I often write about GROW because its a great stock to trade and very predictable.
The middle Bollinger Band is right at 29.11 and the closing price today is at 29.03.
The height of the cup/handle on the chart is 17.56. Therefore, in theory, there can be 3 inflection points.
1/3 retracement 34.95-(17.56/3)=29.1 (this is the 20 day moving average and mid Bollinger Band)
1/2 retracement 34.95-(17.56/2)=26.17
2/3 retracement 34.95-(17.56*(2/3))=23.24 (bottom Bollinger Band is right at 23.8 and 50 day moving average is right at 23.7)
Any of the above price points can be natural inflection points on the chart. When the price does inflect, then you three possible target prices:
1/3 retracement level 29.1+17.56= 46.66
1/2 retracement level 26.17+17.56= 43.73
2/3 retracement level 23.24+17.56= 40.8
Conclusion-
The news in China is that the GDP is too hot and that Chinese officials will be taking measures late Friday. A correction has begun today. However, in the past, the market has seemingly priced in the worst possible scenario and we imagine hardline Chinese officials taking draconian measures. In reality, the Chinese dont want to ruin the economy or the stock market. They just want to slow it down a little bit in order to restore sanity. The measures taken will most likely be tepid and then we will most likely buy on the news of the Chinese decision.
Therefore, the inflection point could be tommorrow as the price has reached the 1/3 retracement level.
However, a retracement to the 1/2 level or 2/3 level is a lot healthier as it reaches deep down to the bottom Bollinger, fills the gaps in price on the chart and encourages shorts to cover.
In the past, the price has usually corrected to the 2/3 level bouncing off of the bottom Bollinger Band.
Tommorrow will be the test for GROW. In any event, I feel the future price target is somewhere over 40 as I have maintained throughout my writings of GROW.
http://stockcharts.com/h-sc/ui?s=GROW&p=D&b=3&g=0&id=p46875723233
(cut and paste this link as I think elitetrader wont translate it correctly)
The middle Bollinger Band is right at 29.11 and the closing price today is at 29.03.
The height of the cup/handle on the chart is 17.56. Therefore, in theory, there can be 3 inflection points.
1/3 retracement 34.95-(17.56/3)=29.1 (this is the 20 day moving average and mid Bollinger Band)
1/2 retracement 34.95-(17.56/2)=26.17
2/3 retracement 34.95-(17.56*(2/3))=23.24 (bottom Bollinger Band is right at 23.8 and 50 day moving average is right at 23.7)
Any of the above price points can be natural inflection points on the chart. When the price does inflect, then you three possible target prices:
1/3 retracement level 29.1+17.56= 46.66
1/2 retracement level 26.17+17.56= 43.73
2/3 retracement level 23.24+17.56= 40.8
Conclusion-
The news in China is that the GDP is too hot and that Chinese officials will be taking measures late Friday. A correction has begun today. However, in the past, the market has seemingly priced in the worst possible scenario and we imagine hardline Chinese officials taking draconian measures. In reality, the Chinese dont want to ruin the economy or the stock market. They just want to slow it down a little bit in order to restore sanity. The measures taken will most likely be tepid and then we will most likely buy on the news of the Chinese decision.
Therefore, the inflection point could be tommorrow as the price has reached the 1/3 retracement level.
However, a retracement to the 1/2 level or 2/3 level is a lot healthier as it reaches deep down to the bottom Bollinger, fills the gaps in price on the chart and encourages shorts to cover.
In the past, the price has usually corrected to the 2/3 level bouncing off of the bottom Bollinger Band.
Tommorrow will be the test for GROW. In any event, I feel the future price target is somewhere over 40 as I have maintained throughout my writings of GROW.
http://stockcharts.com/h-sc/ui?s=GROW&p=D&b=3&g=0&id=p46875723233
(cut and paste this link as I think elitetrader wont translate it correctly)
