Example

    Question:

    Dear Sir,
    I would like to know if I should buy MOT at $18? The stock seems to be doing well as suggested by their press releases, but I am not sure technically speaking. I am limited on my technical experience, but what I see is that the stock is making higher highs and higher bottoms, when comparing the highs in May with the highs in August, and when comparing the higher bottoms in April to June to August. So isn't this a positive for the stock and should it continue to go up? I would sure like to buy some and make a quick profit. Any help would be appreciated. Sincerely, Randy

    Original Chart


    Answer:

    Concerning the stock-term interpretation of this chart (before chart, below), we see that the stock price has reached levels of substantial resistance at the $18 to $19 area as shown with the horizontal blue line. Even though your analogy of the stock "making higher highs and higher bottoms" does appear to be correct, there are a few very important technical aspects to realize concerning this stock. At the bottom of this chart, we show that the long-term stochastics (STO) has reached overbought levels and is giving a sell signal at this point in time. More importantly, the moving average convergence/divergence (MACD) is suggesting a negative or bearish divergence has developed with the stock price. This can be seen by the red lines at the bottom of this chart which are slanting downward and the blue line for the stock price is horizontal. If the blue line was slanting upward, this would be an even more bearish divergence. Also, volume appears to have decreased with the rebound in stock price to previous highs, and we interpret this to be bearish. As for the short-term interpretation of this stock, we believe the next move will be downward, and we would tend to short sell it between $17 1/2 to $18.

    Before Chart


    The stock did drop in price thereafter as shown in the after chart, below, and could soon be a good buy candidate.

    After Chart


    This example shows why it is beneficial to get an unbiased opinion from an experienced technical analyst. One last thought, and an important one, if you ask this same question to your stock broker, he/she will make money no matter if the stock goes up or down. Feel free to submit your questions when the need arises!

 

 

Home ||  Stock Market Timing ||  Technical Charting ||  Web Design

Private Policy ||  Disclaimer ||  Contact Us

  Copyright © 2000 - 2002 StockVisibility.com, LLC All rights reserved