Garmin (GRMN)

[jkruer01]

Ok, I want to make a comment from the beggining that I am completely new to Technical Analysis so this post is worth what you paid for it.

More than being informational for others, I am posting it to record my thoughts on what I am seeing so I can go back and review it later.

I was looking at Garmin stock. In 2007 it had a spectacular runup. I think it is a great company with great fundamental numbers and it is below its MOS. However, it has been in a downward trend since October 2007. Before I get into the company I want to make sure that the trend has reversed.

I started playing around with the chart and attempting to do some Technical Analysis with it. I noticed that the stock broke through $40 a share back in March of 2006. It bounced off of it in April, June, and September of 2006. Just recently it touched it again on April 30th and May 1st of 2008.

My prediction is one of two things will happen.

1) If it breaks through the $40 support level it will continue its downward trend to at least the next support level in the $33 price range. If it has strong volume and breaks the $40 support level a possible play would be to short the stock or to buy a put with a $40 strike price.

2) If the support is stong enough it will reverse the trend and start going upward. The price has bounced off of the 30 day moving average several times along its downward trend so it would need to cross its 50 day moving average to confirm a trend reversal. If it remains above $40/sh and breaks the 50 day MA a possible play would be to go long on the stock or purchase a call with a $40 strike price.



As I mentioned in the beginning. This is more of a me journaling my thought process post for review at a later time than it is an educational or recommendational post for others.

I uploaded the 5yr chart that I was looking at when I made these observations.

Thanks,
Jeremy

[Gunnski]

JK,

Great job. GRMN must have nightmares about TomTom. Hey, where did our moat go?!

My thought process is the same as yours on GRMN. Take a look at your 2 yr. chart w/ Bollinger Bands. You'll see the narrowing bands (constriction) prior to the big run up. Do the same with a 1 yr. or 9 month chart, the B.B.'s are starting to constrict again. This may indicate something is about to happen. Less volitility. Are the sellers all shaken out? $40.00 looks key. A confirmed break down below $40.00, the next stop looks like the $20.00 price point.

Using Stan Weinsteins set up. This is in a Stage 4 and do not touch. I would wait until at least the MA(50) starts to curl back up. The EMA's (4),
(14) & (21) are not even starting to curl back up. Not a positive sign...yet.

[jkruer01]

Thanks!

It is nice to see some confirmation of what I was seeing.

I didn't notice it before but I definitely do see the Bolinger Bands starting to squeeze together.

Why do you see the next stopping point at $20? I'm completely new to this so that is why I am asking. I definitely see the support at $20 that you are talking about but I see it hit resistance at around $33 back in October and December of 2005. Wouldn't this be the next resistance? Is it just not strong enough?

Also, it looks like it hit resistance around $28 in January 2004, November 2004, and January 2005. Wouldn't this be another support level?

I have to admit....I have no idea who Stan Weinstein is or what his setup is or what Stage 4 means. If you could point me in the right direction to learn more about him I would appreciate it.

As I mentioned, I am completely new to this so I am trying to absorb as much information about TA as possible right now.

Thanks!
Jeremy

[Gunnski]

Regarding my ideas on level of support at around $20.00. I require at least three hits with prior candles. I draw a horizonal line from mid 2003, through mid 2005 and extend it outward to the present. This line is right around $20.00.

This is an area where if it does tank, it may find support, as it has in the past. No guarantee. This line has shown confiirmed support at least 3 times in the past. The candle must hit and close above or on the line of support. This shows an area where buyers have come in. This is the worse case, short term. You could argue it could drop to the double bottom, arond $15.00, in the 1st quarter of 2004 (using your chart).

Sam Weinstein wrote "Secrets for Profiting in Bull & Bear Markets". Great book. Yes, outdated. No, it is not the Holy Grail. But, it still works, is simple to follow and makes sense to me. I have made good money using it. Very cheap on Amazon. 341 pages, with simple quizes at the end of the chapter-builds confidence. I recommend it highly.

Stage 1. Is the Basing Stage. Stage 2. Is the Advancing Phase. Stage 3. The Top Area. Stage 4. The Declining Phase. (Like GRMN) He uses 30 week MA (MA150) for investors and MA(50) for traders, along with RSI. He looks at overall mkt. trend, scans hot sectors, culls out the few stocks with most potential within the hot sector(s). He invests on the break out of Stage 1, above the MA(150). He'll trade stocks in Level 2, using MA(50).

It is laid out very clear in his book, with sound buy and sell rules. It includes options, shorts, commodities, etc.

Lets keep our eye's on GRMN & see what happens.

[jkruer01]

VERY VERY Helpful. Thanks for the info. I appreciate it.

Thanks,
Jeremy

[Gunnski]

I reviewed your chart a little closer. Take a look at Stochastics in relation to the points of support I mentioned. Certainly not toppy. But, more likely to go up or sideways, than down.

[jkruer01]

Well, what do you think abut Garmin? Yesterday it closed at its 50 MA but didn't have very high volume. Today it opened at its 50 MA and dropped $2.5/sh.

It seems to me that it hit its head on resistance and will be going back down to the $40/sh price range.

What are your thoughts?

I'm thinking about buying a put on it to take advantage of the decline in price. What do you think?

Thanks!
Jeremy

[Gunnski]

Before I check the charts. I suggest you check the short activity on this bad boy.

50 (MA) is pretty standard area of resistance/support.

Where is your X date on the PUT?

[Gunnski]

I would PUT that to bed!

[danno]

I think this horse still has legs.