However, a week later it moved to bear phase on some major indicators, and began a slide that carried the price down as much as 8.2%.
| pps | pfe trend | pfe loc | |
|---|---|---|---|
| INTC |
And in bear it has, mainly, stayed, with the exception of a series of year-end and year-start whipsaws that saw four phase changes in five trading days.
Earnings are now upon us. The release is scheduled for aft er the close on Thursday, Jan. 13. My decision as a trader is do I jump in with high hopes for an earnings surprise that reverses the slide, or do I assume that other traders, bidding down the price, know exactly what they're doing?
The decline, including a downward gap late last week, pushed the price below the 200-day moving average. The 20-day moving average has crossed below the 50-day, and the confirmation line has slid below the -50 level and continues to trend downward.
The present floor, around $20.55, is level touched five times in late October and tested a couple of time in November. So, it counts as support, but not of the super-strong variety. Below that, it's a long, long drop to the next support level.
Reversal Levels
- $22.07, +6.8% (Dec. swing high)
- $21.21, +2.7% (Jan. swing high)
- $20.77, +0.5% (200-day moving average)
- $20.66 --- You are here.
- $20.55, -0.5% (Recent support)
- $18.90, -8.5% (Oct. swing low)
So what to do. Certainly, the price on INTC is far more attractive now than it was in early December, and the series of late December/early January whipsaws suggest bottoming action.
However, the Jan. 5 downward gap of 1.3% suggests the possibility, at least, that the recent support may not hold, and obstacles are grouped closely together to the upside, and have larger intervals to the downside.
That suggest a hard march up and an easy road down. Human nature being what it is, I tend to bet the that the easy road will prevail.
Also, INTC is one of the most analyzed stocks in the business. It has a lot of very smart professional eyeballs on it, and I tend to assume that phase changes for this stock have a rational basis.
For those reasons, I'm going to pass on an INTC earnings play this quarter. I'll continue to follow it in my Watchlist until after the earnings release, just to see what happens.
Abbreviations:
- pps - Person's Proprietary Signal.
- pfe trend - Trend of the polarized fractal efficiency line.
- pfe loc - Location of the polarized fractal efficiency line.
Key to the PPS/PFE tables
| column | color | meaning |
|---|---|---|
| pps | bull phase | |
| bear phase | ||
| pfe trend | uptrend | |
| no trend | ||
| downtrend | ||
| pfe loc | +100 and above | |
| +50 to below 100 | ||
| 0 to below +50 | ||
| below 0 to above -50 | ||
| -50 to above -100 | ||
| below -100 |
PPS/PFE Analytical Tools
The analysis uses the daily Person's Proprietary Signal (pps), developed by John Person.
This is a black box signals -- the "proprietary" means that Mr. Person knows how it works under the hood, and I don't. But it has shown a fair degree of success in identifying good entry and exit points, and I find it useful.
For confirmation, the analysis uses an indicator called the polarized fractal efficiency (pfe) technical tool. It uses the fractal math of Benoit Mandelbrot to measure how efficiently move between levels. The higher the efficiency, the more directional the price trend.
The math for the pfe is public knowledge, but it is well above my math knowledge, and so to me is also a black-box signal.
This is a relatively new technical tool, based on fractal math. Investopedia has only a cursory explanation. Wikipedia is silent on the subject. ThinkOrSwim has a fuller explanation.
PPS/PFE Trading Rules
These rules are very preliminary. I’m still trying to figure out how the polarized fractal efficiency signal works.
When Person’s Proprietary Signal (pps) is in bull phase, enter when the polarized fractal efficiency (pfe) line crosses the zero line in an uptrend trend) A pps signal and pfe uptrend have less strength but greater upside potential when the pfe location (pfe loc) is below +50, and greater strength but less upside potential when the pfe location is at or above +50.
When the pps in in bear phase, enter when the pfe trend crosses the zero line in a downtrend. The set up has less strength but greater downside potential when the pfe loc is above -50, and greater strength but less downside potential when the pfe loc is at or below -50.
How should the pfe line be treated when it has flatlined at either end of its range, around +100 or -100. My preliminary observations are that the price by then has had a large run and tends to present a picture of exhaustion. However, by the description of the pfe, a high level should indicate a continued strong trend.
This is something that I’ll figure out as I go along.
Disclaimer
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
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