For who were reluctant to jump on EFSF as it cranked up the charts in pretty short order, this week’s market meltdown has opportunity written all over it.
If you look back to previous blogs and editions, I suggested caution if you were considering opening a position as the stock charged towards the $.50 level.
This week’s market meltdown has investors locking in profits in these high flyers. Finally, after three months of moving pretty much straight up, you have a shot and accumulating this one at a much lower risk entry point.
A market blow off was inevitable. The overall market has been streaking since last July, and this week’s 3% correction was long overdue. Everyone was simply looking for an excuse to sell and take a few shekels off the table.
For those of you who are new to the OTC Journal, you will find Fibonacci Retracements are a continuing theme in my technical comments. Leonardo Fibonacci was born in 1175 AD, and was a mathematician 300 years ahead of his time. His Fibonacci ratios constant recur in nature.
There are the ratios that constantly re appear- .382% and .618%. Its uncanny how often it works. One of these days I will write an article about it again.
Here is the current chart of EFSF- with the two Fibonacci ratios in the chart:
This chart measures EFSF’s one month scamper from just under $.30 to a high of just over $.50.
Note the perfect 61.8% retracement from the move is $.354, just above my SSL of $.35. Once the 38.2 gives way, stocks almost always go to the 61.8. If you believe this week’s market blow off was an abrupt and violent long over due correction in an ongoing bull market (as I do), now is definitely the time to snatch up this stock.
Here’s why- the best time to accumulate these kinds of stocks is when they are quiet, have pulled back, and everyone is afraid. That’s when you will always make the most money. Secondly, when you snatch a stock up on a 61.8% retracement, you can set your stop loss fairly close to the market. If it drops much more, technically there could be hard times ahead. Thirdly- when stocks drop due to macro market conditions, not events directly associated with the company, those generally become opportunities as well.
Therefore, if you like this one and have been worried about getting injured by trying to jump on a speeding train, now is the time to make your move.
Pick it up now. SSL- a minor adjustment to $.32- risk 10%. It could turn back up very soon.
So according to your post here, you believe that EFSF will break its trend of rocketing up and then slowly coming down to lower lows? Do you base it on the Cinnergen product – that it is now in stores and being carried more and more by the retailers? What about the volume of trade? It has perked up over the past few months.
On another note, my favorite place to buy vitamins is Vitacost.com. They seem to be a real high volume Internet retailer because they offer some of the best prices I have EVER seen on my favorite vitamin brands. I made a request for them to carry Cinnergen. They have an online form for that. Its about time that I check the status of my request. I’ll keep you posted.
Editor: I really don’t understand the question. I stated very succinctly and clearly in the BLOG that I believed technically EFSF was a buy at $.36 and continues to be a buy down here. What are you talking about with lower lows? I think you should read this stuff more carefully. I have an SSL at $.32- so if it drops there and you are a trader, just get out. However, I believe the stock is going to break the downtrend line and go higher. I don’t know how I could have said it any plainer.
Just for my knowledge can you explain briefly explain the dynamics behind breaking a downtrend line. To the lay man a downtrend line would indicate a downward trend.
Thanks
Editor: Yes- that’s exactly what it means- so- if you break the downtrend line to the upside, it signals a trend reversal. The longer term the downtrend line you are looking at, the more powerful the reversal. Therefore, in the case EFSF- the downtrend line goes back several years- if it breaks that downtrend line, it’s a very high probability the stock will go higher from a technical perspective. Once there is a long term uptrend line, you start looking for the stock to break it to the downside.
Sorry, I guess you did say it quite clear. My bad. Let’s see how things go …
Editor: So far, so good.
I want to buy for the long term. Is this a good entry point.
Editor: If you are buying for the long term it really doesn’t matter. Think about this- are you buying for the long term because you love the company, or are you buying for the long term because you love the way the stock trades. If it’s because of the way the stock trades, you are really not a long term buyer, and probably won’t like the company if the stock trades poorly. If you like the company and are long term, it won’t matter where you buy it. However, even if it’s all about the company, you still should buy smart. Why didn’t you buy it last week when I see it was a great entry point at $.37? – right now, it is about a 6 on a scale of 1 to 10 on a buy. You could just buy part of what you want to earn.
Thank you Wal-Mart!
Editor: Yes- Cinnergen is carrying the day for the time being. They need to get rolling on some of their other products.
3/7/07 move up today on news of walmart/
Is your enty point still at .36 with a ssl at .32
thank you
Editor: Yes- as I stated in yesterday’s edition, if you feel you have to buy, don’t buy all you want. While most investors find it irresistible, you shouldn’t be buying on these news driven up days. You should buy when it’s quiet. That’s what this BLOG if for. To help you identify those times. There will be more opportunities to buy this stock right.
When is EFSF reporting earnings? I couldnt find the date on Yahoo Finance.
I know its mid-march but not sure of the exact date. From my experience, stocks that enjoy a good run-up before earnings always undergo correction after earnings are announced. I was thinking of selling before earnings are announced, and re-buy at a better price point. Your thouhgs would be appreciated. Thanks.
Editor: You are right about run ups into earnings. However, I don’t believe this one is an earnings driven story. I don’t know when they will be releasing numbers, but their numbers will be no big deal.
hey! why do you think this stock is soo touchy when it hits the low 50′s..it hit .51 and .501 and sold off the next day. i dont care when it dips a little but whats with the resistance at the low 50′s? thanks in advance!!
Editor: I don’t know how many times I can show the very long term downtrend line in the chart, but just read the content and you should understand. It has to break the downtrend line for there to be a new ball game.
“I don’t know when they will be releasing numbers”
Is there any place i can find this information? Since its a public company i am guessing its required that they share this info with investors. I know you have contact with the management – so is there any way you can let us know? Thanks!
Editor: The company has an obligation to release unaudited numbers three times a year within 6 weeks of the end of a quarter- once a year it has three months to release its audited financials. Based on their fiscal year, unaudited quarterly numbers are due out soon.
What is your new entry point for this stock? Is it higher than what is was at $.37?
Editor: I don’t have one right now- but if it trades below $.40 I believe you can jump in.
What does it mean that the stock is still trading pretty well on no news? Is there are new bottom for this stock?
Editor: It simply means most stocks that have done really well over the past month have given back 20 to 30% of their gains. This one is only 10% off its high in a lousy market- that’s very strong.