BernayParticipantOctober 30, 2020 at 9:28 AMPost count: 13
Hi Sean, I noted big insider buying on this stock which fundamentally looks good. 10 yr chart looks like at 4 year support level if I am reading it right.Would this be on your radar?Sean HymanKeymasterOctober 30, 2020 at 9:41 AMPost count: 4674
It’s fundamental condition is good, which makes it good enough for a watch list. But, it’s long-term technicals are horrible. It keeps breaking trend line after trend line. It’s fallen below its major moving averages and now there’s a death cross on those moving averages, as they cross over. MACD/RSI slumping. MACD sell signal, etc. So, I think it’s likely got much more downside still yet to go.
I think the first sell-off was wave A. The bounce back to under the moving averages, wave B. And so now, I think that we’re still in the very early stages of its wave C decline.BernayParticipantOctober 30, 2020 at 10:48 AMPost count: 13
Appreciate your response. I wonder why 5 officers would buy on the open market at $54.00 without some insight into future earnings surprise.Group insider buying not stock options seems to be a lagging indicator and may be an exception to Elliot Waves. I guess time will tell.Sean HymanKeymasterOctober 30, 2020 at 11:05 AMPost count: 4674
Many directors will have very long time horizons. And they don’t usually know technicals, Elliott Waves, etc. They just know that their company is fundamentally sound and has pulled back a good bit. They may buy more once it drops lower.
Also, insider buys come out on reports that are delayed. Meaning, that these officers likely bought much higher than what its even at today.
Elliott waves are “the sentiment collectively of the masses”. That would greatly override what a few insiders are doing. In wave C’s, the masses are in distribution mode, not accumulation mode. They’re net sellers. They’re in fear and negative. That has to play out for a while before things even begin to turn around. That’s why wave C’s tend to go for a while or last a while.
In 2019, their investors thought “this stock can do no wrong. There’s no way it can go down”. In 2020, they’re like: “Crap, this stock is going down. It didn’t even rally back when the overall market did. Something’s wrong. I’m selling”. And that thought process will be held for quite a while. It will technically be held through wave 2’s pullback. But the stock could be acquired closer to the latest stages of wave C or wave 2’s pullback.Sean HymanKeymasterOctober 30, 2020 at 11:09 AMPost count: 4674
I’d also add to that, they didn’t go in with both guns blazing. They just simply nibbled away at buying more shares. How do we know? Their purchases were just 5.8% more than what they were before. This is fairly typical of insiders. Nibble on the way down periodically after big waves down. And over the long-term, as it recovers, they do well.BernayParticipantOctober 30, 2020 at 11:28 AMPost count: 13
May not be a bad strategy as you have said to buy 3 tranches down and have 2-4 year horizon.May give future entries at cheaper price and collect 3.8% dividendSean HymanKeymasterOctober 30, 2020 at 11:41 AMPost count: 4674
Not yet. I’d rather that wave C get much more mature than in these early stages. There can be a lot of the drop that can be avoided by sitting on one’s hands. We’re not hurting for yield. Most of our stocks have 3-6% yields, even before any avreraging downs. Our blended yields are even higher than that.
There’s no reason to rush into this one. The better one can get at timing their first entry, the more they can lessen their overall time in the investment. And with where the overall market is going, there’s likely going to be plenty of time to get into one like this at much lower prices to begin with (which also makes for higher starting dividend yields too). There’s nothing technically on the charts that says its even close to their downtrend being over. And it’s been weak, relative to the overall market lately which tells me that they’re selling it, even more than the overall market. Yet another sign of weakness.
With it being so early on in wave C, it should have no problem breaking this first/higher green support zone. It’s the next one under that, that makes a compelling starting entry point. If you see that one happen, let me know.BernayParticipantOctober 30, 2020 at 12:05 PMPost count: 13
Sean I like your insider chart. What is your source for the insider report you illustrated.
thanksSean HymanKeymasterOctober 30, 2020 at 12:17 PMPost count: 4674
Yahoo Finance. https://finance.yahoo.com/quote/RTX/insider-transactions/
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