DESC

[KCScott]

DESC is down close to it's 50 DMA on lower volume over the past few weeks.
It has filled the Nov. 7 Gap



The previous two times this stock has touched the 50 DMA it has turned and I see no fundamental reason to believe it will not make the bounce again

[ScottishTrader]

The 50MA didn't provide the support hoped for, but tomorrow may well be a reversal opportunity

Nice doji star reversal made today touching down on the top of a support zone.  I think tomorrow could be a positive day, just watch for that support level that it just broke through, may well provide resitance now.

[calven]

You are all probably wondering why DESC broke the 50 day moving average. If you take a look at the thread I started you will understand why: http://www.3stocksonfire.org/trading/index.php?topic=3732.msg38534#msg38534

[calven]

Updated WW chart..

[Melf Elf]

maxi,

If you look at calven's chart just above this post, DESC currently is in a Symmetrical Triangle (applause to calven for his nice work on this stock).  Since this is looking like we're currently in an Elliott Wave 4, those often "morph" (change) into something else.

I've drawn this "possible" Elliott 5 Wave scenario below my chart:

Wave 1 - was the first move down off the Wolfe Wave 5 "false breakout."

Wave 2 - was another "false move" out of the Wolfe Wave pattern that failed.

Wave 3 - is usually the largest move of the 5 Elliott Waves.  This one was a tank from 10.49 to the December 21 low of 6.92.

Wave 4 -  When a Wave 2 rally is "simple" (it was), Wave 4 down should alternate, and be "complex."  This is looking that way.  Right now, it's a Symmetrical Triangle, as seen in calven's chart above. 

I have the top of that Symmetrical Triangle drawn as a dotted red line on my chart.

If we rally back to the broken Wolfe Wave, calven's Symmetrical Triangle is going to "morph" into a Bear Flag (solid red lines), and we will have what looks like an A-B-C Wave 4 Bear Flag rally into resistance at the bottom of the broken Wolfe Wave, which comes in at 8.465 on Tuesday, January 6.  It rises at 0.032 daily, if you want to track it.

If we get a rally to "C" that is equal to the rally to "A," that would be 8.28, so we'll watch for that if DESC rallies. 

[Melf Elf]

If we get a rally to "C" that is equal to the rally to "A," that would be 8.28, so we'll watch for that if DESC rallies. 

DESC rallied to 8.20 today and closed at 8.09, up almost 7%.  The Ascending Triangle breakout on the hourly (chart below) looks like this has some more upside. 

If we rally back to the broken Wolfe Wave, calven's Symmetrical Triangle is going to "morph" into a Bear Flag (solid red lines), and we will have what looks like an A-B-C Wave 4 Bear Flag rally into resistance at the bottom of the broken Wolfe Wave, which comes in at 8.465 on Tuesday, January 6.  It rises at 0.032 daily, if you want to track it.

DESC broke out above the Symmetrical Triangle, so we got the pattern "morph."  So far, this looks to be playing out as the A-B-C Wave 4 rally shown in my daily chart this weekend.

[rickjust]

thanks for the great work melf and cal,
looks like i might jump in tomorrow. like to see it open lower but it will probably gap up slightly ,
then i will wait and look for the pullback.
maxi

[Melf Elf]

thanks for the great work melf and cal,
looks like i might jump in tomorrow. like to see it open lower but it will probably gap up slightly ,
then i will wait and look for the pullback.
maxi

maxi,

Short-term, with yesterday's upside Ascending Triangle breakout (hourly chart in last post), I would expect DESC to rally to a minimum of 8.49-8.51 to complete "C" of Elliott Wave 4.  It could go higher than that.  The Ascending Triangle breakout measures to about 8.98, but that might be difficult to achieve since this is a countertrend rally.

1. For today, January 4, the bottom of the broken Wolfe Wave is 8.497. 

2. For today, January 4, the top of the Bear Flag is 8.51.

Bigger picture, it looks like the current Elliott Wave 4 A-B-C rally also could be the formation of the Right Shoulder of a H&S Top, which reinforces the bearishness of the Wolfe Wave if the neckline is taken out. 

[Melf Elf]

maxi,

Short-term, with yesterday's upside Ascending Triangle breakout (hourly chart in last post), I would expect DESC to rally to a minimum of 8.49-8.51 to complete "C" of Elliott Wave 4.  It could go higher than that.  The Ascending Triangle breakout measures to about 8.98, but that might be difficult to achieve since this is a countertrend rally.

1. For today, January 4, the bottom of the broken Wolfe Wave is 8.497. 

2. For today, January 4, the top of the Bear Flag is 8.51.

DESC printed 8.51 at 3:30PM, up another 5% today.  Suggestion: Take some profits on longs when you get to resistance, especially when it's DOUBLE resistance, like this is:

1. 8.497 Resistance at the bottom of the broken Wolfe Wave.

2. 8.51 Resistance at the top of the Wave 4 A-B-C rally to the top of the Bear Flag (see Daily Chart in the last post for the A-B-C  Bear Flag).

[Melf Elf]

[DESC printed 8.51 at 3:30PM, up another 5% today.  Suggestion: Take some profits on longs when you get to resistance, especially when it's DOUBLE resistance, like this is

8.51 was the exact high on the day.

I suspect that we've got some technicians playing this one.   

[Melf Elf]

Two days of selloff Thursday and Friday, after the Wave 4 A-B-C rally to DOUBLE resistance completed exactly at the 8.51 target (top of the Bear Flag) on Wednesday. 

So far, the Elliott Wave scenario that I oulined at the end of the year (see drawing at the bottom of the chart) and calven's Wave Wolfe scenario are playing out to "textbook perfection." 

If we saw the high on Wednesday and DESC tanks from here, I'm going to be annoyed with myself that I didn't short it at DOUBLE resistance,  but I didn't for the following reasons:

1. The general market was very strong this week.

2. DESC had an Ascending Triangle upside breakout (see hourly chart in post above) that measures to 8.98.

3. Elliott Wave 4s are notoriously difficult to play.  They tend to "yank you around."  Bearish patterns like Bear Flags and Rising Wedges can keep ratcheting their way higher and higher, stopping you out, then they tank. 

NOTE: That type of action is an example of when making "higher highs and higher lows" isn't bullish, as it normally is.

Here's how that "ratcheting its way higher," making "higher highs and higher lows" in bearish fashion could play out.  Picture DESC rallying from here, back toward:

1. The top of the Bear Flag (red line)

2. The bottom of the Wolfe Wave (blue line)

3. The 50DMA (green line)

Those all come in early next week in the 8.60 - 8.76 area.  If DESC makes a bid to get through that price range, it's up against TRIPLE resistance.

[Melf Elf]

If we saw the high on Wednesday and DESC tanks from here, I'm going to be annoyed with myself that I didn't short it at DOUBLE resistance,  but I didn't for the following reasons:

1. The general market was very strong this week.

2. DESC had an Ascending Triangle upside breakout (see hourly chart in post above) that measures to 8.98.

3. Elliott Wave 4s are notoriously difficult to play.  They tend to "yank you around."  Bearish patterns like Bear Flags and Rising Wedges can keep ratcheting their way higher and higher, stopping you out, then they tank. 

DESC broke below the Bear Flag on Wednesday, then yesterday, ran all the way back through the Bear Flag, and CLOSED at 8.89, above all of this resistance:

Here's how that "ratcheting its way higher," making "higher highs and higher lows" in bearish fashion could play out.  Picture DESC rallying from here, back toward:

1. The top of the Bear Flag (red line)

2. The bottom of the Wolfe Wave (blue line)

3. The 50DMA (green line)

Those all come in early next week in the 8.60 - 8.76 area.  If DESC makes a bid to get through that price range, it's up against TRIPLE resistance.

Talk about a short squeeze!      

My plan was to short DESC if it made a bid for that TRIPLE resistance, but not when it closes above all of it, and on good volume, like it did.   We'll see how it does from here.

[calven]

You were absolutely right to NOT short DESC when that long white bodied candle re-entered the previous channel on high volume! 100% perfect TA!!!  That was the "tell"...




I have been stalking DESC for the past few months hoping to buy at that 1-4 WW support line but obviously never got the chance...oil prices bottomed and energy started to move again just before my long entry target was reached...needless to say DESC never got the chance to hit the 1-4 line ($68 oil) and it rallied early. Oh well nothing gained nothing lost.

Good TA though Melf Elf...even the WW cant account for the swings in oil prices. Fundamentals ultimately take over.  Its a shame that our patience wasn't rewarded on this one.

Applaud the work though!

Although I don't short stocks much personally, I would encourage you to take a look at shorting DESC when it reaches the 1-3 resistance line again...could be worth a look

cal 

[Melf Elf]

I have been stalking DESC for the past few months

cal,

lol...I have to admit to some "stalking," too.   Good description.   

Good TA though Melf Elf...even the WW cant account for the swings in oil prices. Fundamentals ultimately take over.  Its a shame that our patience wasn't rewarded on this one.

Applaud the work though!

Thanks, cal.  I particularly appreciate that, given how "marked" this looked as a good short, and how much difficulty I had warding off the demons who wanted to "squeeze" the life out of me on this one! 

    

[Melf Elf]

Thanks, cal.  I particularly appreciate that, given how "marked" this looked as a good short, and how much difficulty I had warding off the demons who wanted to "squeeze" the life out of me on this one! 

    

calven,

Thought you'd get a kick out of this chart.

As you will remember, we removed DESC from consideration as a short when it managed the close above triple resistance on January 12.  There are so many charts to look at, I haven't followed it since then (we need a "division of labor."  You take 10...you take 10...you take 10...you take 10...)

.

On February 1, DESC topped out at a new high of 11.00 (after sqeezing the shorts), then formed two Bear Flags, and yesterday, fell like a brick below a bunch of support.

What an interesting chart!