3SOF

Interesting that today is the first really bearish candlestick pattern for CIMT since the first big breakout.  Can CIMT beat the Bearish Cloud Cover near term?  Who cares, like David says, this one is a buy and hold!   

QuoteThanks David

I'm getting ready to sell my lover harley davidson Bad To the Bone

Why are you getting ready to sell it? Do you think it isn't attractive anymore?

Quote
Yes David you'er right , I sold the shares I used to daytrade at $4  just to get it back cheaper but yesterday when the market opened I saw some good signs on CIMT some people want to buy as soon as possible and that forced me to jump back in the stock and buy again at $4.10   

I told you, you probably won't beat a buy and hold strategy on a rapidly rising stock as CIMT, not even when your hand is very hot.

Quote
I'm happy I got in at  the right time

I'm happy too that you're holding CIMT.

QuoteDavid I Bought this stock yestrday it worth it to take a close look to this nice company EGR I it has good potenial to grow more ...

It could be good for the main portfolio

EGR? Uh la la, great quarter ! I could have bought it about 40% below, had I seen it. Sill looks very attractive. I'll try to perform a video analysis on it today.

Quote from: tokyopua on April 10, 2007, 11:08:12 PM
Interesting that today is the first really bearish candlestick pattern for CIMT since the first big breakout.  Can CIMT beat the Bearish Cloud Cover near term?  Who cares, like David says, this one is a buy and hold!   

Yes, a bit of a bearish candlestick, but volume was so low that I don't think it has much technical significance. Anyway, as you rightly wrote, fundamental trends say CIMT is worth $17.75 today (of course, if those trends continue, but that must be the natural assumption - that will be confirmed or not by the actual results), so I'll keep on holding CIMT.

Quote from: tokyopua on April 10, 2007, 11:08:12 PM
Interesting that today is the first really bearish candlestick pattern for CIMT since the first big breakout.  Can CIMT beat the Bearish Cloud Cover near term?  Who cares, like David says, this one is a buy and hold!  

Yes, a bit of a bearish candlestick, but volume was so low that I don't think it has much technical significance. Anyway, as you rightly wrote, fundamental trends say CIMT is worth $17.75 today (of course, if those trends continue, but that must be the natural assumption - that will be confirmed or not by the actual results), so I'll keep on holding CIMT.
[/quote]

Tokyopua, I'm still learning technical analysis so correct me if I'm wrong, my book says for a dark cloud cover to occur, the second (black) day had to close below the midpoint of the previous days white body which would be below $4.23. It says there are no exceptions  to the pattern. Still there is no denying it was a bearish candle and almost a dark cloud cover. Lets see what happens.

what about that same candle on the 16th after the first breakout?

QuoteTokyopua, I'm still learning technical analysis so correct me if I'm wrong, my book says for a dark cloud cover to occur, the second (black) day had to close below the midpoint of the previous days white body which would be below $4.23. It says there are no exceptions  to the pattern. Still there is no denying it was a bearish candle and almost a dark cloud cover. Lets see what happens.

Is your book Candlestick Charting Explained, by Gregory L. Morris?

Great book, but not particularly useful for long term investing.

My take is you're right about the dark cloud cover pattern, it didn't occur in CIMT yesterday.

Quote from: David Randolph on April 11, 2007, 09:26:19 AM

QuoteTokyopua, I'm still learning technical analysis so correct me if I'm wrong, my book says for a dark cloud cover to occur, the second (black) day had to close below the midpoint of the previous days white body which would be below $4.23. It says there are no exceptions  to the pattern. Still there is no denying it was a bearish candle and almost a dark cloud cover. Lets see what happens.

Is your book Candlestick Charting Explained, by Gregory L. Morris?

Great book, but not particularly useful for long term investing.

My take is you're right about the dark cloud cover pattern, it didn't occur in CIMT yesterday.

Yes David, it is the book. I also recently bought "Getting Started in Technical analysis" by Jack Schwager at your suggestion (and a very good one.) My brother also sent me " Technical Analysis of the Financial Markets" by John J. Murphy, text and study guide/workbook that I really like so far.

QuoteYes David, it is the book. I also recently bought "Getting Started in Technical analysis" by Jack Schwager at your suggestion (and a very good one.) My brother also sent me " Technical Analysis of the Financial Markets" by John J. Murphy, text and study guide/workbook that I really like so far.

Hmm, that wasn't my suggestion BigSully1, I never read that book. The big book I have (and I mean big, it has 721 pages ) on technical analysis is "Technical Analysis of Stock Trends", by Robert D. Edwards and John Magee, between others.

I must say that my faith in technical analysis isn't as enthusiastic as it once was, but I still feel it is much better to know it than to ignore it.

Good study

Quote from: David Randolph on April 11, 2007, 09:42:09 AM

QuoteYes David, it is the book. I also recently bought "Getting Started in Technical analysis" by Jack Schwager at your suggestion (and a very good one.) My brother also sent me " Technical Analysis of the Financial Markets" by John J. Murphy, text and study guide/workbook that I really like so far.

Hmm, that wasn't my suggestion BigSully1, I never read that book. The big book I have (and I mean big, it has 721 pages ) on technical analysis is "Technical Analysis of Stock Trends", by Robert D. Edwards and John Magee, between others.

I must say that my faith in technical analysis isn't as enthusiastic as it once was, but I still feel it is much better to know it than to ignore it.

Good study

Sorry bout that David, it was Ramsburg that suggested it. Here is the thread if anyone interested in book suggestions;

http://www.3stocksonfire.org/trading/index.php?topic=1267.0

Quote from: BigSully1 on April 11, 2007, 09:12:35 AM

Quote from: tokyopua on April 10, 2007, 11:08:12 PM
Interesting that today is the first really bearish candlestick pattern for CIMT since the first big breakout.  Can CIMT beat the Bearish Cloud Cover near term?  Who cares, like David says, this one is a buy and hold!  

Yes, a bit of a bearish candlestick, but volume was so low that I don't think it has much technical significance. Anyway, as you rightly wrote, fundamental trends say CIMT is worth $17.75 today (of course, if those trends continue, but that must be the natural assumption - that will be confirmed or not by the actual results), so I'll keep on holding CIMT.

Tokyopua, I'm still learning technical analysis so correct me if I'm wrong, my book says for a dark cloud cover to occur, the second (black) day had to close below the midpoint of the previous days white body which would be below $4.23. It says there are no exceptions  to the pattern. Still there is no denying it was a bearish candle and almost a dark cloud cover. Lets see what happens.
[/quote]

Given the volume and the fact it didnt close within 50% of the real body it probably doesnt have much bearish signifigance.  However, with this pattern (as with many candlestick patterns), Steve Nison suggests that it can be open to interpretation:

"The first day of this two-candle pattern is a strong white real body.  The second day's price opens above the prior session's high (that is, above the top of the upper shadow).  However, by the end of the second day's session, the market closes deeply within the prior day's white body.  The greater the degree of penetration into the white real body, the more likely this is a top.  Some Japanese technicians require more than a 50-percent penetration of the black session's close into the white real body.  If the black candle does not close below the halfway point of the white candlestick, it may be best to wait for more bearish confirmation following the dark cloud-cover.  In some circumstances I will also view it as a dark-cloud cover even if the open is over the prior session's close instead of the prior session's high."

I consider Nison to be the authority on candlesticks, so I go by his interpretations.  He has two scenarios where he will still call it dark cloud cover where others might not, but in my experience this flexibility has saved me some money by looking at the overall picture.  

So this is a dark cloud cover per his definition (you could his two variations Weak Dark Cloud Cover and Didn't-Open-Above-Prior-High Dark Cloud Cover, lol), but per his guidelines not one that you would necessarily act on or expect to follow through bearishly.  

Also, as David added, the low volume reduces the signifigance further.

Quote from: tokyopua on April 11, 2007, 10:13:53 AM

Quote from: BigSully1 on April 11, 2007, 09:12:35 AM

Quote from: tokyopua on April 10, 2007, 11:08:12 PM
Interesting that today is the first really bearish candlestick pattern for CIMT since the first big breakout.  Can CIMT beat the Bearish Cloud Cover near term?  Who cares, like David says, this one is a buy and hold!  

Yes, a bit of a bearish candlestick, but volume was so low that I don't think it has much technical significance. Anyway, as you rightly wrote, fundamental trends say CIMT is worth $17.75 today (of course, if those trends continue, but that must be the natural assumption - that will be confirmed or not by the actual results), so I'll keep on holding CIMT.

Tokyopua, I'm still learning technical analysis so correct me if I'm wrong, my book says for a dark cloud cover to occur, the second (black) day had to close below the midpoint of the previous days white body which would be below $4.23. It says there are no exceptions  to the pattern. Still there is no denying it was a bearish candle and almost a dark cloud cover. Lets see what happens.

Given the volume and the fact it didnt close within 50% of the real body it probably doesnt have much bearish signifigance.  However, with this pattern (as with many candlestick patterns), Steve Nison suggests that it can be open to interpretation:

"The first day of this two-candle pattern is a strong white real body.  The second day's price opens above the prior session's high (that is, above the top of the upper shadow).  However, by the end of the second day's session, the market closes deeply within the prior day's white body.  The greater the degree of penetration into the white real body, the more likely this is a top.  Some Japanese technicians require more than a 50-percent penetration of the black session's close into the white real body.  If the black candle does not close below the halfway point of the white candlestick, it may be best to wait for more bearish confirmation following the dark cloud-cover.  In some circumstances I will also view it as a dark-cloud cover even if the open is over the prior session's close instead of the prior session's high."

I consider Nison to be the authority on candlesticks, so I go by his interpretations.  He has two scenarios where he will still call it dark cloud cover where others might not, but in my experience this flexibility has saved me some money by looking at the overall picture.  

So this is a dark cloud cover per his definition (you could his two variations Weak Dark Cloud Cover and Didn't-Open-Above-Prior-High Dark Cloud Cover, lol), but per his guidelines not one that you would necessarily act on or expect to follow through bearishly.  

Also, as David added, the low volume reduces the signifigance further.
[/quote]

Thanks Tokyo.  Nison uses some subjectivity in his interpretation.  Just a yellow flag? By Morris' interpretation, even if it would have been a dark cloud cover, it would still require further confirmation.

As I did for SILC, I'm interested in writing how Q1 2007 needs to look like to confirm the estimates I got for CIMT:

1) The share count in Q1 2006 was 7,835,000, and the number has been the same for many years. I don't expect it to change going forward, so my dilution factor is 1;
2) I have a revenue CAGR estimate of 1.2. Revenues in Q1 2006 were $5,374,000. For Q1 2007 they need to come in at least 20% higher, that is, $6,448,800;
3) I expect the net profit margin to rise from the current level of 9.24% to 15% over the next 3 years. Something between 8 and 12% would be fine for this quarter (since in Q4 2006 there was a currency benefit that might not happen again in this quarter, an interesting story for the next update);
4) I estimate that over the medium term CIMT will trade at the Technical & System Software industry average of 39. Currently CIMT is trading at a trailing earnings multiple of 62, so I don't think there will be a problem with trading at 39 times earnings, just give us the earnings growth we expect.

So, we know what we need, let's wait for the company's results.

I'll keep holding CIMT.

CIMT continues its worldwide expansion, now going for Australia & New Zealand:

• Cimatron Appoints Headland Machinery as Distributor for Australia and New Zealand
PR Newswire (Thu 6:17am)

CIMT released the following news yesterday:

• Cimatron Appoints Headland Machinery as Distributor for Australia and New Zealand
PR Newswire (Thu 6:17am)

It is another step in the company's worldwide expansion plans but didn't have a material impact on the share price.

CIMT is fighting with SILC for the #1 place in the Main Portfolio as the most attractive stock:



The estimated share price CAGR is a spectacular 84.6% and the optimal selling price today is just $17.77. The stock closed at $4.41 yesterday.

And I believe there's upside potential to these estimates, especially the revenue CAGR estimate, since I'm expecting just 20% revenue compound annual growth rate going forward and the company grew 80% in China in 2006, its strongest bet for 2007 as we can perceive from the recent press releases.

I'll continue holding CIMT.

Q1 2006 results came out only on May 18, so probably we're still about one month away from knowing Q1 2007 numbers. I already wrote what I need on this quarter to confirm my long term estimates:

Quote
1) The share count in Q4 2006 was 7,835,000, and the number has been the same for many years. I don't expect it to change going forward, so my dilution factor is 1;
2) I have a revenue CAGR estimate of 1.2. Revenues in Q1 2006 were $5,374,000. For Q1 2007 they need to come in at least 20% higher, that is, $6,448,800;
3) I expect the net profit margin to rise from the current level of 9.24% to 15% over the next 3 years. Something between 8 and 12% would be fine for this quarter (since in Q4 2006 there was a currency benefit that might not happen again in this quarter, an interesting story for the next update);
4) I estimate that over the medium term CIMT will trade at the Technical & System Software industry average of 39. Currently CIMT is trading at a trailing earnings multiple of 62, so I don't think there will be a problem with trading at 39 times earnings, just give us the earnings growth we expect.

I have no reason to change anything to the valuation model today, except the estimated EPS multiple, because the Technical & System Software industry average earnings multiple rose from 39 to 40.55:



The share price CAGR rose just 0.1 percentage points to 84.7% (because the initial share price rose 3.83%) but the optimal selling price increased from $17.77 to $18.48 now.

Over the next update for CIMT I want to check out how important that currency benefit was for CIMT's Q4 2006 results and if that will be repeated in Q1 2007 (I think so, because the USD has been weak against the Euro and major Asian currencies, so when results are translated into USD, they come in higher. But I'll check this out in more detail).

No doubt I'll keep on holding CIMT.

CIMT's 9.6% fall yesterday didn't damage the technical picture, as the trend remains clearly bullish.

From what I've seen in the balance sheet, I believe that the difference between operating income of $366 K and net income of $557 M in Q4 2006 is due to interest income, not a currency benefit. The company has the following assets that probably gave it an interest income of $211 K:



I'm not changing any key variables of the model (except the EPS multiple estimate, that rose from 39 to 41, according to the rise in the Technical & System Software industry average):



The valuation model says CIMT is extremely attractive, with an expected share price CAGR of 91.7% and an optimal selling price of $18.68.

I'll keep holding CIMT.