An Abundance of Wedgies

Slack Investor does love the ‘the Wedgie’ chart pattern – where the share price emerges from a wedge-shaped decline. He noticed it appeared recently with a few stocks (TLX, NDQ, TNE, PME) and this ‘breaking of a long-term downtrendline’ is usually a good sign of a potential stock price recovery. The chart pattern ‘the Wedgie’ was first discussed by Slack Investor back in 2019 and he has done a small-scale analysis on whether it works 1-year on. His conclusion, yes, mostly!

The top of the wedge downtrend line should be drawn for a period of at least 3 months (preferably 6 months) and connect at least 2 (and preferably 3) descending high points. _{– Slack Investor}

Slack Investor has used the ‘Wedgie’ as a buy signal to top up his holdings in TLX, NDQ, PME,GMG, IPH and MP1. Of course, he also checked Market Index to see that the stock had predicted earnings growth, good return on equity (ROE) and the predicted PE Ratio was not too high. Slack Investor has learned the hard way that these predictions dont always come true (e.g. CSL) – but, he has to start somewhere.

Slack Investor will report back in a year’s time to see how these stocks fared. He included (above) the ASX listed Greyscale Bitcoin Trust ETF (GBTC) – not because he is an investor … but, just for sport.

CSL Dumpster Fire

It brings no joy to Slack Investor to discuss his own failings. But, it is part of investing and all investors will have a similar story. Emotion comes into this as CSL was one of the first things that I invested in – way back in 2010 when it was around $30! He has bought more share along the way. The most recent purchase was at $282 (Ouch!). CSL was my first ’10-bagger’ and it gained a special place in his heart when it reached the dizzying heights of over $300. It is now under $100.

CSL has delivered a succession of earnings misses and guidance downgrades that, one by one, have stripped away the premium investors assigned to the ASX’s most trusted name.  _{– Carl Capolinga, Livewire}

Slack Investor has always taken a look at CSL after each of the 3 earnings downgrades and price slumps since 2025. He does this by going to the financial page of CSL on Market Index. Each time, he has convinced himself by looking at the analysts earnings growth projections that a recovery is imminent, and he has not sold. Sadly, the bad news of earnings not meeting forecasts has continued for 18 months.

In investing, the investment decision may be right … but the timing wrong. Or, sometimes bad things just happen. The best investors seem to be able to sense this – and are more ruthless in getting out of a stock than Slack Investor.

He was not alone in thinking the CSL price would recover. The table below shows Broker analyst predicted consensus rating and targets after each reporting season downgrade. The consensus was a BUY rating after each price slump. Ahh well … Slack Investor has only modest aims – mostly right over the long-term.

In hindsight, Slack Investor would have been much better off selling after the first (or second, or third) earnings downgrade and waiting for the ‘Wedgie’ recovery. However, Slack Investor is a complex mix of attributes and foibles … sometimes the foibles win! He still holds his CSL shares.