Continuation from yesterday……TECHNICAL ANALYSIS
Since the fundamental analysis has failed to yield any sort of a buy signal for Bally’s stock in 1999-2000 we must now concentrate on the technical side of the equation.
As the chart above shows, between 1993 and 2000 the company’s stock collapsed from $34 a share to less than $0.50 a share. What’s more, this substantial down move had occurred during one of the strongest bull markets in history.
Unfortunately, outside of dropping 99%, Bally’s stock gave us very few clear technical clues that it would either top out in 1993 or bottom out in 2000. Outside of a clearly defined downtrend between October of 1993 and 1999-2000, we have very little to go by. As was mentioned earlier, by 2000 Bally’s fundamental and stock price performance has gotten so bad that it received a number of delisting warnings/notices from the Nasdaq. In other words, any analyst looking at this stock and the company’s fundamental performance at the time would have assumed that the Bally’s stock would be delisted. Ending up in the pits of OTC trading.
Yet, despite the setbacks Bally’s stock price bottomed at $0.42 in May of 2000 and then went on to appreciate to $34 by April of 2004. An 8,000% gain in less than 4 years. Unfortunately, the stock itself gave us very few technical clues that it was about to stage a massive multiyear rally. In fact, it wasn’t until March of 2001 that we would have gotten our first real technical confirmation that the Bally’s stock price might be going through something more than a simple bounce. By that time the stock was already selling at $3 a share. While an entry at that point would have still resulted in a 10-20 bag run over a 5-13 year period of time, such performance would have been far below our anticipated threshold.
In conclusion, technical analysis alone would have failed in giving us a clear buy signal anywhere close to our anticipated entry point of $0.50-1.00 a share in the second half of 2000. There were NO clear technical signs that Bally’s stock price was about to stage an 8,000% rally or a rally of any kind. Perhaps we will have better luck with our timing and mathematical analysis.
TIMING & MATHEMATICAL ANALYSIS:
To Be Continued Tomorrow……
