A few weeks ago, we identified several (9) stocks that were likely to benefit from the rising stock market, that our decision support engine was forecasting. One of these was GoPro (GPRO) - Get Report , which appears on fourth page of that analysis.
Reviewing the specifics, the point was made that $31.63 should be used as a buy stop to exit shorts, and establish long exposure, since the initial buy signal had come when lower lows in prices were not confirmed by lower lows in stochastics. Since $31.63 was broken above the next day, shorts should have been exited, with huge profits for those bold enough to make that bet, and initial longs begun.
These minute details are for short term positioning only, though, as the larger picture remains vastly bullish, even as the company is about to announce its latest earnings after the bell today. Any quick spike down in price should be used as the best buying opportunity since the IPO, as the decision support engine's buy signal surrounding the $30 level is even more confident now than a few weeks ago.
This weekly bar chart shows the updated view, which is little changed from earlier this month. Whatever the earnings turn out to be, or lack thereof, the crowd has already (or nearly) discounted them, having hammered the price down from the August high, near 65. While we can't rule out a test, or even break and reversal, of the bold blue support line (near 25.25 today), it's neither required, nor favored, in order to conclude that the entire decline off the swing high of 65, and therefore the all time high of 96, is mature.
Evidence that this entire decline from 96 terminated at the 26.68 low on October 14 is growing. This is seen by the five wave decline, labeled with blue numbers in parentheses, from 65 to the 26 low this month. This structure has perfect symmetry at 26, where wave (5) approximates the size of wave (1). Perfection is not required, but provides price behavior elegance and order, which is the tendency for the herd to manifest its mood.
Another measurement of completion of this decline from the 96 all time high is given by Fibonacci mathematics. This is illustrated by the two vertical red bars, which measure the decline labeled as A-circled, and the decline labeled into the low this month; C-circled. These two declines will be related by the Fibonacci ratio of .62 (rounded from the actual .618; the Golden Ratio) in the 24 +/-2 zone. The next most likely relationship between C-circled and A-circled would be equality, or 70 points, which when subtracted from the August highs would take prices to -5, which is impossible.
Therefore, having tickled the upper end of 24 +/-2 already, the minimum requirement for the decline at both degrees of trend may have been seen. As written above, any break of 25.25 in the next few hours to days should find massive support into the lower 20's, where price would be expected to remain for only hours to days, but not weeks.
The decision support engine warns short sellers to, again, place protective buy stops at 31, as breaking above that level clears the way for the next rally to push GoPro toward, at least, the September high near 37.35. If flat, breaking above 31 and/or testing the lower parameters just given should be used to become assertively long. If currently long, and wrong, the decision support engine warns that selling actions are not indicated here, and buying actions are. So, holding or adding to existing longs is the ideal plan.
With all the news about this company coming out with negative spin, and the set up for a major low in place, or nearly so, the prudent observer should be preparing for some important news to arrive, in the coming weeks and months, that justify the decision support engine's forecast for a rally from the 20's toward the blue path's initial target in the 40's, with more bullish potential thereafter, toward the 60 level.
For more of this kind of analysis, join our new real-time, live-market analysis chat room. Come benefit from decision support engine analysis from bell to bell, addressing indices and stocks, as well as member questions throughout the day. Special founding member pricing is available for TheStreet.com readers who subscribe early, after enjoying a complimentary trial week.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.