SWN, TOL, VRX updates 07/06

SWN: Unfortunately the advance for the first 6 months of 2016 was not five waves up, as I originally thought, because price has now made a lower low. Question is if the cycle wave is complete OR if SWN is becoming a “dead stock”: it will stop to exist. This is something to seriously consider as it has now almost retraced 100% of the decade-long rally from 2000 to 2010. This also shows why long term buy and hold is really not the ultimate strategy as one has to pick the stock very carefully. And remember this pattern can happen to ANY stock. Yes, also to AAPL, NFLX, AMZN, etc. Nothing is immune to the test of time. The only good thing for now is the up sloping monthly MACD -the chart below is on the monthly time frame- as price has moved lower.  Not shown here, but on the daily chart price has moved back above its 200d SMA since early June and the 50d is about to do a “golden cross” (move above the 200d SMA); which are all Bullish signs. If long, or wanting to go long SWN, place stop on close below 200d SMA (currently that’s 7.8% downside risk)

SWN Monthly

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TOL: It’s been a while since we looked at this chart, but nothing’s changed and honestly I must say I am starting to like the alternate count more and more. We had a picture perfect c=a relationship, and 9 out of 10 times, the one-degree-lower 1st wave (yellow (major-1) is smaller than the one-degree-higher 1st wave (blue primary-I). In addition, the whole advance off the possible C2 low is still only three waves: corrective. Price MUST move over the possible major-1 high ($52.73) to signal major-3 to as high as $85ish (assuming a 1.618x extension and assuming major-2 bottomed this month) is underway. But, there’s nothing in the charts yet to suggest this is the case. Thus for now, I would actually make the alternate count the preferred count until proven otherwise. In that case I expect a revisit of the 2011 lows for a large (dare we say huge”) flat Cycle 2 correction.

TOL monthly

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VRX: Here’s another case of a three wave advance (so far). First: At this month’s high price reached a picture perfect c=a extension. Second: the advance off the November low is therewith only three waves. Third: Turning this into a set of nested 1st and 2nd waves is a bit tricky since each one-degree lower wave is longer or equal to the one-degree higher 1st wave….

The only thing the Bulls have going here is price is nicely surfing higher in a symmetrical uptrend channel. However, the weekly A.I. has turned to a sell, and the RSI14 became overbought at the top, just like it did early 2018. Back then price erased >40% of its high and to stomach another such decline is quite the ride IMHO… Support is at the 20w SMA (~$20 and rising).

Can price move higher? Of course it can, the c=1.382x a (~$33) and 1.618x a (~$36) extensions are always possible, but for now I am not yet seeing any clues to those being reached.

vrx weekly