Darling Intl - Dear Darlin'   Thursday, May 20, 2010
By Gibbons Burke
 Darling shares have fallen out of favor during May, falling from the 52-week high of $9.75 in late April down 15.3% to Wednesday's close at $8.26. It has triggered a repeat occurrence of an event with bullish potential, and it is near solid support from a trendline that extends back to September which has been tested several times. The event, which is based on a 'very large' five-day percentage decline which closes above the 200-day average price, was triggered nine days ago on May 6th, and since then the stock has declined 6.9% (see column t+9 below). We didn't feature the idea then, but as you can see on the chart below, the drawdown is within the 'normal' noise level around this signal - it is behaving as it has in the past, which has had similar drawdowns following the event.
But now we may be ready to act on this setup because of the combination of the historical behavior after the event, combined with the technical set up - it's proximity to the trendline support, which you can see on this technical chart of DAR:
The trend picture is somewhat bleak - the stock closed below all the averages we track except the 200-day so the bulls are barely holding their ground. A lot depends on the rest of the market, and a grand market failure of a retest of the May 7th lows could be catastrophic in a general sense, in which case all bets are off, but in the meanwhile, this trading idea provides a low-risk way to play the odds of a rebound using this stock. Q: How has DAR performed in the past when it has seen a 'very large' five-day decline where the stock closes above its 200-day average price? A: According to the 24 previous occurrences of this event, EventEdge indicates that DAR has shown a somewhat bullish edge that peaks 25 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Thursday, 6 May 2010) is Thursday, 10 June 2010. DAR rallies in 79% of the cases (19 of 24) by an average of 14.1% relative to the close on the event date. The average of the 5 declines is -3.4%. The overall return of the 24 cases is 10.4%, which, based on the close of DAR on the event date ($8.87), provides a target price of $9.79. Click here to research this idea further using EventEdge®. Gibbons Burke is editor of MarketHistory.com.
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| | Let variable values:
@ = GII.DAR.NYSE
theEvent = IF
5 value percent_move of @ is less than
(30 day average of 5 value percent_move of @ -
(2 * 30 day std_dev of 5 value percent_move of @
)
)
AND
@ is more than 200 value average of @
THEN 1
ENDIF
Date Day t-5 t+6 t+9 t+15 t+25
10/24/1995 Tue -10.8 -0.5 3.2 3.2 2.6
02/02/1996 Fri -3.7 0.0 -1.7 0.9 -0.4
12/11/1996 Wed -6.6 -3.3 -5.0 -7.9 -10.4
01/28/2003 Tue -15.9 16.1 21.8 12.1 20.7
04/16/2003 Wed -9.9 15.6 19.1 24.3 19.1
09/25/2003 Thu -14.8 8.7 5.9 7.5 14.6
11/14/2003 Fri -8.3 3.8 4.9 11.3 12.5
08/06/2004 Fri -12.2 -0.7 -4.8 -4.8 2.4
10/18/2004 Mon -6.1 -0.5 -2.0 -6.0 -1.0
01/10/2005 Mon -5.1 1.6 0.7 2.6 -3.5
03/22/2006 Wed -7.3 8.4 4.3 2.9 5.0
05/12/2006 Fri -10.9 3.3 5.8 3.8 5.8
01/11/2007 Thu -6.4 6.3 8.9 9.1 5.5
03/05/2007 Mon -12.4 9.7 14.7 31.2 30.8
06/11/2007 Mon -5.1 0.1 0.3 5.6 10.2
07/26/2007 Thu -16.8 -1.6 5.1 -11.6 2.1
11/02/2007 Fri -8.2 3.6 1.8 2.8 21.0
01/22/2008 Tue -12.1 11.8 23.7 26.4 33.4
03/06/2008 Thu -7.1 -0.2 -4.7 -2.2 3.1
03/20/2008 Thu -9.9 8.2 8.0 14.3 31.2
05/14/2008 Wed -14.4 4.2 15.0 21.6 23.5
06/17/2009 Wed -11.6 -4.2 -6.9 -8.0 -1.6
08/17/2009 Mon -6.7 6.4 7.3 8.3 18.1
01/22/2010 Fri -10.3 3.5 -4.3 -2.3 5.6
05/06/2010 Thu -7.7 2.1 -6.9 NaN NaN
Avg -9.6 4.1 4.6 6.0 10.4
AvgPos NaN 6.7 8.9 11.0 14.1
AvgNeg -9.6 -1.6 -4.5 -6.1 -3.4
PctPos 0.0 68.0 68.0 70.8 79.2
PctNeg 100.0 28.0 32.0 29.2 20.8
Maximum -3.7 16.1 23.7 31.2 33.4
Minimum -16.8 -4.2 -6.9 -11.6 -10.4
StdDev 3.6 5.5 8.8 11.3 11.9
ZStat -2.7 0.7 0.5 0.5 0.9
Variance 12.7 29.9 77.6 128.2 142.8
25 Occurrences | |
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