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Advanced Technical Analysis - RSH



Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

RadioShack (RSH:NYSE) is at a potentially interesting juncture in its price pattern. Having peaked in February of 2004 with attendant momentum divergences and DeMark exhaustion indicators, the stock started a 6 month impulsive looking slide into its lows in August 2004, losing 28% in the process. The fact that this decline looks impulsive (5 waves) and is part of a larger bear trend from the stocks $79 all time peaks in 1999, suggests that the probability for this stock is that its larger bearish secular trend is getting 'back in gear' now. The sell side has 8buys, 8 holds, and 3 outright sells while the short interest ratio is at its lowest level in more than 3 years.

We would note as well that RSH peaked this past Monday at precisely (to the penny) the 78.6% retrace point of the entire 6 month decline from February to August. Further the bounce off the August lows is looking very much like a series of "3"s, or a corrective bounce (it looks to be a double zig-zag or an ABC-X-ABC). On another note, there is a nice Fibonacci time relationship at the peaks registered on 11/29 this week. Specifically, the bounce from August 13th to November 29th took 108 days. The previous (impulsive-looking) decline from February 19th to August 13th took 176 days. Thus the bounce took 0.614 times as long as the decline, which is almost precisely a perfect phi relationship between the impulse (down) and corrective (up) waves.

The short term interpretation of the bearish case for RSH suggests technical weakness from current prices or at any bounce with trade moving thru the recent peak at $34.07 (given the nice Fibonacci relationships in price and time at this past Monday's peak) negating the near-term bearish call (not advice).

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No positions in stocks mentioned.

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