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Real Time TXN Experiment



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.

Texas Instruments (TXN) reports a mid-quarter update tonight. There is talk on the Street of a narrowing of the previously released guidance while keeping the midpoint of said guidance the same. Something about usually weak seasonality (Q1) trends being better than normal was also cited. That pretty much exhausts what I know about TXN's fundamentals. Given that, let's see if we can continue our standing real-time experiment with our complexity models to determine if the price of the security itself is telling us how the Street is going to 'react' to the fundamental news update post the close. In the last several weeks we have used ERICY, CSCO, DELL, A, and AMAT as examples in this experiment.

The daily chart shows a nice impulsive decline from the Jan 16th 2004 $33.98 peak to the Aug 13th 2004 $18.06 lows, dropping 47% in 210 days with some Demark trend exhaustion indicators and some nice divergences at those August lows. The bounce from August has take on a clear three wave form, with the A wave from August to December, the B wave from December to January and the C wave from January to present. $27.86 is the 61.8% Fibonacci retrace resistance point from that 2004 decline and $28.08 is the point at which waves A and C are equal in that bounce from August. Further, Daily demarks are at a "10" today (Wednesday could complete a "13") while hourly Demarks are showing exhaustion as well as momentum divergences at current prices. We would note too that 210 days from the August 13th 2004 lows is March 11th: this Friday.

So net/net, our models show that TXN has reached (or will shortly reach) several different degrees of important price and time bifurcation points. Without knowing at all what the mid quarter update is likely to be, our complexity model suggests that the Street will view this update at best as neutral and more likely negatively, sending the stock lower as a result. Let's see if TXN gives us another data point with which to make the case that the relationship between stocks and their fundamentals is a highly non-linear (read: complex) one.

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No positions in stocks mentioned.

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