Tyco Rebounded After Its Stock Price Collapsed

Tyco International (TYC), a diversified manufacturing and service company that designs, manufactures and services everything from security and fire protection systems to infant care products, has a checkered ten-year performance from January 1995 through May 2005.

The daily price chart shows a strong upside and a choppy topping formation before the stock collapsed after top executives were charged with grand larceny, securities fraud and other crimes.

The price dropped from $58.62 on December 28, 2001 to $8.16 on July 25, 2002, an 86 percent decline. It then rebounded to $36.26 on January 6, 2005 before closing at $29.70 on May 19, 2005. From its bottom to the intermediate high of $36.26 the stock gained back $28.10 of the $50.46 loss, which is a 56 percent retracement. Then the stock turned down to its current level of $29.70. Stocks that retrace 40 to 60 percent of severe losses, often meet resistance and turn to the downside.

The Complete Trading Model (CTM) percent returns chart shows that for the 10-year period 70.63 percent of all the buy and sell combinations were winners (green) and 29.37 percent were losers( red). The large red area includes the losing buy and sell combinations that occurred during the price collapse.

The rebound in returns is shown in the front right corner of the chart. Click on the chart to see an enlarged view of the area.