Affymetrix - Cheating the Death Cross   Thursday, June 10, 2010
By Gibbons Burke
 Shares in Affymetrix (AFFX) have fallen in each of the trading days of this week, and started to fall last Friday with a 'big' 4.9% decline which was followed by another 'big' 5.6% drop on Monday, -3.5% on Tuesday and -0.8% on Wednesday to close at $5.81, down a 'large' 12.1% over the last five trading days. The move filled in the gap that had been left on the chart since the stock rallied strongly in early February.
From a trend perspective, the stock is currently below all the moving averages we track, so it is in fully bearish mode, and to top the dismal news, the 50-day average crossed below the 200-day average to form what many like to call the "death cross" signal, which most consider a portent of further declines.
Is it time to throw in the towel on Affymetrix? There's hope, according to history... Q: How has AFFX peformed in the past after a 'death cross' signal, where the average price over the last 50 days crosses below the average price over the last 200 days? A: History tells a different story: according to the 9 previous occurrences of this event in the stock's history, EventEdge indicates that AFFX has shown a very strong bullish edge that peaks 23 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, 9 June 2010) is Monday, 12 July 2010. AFFX rallies in 100% of the cases (9 of 9) by an average of 12.7% relative to the close on the event date. The overall return of the 9 cases is 12.7%, which, based on the close of AFFX on the event date ($5.81), provides a target price of $6.55. Click here to investigate this trading idea further in EventEdge®, where you can bring up bar charts for any of the previous occurrences of this event, or try different event combinations. Gibbons Burke is editor of MarketHistory.com.
Related Ideas:
| | Let variable values:
@ = GII.AFFX.NASDAQ
theEvent = IF
50 value average of @ crosses below 200 value average of @
THEN 1
ENDIF
Date Day t+5 t+10 t+15 t+23
01/20/1998 Tue -11.6 11.2 12.1 6.7
05/22/2000 Mon -8.4 25.7 22.5 22.9
08/17/2000 Thu 24.9 32.8 25.4 8.6
04/11/2002 Thu 23.1 15.4 7.5 13.3
05/09/2003 Fri 5.5 11.2 18.4 12.1
08/09/2004 Mon 3.0 10.2 12.6 15.1
10/21/2005 Fri 5.3 12.3 13.8 22.4
07/06/2007 Fri 2.7 -1.0 -1.7 11.5
12/18/2009 Fri 8.1 7.2 16.0 2.2
06/09/2010 Wed NaN NaN NaN NaN
Avg 5.8 13.9 14.1 12.7
AvgPos 10.4 15.7 16.0 12.7
AvgNeg -10.0 -1.0 -1.7 NaN
PctPos 77.8 88.9 88.9 100.0
PctNeg 22.2 11.1 11.1 0.0
Maximum 24.9 32.8 25.4 22.9
Minimum -11.6 -1.0 -1.7 2.2
StdDev 12.2 10.0 8.1 6.8
ZStat 0.5 1.4 1.7 1.9
Variance 149.0 99.2 65.0 46.2
10 Occurrences | |
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