The Independence Day Top 5

[New-born baby]

Any opinions on which way FAL will go from here given good earnings announcement, but one of two takeover offers just failed?

I could very well be wrong, but I think FAL has just topped. Why?
1. HUGE volume last week, but not much movement.
2. PNF has identified $56 as the upper target.
3. Right now FAL is either set to build a base here, or else build
a head and shoulders top formation. Currently under construction,
we cannot tell which right now until the chart matures more.

[eliaskane]

Fal

I could very well be wrong, but I think FAL has just topped. Why?
1. HUGE volume last week, but not much movement.
2. PNF has identified $56 as the upper target.
3. Right now FAL is either set to build a base here, or else build
a head and shoulders top formation. Currently under construction,
we cannot tell which right now until the chart matures more.

Okay, let me play devil's advocate, at the risk of being off-topic for momentum stocks. The real world has intruded on the TA picture here.

FAL closed Friday at $55.02. The Inco (N) takeover offer of stock plus cash failed at a per-share valuation of FAL at $56.49 US, despite management's approval. This implies that shareholders think the company is worth more. Xstrata (XSRAF.PK) owns 20% of FAL and is accumulating shares, while its tender offer is still open at $55.35 cash per FAL share. This implies a price floor for the next couple of weeks.

So, what's a poor Mr. Market acolyte to think? Will takeover maneuvering dominate the stock price? Will FAL go higher based on its greatly improved earnings? Will it stay near the Xstrata offer price? Or is this a situation the true MrM devotee should just walk away from, feeling glad to break even?

[skiracer]

Okay, let me play devil's advocate, at the risk of being off-topic for momentum stocks. The real world has intruded on the TA picture here.

FAL closed Friday at $55.02. The Inco (N) takeover offer of stock plus cash failed at a per-share valuation of FAL at $56.49 US, despite management's approval. This implies that shareholders think the company is worth more. Xstrata (XSRAF.PK) owns 20% of FAL and is accumulating shares, while its tender offer is still open at $55.35 cash per FAL share. This implies a price floor for the next couple of weeks.

So, what's a poor Mr. Market acolyte to think? Will takeover maneuvering dominate the stock price? Will FAL go higher based on its greatly improved earnings? Will it stay near the Xstrata offer price? Or is this a situation the true MrM devotee should just walk away from, feeling glad to break even?

There are a number of other large nickel and copper producers that would like INCO and FAL both. I think the FAL stockholders are playing a waiting game. Usually when the bidding starts like this the price could get bid up much higher than the initial offers. Go to www.msnmoney.com to find a number of recent articles on the lastest happenings. I like the daily chart and with the impetus of the bidding could prove to be a big driving force. Do you own it? If so I would hold. If not I wouldn't be buying it outright but an option play, I don't even know if there are options on it, would be an inexpensive way to get a play in on it. I think the bidding is going to start this week.

[New-born baby]

Okay, let me play devil's advocate, at the risk of being off-topic for momentum stocks. The real world has intruded on the TA picture here.

FAL closed Friday at $55.02. The Inco (N) takeover offer of stock plus cash failed at a per-share valuation of FAL at $56.49 US, despite management's approval. This implies that shareholders think the company is worth more. Xstrata (XSRAF.PK) owns 20% of FAL and is accumulating shares, while its tender offer is still open at $55.35 cash per FAL share. This implies a price floor for the next couple of weeks.

So, what's a poor Mr. Market acolyte to think? Will takeover maneuvering dominate the stock price? Will FAL go higher based on its greatly improved earnings? Will it stay near the Xstrata offer price? Or is this a situation the true MrM devotee should just walk away from, feeling glad to break even?

I appreciate the information, as I knew nothing about what FAL is doing outside of the chart. The chart tells me that people don't think FAL is worth $56.49 because it is currently selling at $55.02. And FAL is currently under the floor of $55.35 I am saying that if these offers fail, FAL falls. It has topped. That HUGE volume stick tells you that a LOT of shares were sold off because somebody(s) didn't believe that FAL is going to bring a lot more money.

This stock has NO OPTION CHAIN. IF you buy her here, you are on your own.
I tell you, I thin this one has topped.

Thanks for all the info And thanks for bringing this stock to our attention.

[spikefader]

Any opinions on which way FAL will go from here given good earnings announcement, but one of two takeover offers just failed?

I think it's owed more impulses up. It's currently in a weekly 5th with subwaves and doing the 3 now. So look for 3 to end, 4 down, 5 up. Then the abc correctives. I don't think it's done yet.

[Hany]

Re-tuning?

Folks,

You might want to re-tune your philosophies a bit. No one mentioned AXR besides Ernie.

MIKR and NTG are at -20% right now.
IBCA is at 2% even though its earnings trend is good.

Relatively speaking, NTG, IBCA and AXR have very similar revenue trends (in fact, IBCA seems the best).

The Top 5 tend to always have HIGH volatility and very high momentum and so I'm not sure how charting can help us differentiate between the winners and losers. It may help in the short term but I cannot comprehend that TA can make us above average returns in the long term.

There is certainly an element of luck but also Due Diligence when analyzing the business and its financials are critical. When the momentum forces the stock to go south, you need that solid justification to want to stay in the stock. Ernie's is earnings, earnings, earnings. TA folks base their decisions on unexplainable trends. Some people follow them and so they become self-fulfilling but that's not always the case.

I guess I'm saying that fundamental analysis and good market timing (not TA necessarily) are all you really need. Ernie does the best job out of all of us in the FA area and I have seen his market timing improve over time (known about him since 2003).

If you agree or not, can you share your experiences? Have you made an effort to analyze your trading style? What have you learned?

[spikefader]

...I cannot comprehend that TA can make us above average returns in the long term...

TA doesn't make us above-average returns in the long-term, Hany. It's merely a tool or methodology to a) identify a bias b) find a trade setup with good risk/reward and c) provide logical technical points of exit (target or stop).

Making above average returns, whether it's TA-based or FA-based, requires risk control, diversification and sensible allocation. It requires a plan and then the disclipline to trade the plan.

[Tatnic]

Folks,

You might want to re-tune your philosophies a bit. No one mentioned AXR besides Ernie.

There is certainly an element of luck but also Due Diligence when analyzing the business and its financials are critical. When the momentum forces the stock to go south, you need that solid justification to want to stay in the stock. Ernie's is earnings, earnings, earnings. TA folks base their decisions on unexplainable trends. Some people follow them and so they become self-fulfilling but that's not always the case.

I guess I'm saying that fundamental analysis and good market timing (not TA necessarily) are all you really need. Ernie does the best job out of all of us in the FA area and I have seen his market timing improve over time (known about him since 2003).

If you agree or not, can you share your experiences? Have you made an effort to analyze your trading style? What have you learned?

I think you're confusing FA with data mining or quantitative analysis. Ernie's screen is a quantitative momentum screen, meaning it looks at the numbers. Once he narrows down his list then he does a more in-depth fundamental analysis on the business itself, ie what do they do/sell, who are their competitors, who's the management, what are their prospects going forward, etc. That's fundamental analysis. Maybe you were saying that and I misunderstood.

I do agree with your slight of TA. People who think they can predict what a stock will do by looking in the rear-view mirror are only setting themselves up for a fall in my opinion. They might get lucky some of the time but over the long run they'll find that they need to change.