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August 18 Chart of the Day - Hawaiian Electric

By now you may have heard about the tragedies in Maui. I have thought and prayed about those suffering from the devastation and will continue to do so.

Today we'll take a look at Hawaiian Electric's (HE) chart.  The company serves 95 percent of Hawaii's 1.4 million residents on the islands of Oahu, Maui, Hawaii, Lanai and Molokai.

The primary reasons for taking a look at this chart is to provide a harsh reminder to you to "never say never" and that in the markets anything can happen at anytime for any reason...

Technical analysis, nor any other charting system, is not foolproof.  There are never any guarantees in the markets.

And yes, that's coming from someone who was in MBA school during 1987's Black Monday when the Dow Jones Industrial Average dropped 22.6% in a single day!

Can you imagine if that were to happen now?  Well, many "safeguards" have been implemented since then to try and prevent huge single day market crashes.  All that means is it could still happen but over a longer time period.

On the HE weekly chart, price disregarded every potential support level on the way down, even gapping down through the "toughest" areas.

And by the way, technically speaking there's still room for more downside.  As a previous mentor would routinely say about a chart "it can only go to zero."

Overall I thinks it's a sad and unfortunate incident. I've read about the allegations and claims regarding negligence and not being proactive... I don't think anyone did anything malicious or with intended harm however that won't keep lawyers from being lawyers...

It's likely to be a bumpy road for the company to manage through and survive this but at the end of the day 1.4M people still need power so there will be an entity that provides it.

There are several things that could happen to the company while it figures out how to move forward:

There's alway a chance of a government take over or involvement (remember General Motors, Chrysler, Big Banks "too big to fail" scenarios)

Another power or related company could come in as "white knight" to acquire outstanding stock

HE could file for protection in the courts...

All while their stock could keep getting beat up but at the end of the day the demand for power will still be there.

The next few years will be interesting to watch as it unfolds...

From a stock perspective, if it hits that lower trend line channel I may consider getting in speculatively but not before.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

We'd like to hear from you in the comments sections.

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1 comment

  • Thank you to Tom, Beautiful charts, thank you, I am intimate with this company and stock. HE (Hawaiian Electric) – after 3 days of panic, almost 82% of the total float traded, after the 4th day, @ 122% of the total float traded. Weak hands no longer hold the stock, those with stock are going to hold at that level, new money looking to buy in, we see the fluctuations in the price each day.
    Desperate players will buy and sell at the market, both stock and options. Rational is returning. September Out of the Money Put prices lost almost 50% of the premium off the higher range of the prices. The law suit has not concluded, it will be far off in time.
    Selling of the 7.5 and 5 strike puts do not take much margin.


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