Asleep at the Wheel

[rich pearl]

a lifetime ago -- before fast chips and algorithm trading became de rigueur, in the days when market makers were numerous, and with only three digits to the right side of the decimal there was no such beast as a trip zero stock -- i did some charting for a small Internet related pink sheet company that obstensibly claimed to earn its keep via the advertising on its webpage, but was in reality a vehicle for the share swapping that we've all come to know and see as the game itself; they made the bulk of their money by carefully selling and then buying back shares, all the while making sure to keep the float as tight as possible. these were professional traders and there was no sense of urgency and no big dumps, just the steady rat-a-tat-tat of the back and forth flipping of the only liquid asset they had. it was all very controlled and my charts were used to time the filings and news releases, as well as determining when to sell, when to hold, and when to buy. back then we worked on the assumption that a proper gestation period for a stock to play in -- from the pregnant pitch at the bottom to the birth as the high -- was approximately 8 or so months, and during that period there would be 2 to 4 rolls where the stock would run, retrace, consolidate, and run again. nutured properly these usually occured every 2 or 3 months. mind you, all this was predicated on the idea that history is generally repetitive, which, btw, is the basis for charting. the reason history has meaning is that the patterns by which it exists often play out in much the same way over and over again.

so... using that as a prelude to a chart, let us look to see what i would have made note of in those 'daze of yore'.

below is the 2 year weekly chart for INMG and it offers a story for the parsing. if you go back to August 12 of 2016 you will see there was a high noted at .01, and then over the next eight months this stock drifted southward, ultimately falling to a relative bottom around .0015. on April 12 of last year this erupted and began a two week run to .032, before retracing and consolidating, and then ultimately culminating with a run to .043 on August 29 of last year. obviously then, those are the indisputable facts. now lets do some extrapolating.

first off, a caveat. basic stock gestation periods have changed over the course of the last decade. more over, the down time has become significantly longer than that of how long it takes to go up; but the basic patterns remain the same. it took exactly eight months for this to create a stable bottom from which to make its turn, and then it had a four and a half month climb to the top before returning to a bottom. so, what does that infer for the future?

time to do some math.

the walkdown from .01 to .0014-.0016 brought with it a loss to a value that was between one-sixth and one-seventh of the high. using the same relative math for the drop from .044, we have here a seven month channel drift to a relative bottom that runs from .0066-.0073. iow, we have a near duplicate pattern, with some of the same rolls on the way down, as that of the previous drop. don't believe me? look at the chart. show me where i'm wrong. the math doesn't need to be an exact fit; it merely has to stay around the same parameters.

ergo... if the recent history is to be repeated, i would look for this to begin to make a move sometime in mid to late April. of course, as is always the case, the chart is simply a map used to project the possibilities, and it offers no actual guarantees. but that's only because charts are historical, while crystal balls are speculative.

in any case, i'm still holding my third tranche, hoping to yet add on in, and patiently waiting to see how this plays out.

best of trading to ALL

rich