Tuesday, March 25, 2014

Tylers appointment with destiny

One of my first recomendations on this blog was Tyler Technologies (TYL). This has by far been my worst investment. I was way early shorting it and my position was too large so I covered half at a loss and still hold the other half, about 9 months later, with a portfolio position of 10%. But somehow I manage to be still optimitic about this "trade". And even more than that, I suspect Tyler might be a good proxy for the market as a whole. I also could be delusional.

So what has happened? Tyler had a huge blow off top, but a slow moving one:

In close up we can see the slow motion of the top formation:

So whats going on? I believe two things. First, a blow off top will usually move at the same speed down as it moved up. Tyler wasn't in a hurry on the way up. Second, a blow of top tend to creep down at least 6/10s of the top formation. Something like this:

Sometimes it goes all the way below the base but not always. 6/10s of the top formation is a common pattern. It could of course have a counter rally on the way there but still this is a level I suspect it will end up in before it turns. Now what is it going to take to get there? I don't think it's going to get there by itself. It would be far easier with some support from a sluggish general market. So if Tyler is going to fulfill its destiny, set by yours truly, then the market would have to become more bearish. Lets see what happens!

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