When we look at technical indicators, the ( ) is at 76. tends to determine trends, momentum, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the is overbought meaning the stock could drop in the near term.
The positive indicator (VI) is at 1.2375 and the negative is 0.7026. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action has flattened out. I could not locate similar consolidation in this stock for such a prolonged period of time. While this activity is a bit of a wildcard, the positive indicator oscillates up and down as time transpires. With it staying high for a while, it is due to head downward, meaning the stock would drop at least a little (1-4%) soon.
The oscillator K value is 92.15 and D value is 92.44. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The is certainly in overbought territory The D value has just overtaken the K value at the time of writing; meaning the decline in the stock should begin within the next two trading days.
I have created an algorithm (called the SAG gauge) which signals when stocks are truly overbought and oversold. The algorithm indicates when a particular stock meets multiple criteria culminating in an oversold or overbought signal. That signal occurred today which is another indicator of downward movement for the stock.
Upon back-testing this indicator, it has signaled overbought status 98 times dating back to 1972. The stock drops at least 1% over the following 30 trading days in ninety percent of these occurrences. The stock drops at least 3.75% seventy percent of the time and fifty percent of the time loses 6%. Even though a drop does not always occur, these number combined with the following statistics have instilled confidence that a sizeable drop is coming.
The , , and positive VI have been at their current or higher levels simultaneously only three times in the history of the stock since 1979. Even though the availability of data points is low, the rarity of such a feat is the biggest signal for short-term traders to consider. Over the next 30 days, the stock always drops at least 7.19% from the date all three indicators are at or above the current levels simultaneously. The median drop over this time frame is 10.17%.
If we look solely at the overbought reading and its historics, the stock could drop in upwards of 8%. The has been at or above its current level 139 times in its history. Over the course of the following 35 trading days, the stock retreats an average of 10.03% and a median of 8.27%.
Between all of the aforementioned historics, we are confident the stock could drop at least 7% over the following 35 trading days. The best indicator is the flattening positive VI value and the simultaneously high levels of all three indicators. The SAG gauge signal and its historic information support a minimum of 3-5% drop in the near-term as well.
-Elliott Wave Ideas (elliottwaveideas.com)