Tuesday, December 14, 2010

12-15 Cree cycles

I alerted you back on 12-06 that the 22 day and 34 day cycles were approaching tops and it was time to start thinking of taking profits.  It appears those tops are in (as well as a 45 day cycle).  The gap from back in August was closed (as I believe I mentioned might happen).

Now with 3 cycles down CREE dumped today as one might expect when 3 cycles align to the downside.  I have a target for the week under $65.  Time will tell - low $60s are possible by next week.  So you should have gotten stopped out today if you had not already sold. 

The play now would be to short CREE or if you want to limit the $s at risk to buy puts $65 or less.  See for yourself:

Gl traders....


  1. I am really fascinated by your MA envelopes. I just found your Blog here looking at some info on CREE. Could you possibly explain the Envelopes. Obviously you are using StockCharts.com but I cannot make the bigger envelopes with the 21 reading look like yours. Any information or explanation would be welcome. My email address if you need to go into detail off site is tjllatt@gmail.com

  2. On the envelopes: I use the MA envelopes. The first parameter (ie 21) is the # of days averaged. The second parameter (ie 7.5) is the % above/below the MA. The third parameter is a time shift (ie -10 days)to place the channels midway over the data that is being averaged. This placement is important to accurately represent the average half of the days before and half the days after the point on the channels lines.

    The dashed lines at the end are MY projections of the future envelope lines (which may or may not be accurate).

    The idea in setting the second parameter is to get a best fit that incorporates all/most of the price movement and may require some trial and error. From experience I have found 21 days usually works well as a time period, but this too may require some trial and error to get a best fit.

    It is really quite simple, but becomes easier over time with experience. The idea of using envelopes - see JM Hurst's work regarding cycles. He exlains the concept much better than I ever could.


  3. Again...another great blog. Now that CREE has bottomed..do you think this is a short term buy for the 5th wave up (Elliott Wave Theory Wave 1 started 10/22). This would line up with the larger pullback at the year end. Or do you think it drops further from here. Looks like it caught a bounce (12/15) with medium volume.
    Stochastics bottomed, RSI matching that of the start of the 3rd Wave (11/15). If this is a 5th Wave then it could go to 75 before hitting resistance!!! This is a stretch. On the flip side this could be a headnshoulders pattern also, but I don't think so, not with the current market sentiment. RSI has been steadily rising since 7/1 and we haven't topped out on bottoms yet.

  4. Shadow7 - I believeCREE has some more downside potential.

    As to EW - I leave that to folks smarter than me (too many rules, too many exceptions IMO).

    As to patterns such as H&S they can be explained by the interaction of different cycles. JM Hurst does a good job of explaining this in his book (The Profit Magic of Stock Transaction Timing). So I don't study patterns per se as they are a result of cycles interacting with each other.