PriceTime-Review's: LONGWAVE
TRENDS
Texas Instruments Inc. (TXN)
From 10/1953-11/9/2004 UPDATED 11/9/04
LOG AND LINEAR SCALE CHARTS WITH
MEAN REGRESSION CENTER LINE, RATES, TRENDLINES, CHANNEL LINES, RATIO ANALYSIS
AND PROJECTIONS: rate chart is at the bottom
of this page.
Standard Introduction for Longwave rate analysis.
Current comments and chart are below.
As with all longwave projections, we will start
out by plotting the existing price-time chart for the longest time period
that we have data available for. That plot will be made in semi-log and linear
scale, but the main analysis will be made in log scale since it is much more
likely that we will be able to see some actual longwave trend lines, if any
exist, in that scale. As explained in our Longwave and Fibonacci introductions,
stocks charts have a very strong tendency to produce an exponential growth
curve, and those curves will appear as straight lines in semi-log scale but
will appear as steeply rising curves in linear scale. After we have plotted
the longwave stock chart, we will then plot some "lines" to represent the
longwave rates of return on invested capital excluding dividends (ROROICED)
that some similar stocks and will know market indexes have "actually" returned
over many years. We will then compare our stock under review with those
other rates and make some "logical" estimates of how likely this is to "regress"
toward one of those other rates, continue on it's current rate line, return
to a prior rate line, or move on to something totally different.
Needless to say, there is no guarantee that any
individual stocks will now, or even eventually, fall within the long term
mean or actual rates of return delivered by similar stocks or indexes over
their long term period. Never the less, it is very logical that similar type
stocks will "eventually" do just that, as statistical analysis has shown
that most "functions" based on nature or human activity do eventually "regress
to mean" as well as show a tendency to "group" within the bounds of similar
functions. That is especially true when an individual component is
part of the larger group under review, as most stocks are part of the industry,
group, or index which we compare with.
UPDATED FOR 11/9/04:
We posted a new rate chart at this link,
<TXN:
1990-2004>
, but there are virtually no changes since the last posting on 8/27/04,
which we have left as is in the space below.
The large graphic for that 8/27 posting is still valid, and we still believe
that TXN will either make a double top with it's prior 2004 high, at $34,
or at least make a run back up to somewhere near that high in the next few
weeks or months. After that high is in, somewhere between $30 and $34
"we think," then we expect TI to decline into a fall of 2006 low at,
or very near, the low made in 2002, at $13, OR even make a new "lower-low"
near $8. After that we expect TI to make another Bear Market rally
up, as wave D of this wave four triangle, into a 2008 high, and that high
to be followed by another low in the fall of 2010: as the termination of
the Bear Market that began at the March 2000 all time high. The low
in 2010 "should" be at either $13 or $8, and will most likely be the opposite
of the low made in 2006. That is to say, if 2006 is $13 then expect 2010
to be a lower low at $8, and if 2006 is at $8 then expect 2010 to be nearer
to $13.
For the
PriceTimeR
eview
A.J. Quiggly
Editor
LONGWAVE RATES
(TXN): POSTED 8/27/04
While it is not shown on these
charts, TXN has fallen below the key Gann angle of 1:1 (45 degrees in the
correct scale) coming up from the 2002 low, which is now at "about" $44 when
using Mr. Gann's weakest chart scale of one point per month. While that would
earn TXN a classification of "bearish" by most Gann traders, the stock is
also "well below" the Gann 1:2 angle coming up from that same low, which
is now at "about" $25, and this would earn TXN a classification of "very
bearish" IF it fails to break back above that 1:2 angle. However, based on
the Gann angles TXN has reversed off of the 1:4 angle which could now support
a full reversal if TXN can get back above the 1:2 angle at $25. Needless
to say, if TXN drops below the 1:4 angle again then a full retest of the
2002 lows is very likely and sooner rather than later. Of course, the Gann
angles are an excellent short term trend indicator, but rarely work beyond
a few years because they are applied in linear scale.
There is no long term mean, standard deviation, or extreme
boundary trendlines shown on this graphic, since they would cleanly only
be valid for that first long trend up, a "spur" trend, connecting the low
in 1953-1962 to the all time high (ATH), in 2000. Since the Longwave
main trend is "extremely likely" to be well below that "spur," any mean and
boundary trendlines draw now would be very unlikely to have any meaning in
relation to the overall trend "projection" beyond 2000.
The annually compounded rates of return (excluding cash dividends)
that TXN has returned since late 1953-1981 are shown in orange text on the
graphic below. We have also placed some "rate lines" for the three major
indexes and one other major "old" technology stock, IBM, on this same graphic.
I would also note that if we had placed a rate line for Hewlett-Packard
and Motorola on this graphic, two other "old" or "mature" technology stocks,
they would have been very similar to IBM.
While I do not know which "rate line" TXN will eventually
gravitate to, I have to assume that it will be lower to much lower then it
is now; eventhough, I have no assurance that it will not go up before it goes
down, or even go sideways before it goes down. As a matter of fact,
we "expect" TXN to make one more "good" rally up, to or near that "B" wave
double top, before the real damage begins.
All in all, from what I see here, it appears "to me" that TXN
will eventually make its way to either a 10.8% or 11.8% rate line depending
on whether it continues to pay a very minimal (.8%) dividend or increases
that payout to a more normal market rate, since higher dividends produce
lower stock prices over the long term. However, when I include other analysis
into the mix, it appears that the most likely target will be for TXN to
make the Fibonacci number line at either $8 or $5 sometime in late 2006,
which is also "near" a 61% retracement of the last bull leg up, from 1990
to the 2000 ATH, in log distance (percentage) terms. While any estimate is
always going to be subjective, we currently estimate that TXN will have
a 45% probability of reaching that $5 target in 2006, a 55% probability
of reaching $8 in 2006,
a 70% probability of reaching $13 or lower in 2006,
and a 75% probability of reaching $13 or lower by 2010.
