocks due to short term worries, like my dear airlines and ONSM, for example (ONSM not so safe, but still very hot).

I don't want to sell NVLS and cry a few weeks from now. Because NVLS is a great stock too, both from a technical and fundamental perspective, as you can read on the initial analysis of this thread.

I'll keep on holding NVLS.

I feel the discussion around NVLS has been a bit biased towards technical analysis (my and Melf Elf's fault, but it has been great), and in over 6 pages we have only the initial analysis and some comments on analysts downgrades to support the fundamentally bullish case on the stock.

To close some of that gap this post will be strictly fundamental. 

First, let's study the quarterly revenue and gross margin graphs:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=31674;image)

You can see on the graph above that, after being very stable for the five quarters between Q4 2004 and Q4 2005, revenues started rising strongly in 2006, from $332 M in Q4 2005 to $444 M in Q3 2006.

As importantly, gross margin rose from 49% to 55% over the same period.

The share price responded to the fundamental improvement, and NVLS stock rose 36%, from Q4 2005 to the present. Revenue growth from the same period a year ago was 31% for NVLS and just 9.3% for the Semiconductor Equipment & Materials industry. Also NVLS seems to be much more efficient than its competitors, because NVLS's gross margin is 55% and the industry average is just 42%. Some of these fundamental advantages are already discounted by the share price, as the richer revenue multiple of 2.44 for NVLS and 1.58 for the industry implies.

But, as we'll see over the EPS and net margin graph, NVLS still looks undervalued:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=31675;image)

On this quarterly EPS graph you can see profits jumped a lot in Q2 and Q3, and Q3 2006 was the second best quarter of the last 46 quarters, going back to Q2 1995.

Expected EPS for the full year of 2006 is $1.78, so the trailing earnings multiple is just 18.4, and the industry average is 24. NVLS looks to be 30% undervalued, and I think it should be valued above the industry average, because gross margin, net profit margin and growth rates are higher than average.

NVLS EPS has been growing 16% a quarter for the last 11 quarters.

I know about the several downgrades from other analysts, but that only makes my belief stronger, because at the same time they issued those bearish research pieces, NVLS shares kept on climbing.

Fundamentals say the stock is undervalued. Technical analysis is bullish, despite some very short term weakness (remember, this is a $4 B company, one shouldn't expect it to rise fast).

I'll continue holding NVLS.

Despite the continuing consolidation phase on NVLS, I'll keep on holding the stock, due to medium term technical factors and long term fundamentals.

NVLS was due to rally strongly today, but the general market weakness didn't let it fly too much. Anyway, it was a positive reaction to the 50 days moving average that I welcome. Will keep holding NVLS.

The Channel break target of 30.82 MADE this morning after the gap down on the green trendline failed to hold, as support.  That's a return to the bottom of the channel, at Red #2.

MACD did a good job as a "lead indictor" at the 35.00 top (next post).

The Triple Negative divergence in the MACD occurred exactly at the 35.00 top, then the MACD turned down from there.  The 34.97 re-test of the high a couple of days later failed, and we got the short-term double top. 

NVLS currently is at two-month lows, so although it looked like only a short-term signal, these signals also can be a "first alert" for something more than just the very short-term.

So what you are saying is that ithis could turn out to be a view to steady declines? I know this is the technical picture of the stock but how does this marry up to the current fundamentals? And is there any news that is preventing this stock from doing what it should be doing?

NVLS had a nasty technical breakdown today. Melf Elf was right at the $35 top, hats off to him :)

The whole semiconductor sector was bleeding today, and NVLS was especially hit by the following news:

• Lam Research forecast sinks chip-equipment stocks (http://us.rd.yahoo.com/finance/external/cbsm/SIG=12tmtfbsb/*http://www.marketwatch.com/news/story/lam-research-forecast-sinks-chip-equipment/story.aspx?guid=%7BA5FA91B0%2D1100%2D4C18%2DA276%2DFD0511DF08A6%7D&siteid=yhoo&dist=yhoo)
at MarketWatch (Thu 5:11pm)

I'm afraid the semiconductor industry, being cyclical, is at its top. I see LRCX has even better fundamentals than NVLS, and it fell 15% on the news ::)

It will take all in me to admit this mistake, especially after all I wrote on this thread, but I need to be humble and recognize the fact that the market has proved me wrong.

The plan is to SELL NVLS tomorrow, this isn't a business to own for the long term and the short term risk can be high, I'm sorry I took so long to perceive it :P

The lesson learned is: fundamentals must be seen in conjunction with the industry's characteristics. If the industry is cyclical, fundamentals will be the best at the top and the worst at the bottom. It's more complex than just ratios and comparisons with the industry's average valuation. Live, learn, move on to be a better trader.

Just leaving an updated chart, making sure NVLS is on my Metastock database: