A strong trend in bubble as a concession. This trend is well established and usually a trader or investor monitors this by observing the degree of parallel division in the long term group of averages. The screen GMMA table shows KSC sound, stable, well-developed trend.
Our interest arises when a group of short-term moving averages up quickly. This coincides with three days of bar chart, which have much higher price than the normal range. These days also include places where the gap opens higher than yesterday's high. Some temporary exciting news is driving the price. This has the possibility of setting a new trend, or be short lived rally. This is not the same as the speculative bubble, because it is built on a well established trend.
This bubble can draw some speculative activities. This is of interest if we already hold the stock because you expect the bubble to collapse and bring prices back to the primary trend. If we are considering buying KSC then it is worth waiting for the bubble to collapse.
The leading indication for a weak bladder rupture is a sudden down in 3 and 5 days EMAS, shown in a circle. The key confirmation comes when prices drop back to the trend line, and then jump away. The short term group of averages quickly returned, and then returns. The degree of separation between the two groups with the average of the compression and rebound point remains essentially unchanged compared with previous returns points. These are shown with thick black lines.
When this division is consistent also coincides with the growth of this trend line on the bar chart, then we can be sure that the underlying trend is intact. It is this combination of features that allows us to treat the sudden price increase as unthreatening bubble. The development is very short lived on and off from a very solid base. This is quite different from the bubble feature that also threatened the end of this trend.
Tuesday, May 24, 2011
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