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ELLIOTT WAVE


Aruba Networks

10/26/10 11:56:52 AM
by Koos van der Merwe

How high can this stock rise? Is it worth buying? Should I buy it? These are all questions I have tried to answer.


Security:   ARUN
Position:   Buy

Aruba Networks (ARUN) gave me a buy signal this past weekend. Looking at the share price, I wanted to know why it gave me a buy signal, and what its target is.


FIGURE 1: ARUN, WEEKLY
Graphic provided by: AdvancedGET.
 
Figure 1, a weekly chart, shows how the price has fallen from a high of $23.81 in July 2007 to a low of $1.98 in November 2008. Since then, the price has risen in a wave count that looks acceptable to a high of $22.82 by October 1, 2010, suggesting a target fifth wave greater than $25. To get a more accurate reading of this target, I look at the daily chart.

The relative strength index (RSI) shown is suggesting that Wave IV may not be complete. The JM internal band (blue lines shown), however, is positive.


FIGURE 2: ARUN, DAILY
Graphic provided by: AdvancedGET.
 
Figure 2 does suggest a Wave 5 of $26.20 with a probability index factor of 54%, which is pretty good. The JM internal band has given a buy signal, confirmed by the RSI. A JM internal band is a 15-period simple moving average offset by 2% on either side.

FIGURE 3: ARUN
Graphic provided by: OmniTrader.
 
Figure 3 shows the following:

1. The high of today broke above the Vervoort trailing stop, suggesting a buy signal.
2. The RSI volume histogram indicator has moved above 10, suggesting strength.
3. The stochastic RSI indicator has given a buy signal.
4. The vote line, which sums up the red/green strategies, has given a buy signal. Eyeballing this strategy over past signals shows its efficacy.
5. Finally, the triangle that has formed is suggesting a target of $24.19 (21.62 - 16.17 = 5.15 + 19.04 = 24.19).

I am a buyer of ARUN on any correction with a target of between $24 and $26.




Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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