NVLS

[Melf Elf]

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

[David Randolph]

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 You know what, I'll try to make it now!

I'll keep on holding NVLS.

[David Randolph]

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

[Melf Elf]

One day I'll make a video to show you how to make your charts smaller 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!   

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.

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: 

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

[David Randolph]

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

[David Randolph]

Melf, please make your tests on the "Charts" message board (the type must be .gif, not .png). Thanks.

[David Randolph]

You have to click here:



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

[Melf Elf]

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. 

[David Randolph]

I 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

[Melf Elf]

Well, you made it, congratulations !

David,

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

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. 

[thai626]

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.

[David Randolph]

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.

[thai626]

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

[David Randolph]

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.

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.

If 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.

I 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

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.

[David Randolph]

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.