It's weekend and I've got a lot of time to review the companies on my watch list as well as look for some news to form some solid grounds on coming up with my trading and investing decisions. Looking at long term charts, MEG and SMPH are showing good room of potential to go long.
Elliot's Wave Theory (EWT) states that a stock normally goes 5 waves before changing it's course. 1, 3, and 5 going the same way while waves 2 and 4 going the opposite way.
EWT shows that SMPH have gone through waves one to four for the past year and a half going up from roughly P6 in near end of 2008 to more than P12 to near end of 2010 before slipping down to just a little over P10 as of this writing.
Supports at P10.7 and P10.5 were already hit and there is a good chance that this stock will slip further down. Confirmation is strongly recommended for this stock before entry. Personally, I think that this could go down further to P10 or maybe even more.
MEG presents a very interesting case as it could go either way. Starting with the downtrend, MEG could possibly be on it's 5th wave which is going down and should a reversal will happen, there's no other way to go but up. If we'll start wave one with the uptrend, MEG's wave 5 will be going up for a year (based from the interval of the first four waves). Either way, be it starting EWT from the downtrend or from an uptrend, it will still go up sooner or later.
MEG started from barely nothing near the start of 2009 and went all the way up to as high as near P3 in 2010 before settling down to near P2 as of this writing. Just like everything else, entry should be done best after a confirmation of the trend.
For the fractional growth of these two stocks since wave 1, MEG (computing from the uptrend) grew nearly 300% in roughly two years and a little over 200% to date while SMPH was close to 100% gain in two years and around 67% as of this writing. Not really that bad if you ask me (way better than putting money in the bank actually).
And lastly, it might be wise to make an entry when PHISIX is back on an uptrend again. Take note that we're entering for a long hold, not day or swing trade the stock.
