Timing Mkt Entrance from RSI, Stochastic & Bollinger Bands
I am eager to buy this stock because of its strong financials, its strong dividend, exemplary stewardship, and its current valuation, which is significanlty less than its fair value estimate (~21/share current, compared to ~29/share est. fair val.).
However, due to its recent price increase I am not confident to buy this stock now because I have a gut feeling that this stock will decrease in the short-term, thus minimizing my prorfits. Furthermore, with the market being as high as it is, I would like to mitigate the effects of any impending stock market slumps. Many believe that another crash is imminent, and I dont want to be caught in a situation where I paid a price for a stock that it may not reach again for several months. This will tie up valuable income that could otherwise be used to make bargain purchases should a stock market slump occur.
My analysis of this stock is as follows.
I first indicated the prolonged overbought status of the RSI indicator, further confirmed by the stochastic indicator beginning in middle-to-late November.
Then, I took note of the repeated top-Bollinger band penetration by the price signal, beginning in the first week of November, and continuing until mid-December.
Finally, I looked at the volume oscillator to look for signs of divergence. I know that if strong upward moves are supported by a strong positive shift in volume, that the current trend is likely to continue. However, I know that if a strong upward move in price is backed instead by a strong negative shift in volume, that a price reversal may soon follow.
Further to my point about volume movement, I observed that the volume oscillator's value at the close of December 11 was ~-4%, and more, that the rate of change of the volume oscillator was decreasing. This is especially apparent in the DEMA-9 of the volume oscillator signal. Since volume is an inherently noisy signal, especially in the 4h chart used in this analysis, I prefer to analyze a smoothed, DEMA-9 on the volume oscillator instead. This makes it more straight forward to assess volume movements and not be distracted by strong peaks and valleys seen in the un-smoothed signal. Thus, I anticipated that a further volume decline would ensure, despite the fact that the price appeared to be increasing rather strongly (but deceivingly so).
I thus held off on buying this stock on November 24, where I began my analysis, despite my strong urge to do so given the attractive price increase.
I am not certain when I will buy this stock, as the point I made about an imminent market crash is still valid. However should the price continue to decline significantly - the current decline sits at -2.3% in 3.5 hours since mkt open - it will look much more attractive to buy at that time.
However, due to its recent price increase I am not confident to buy this stock now because I have a gut feeling that this stock will decrease in the short-term, thus minimizing my prorfits. Furthermore, with the market being as high as it is, I would like to mitigate the effects of any impending stock market slumps. Many believe that another crash is imminent, and I dont want to be caught in a situation where I paid a price for a stock that it may not reach again for several months. This will tie up valuable income that could otherwise be used to make bargain purchases should a stock market slump occur.
My analysis of this stock is as follows.
I first indicated the prolonged overbought status of the RSI indicator, further confirmed by the stochastic indicator beginning in middle-to-late November.
Then, I took note of the repeated top-Bollinger band penetration by the price signal, beginning in the first week of November, and continuing until mid-December.
Finally, I looked at the volume oscillator to look for signs of divergence. I know that if strong upward moves are supported by a strong positive shift in volume, that the current trend is likely to continue. However, I know that if a strong upward move in price is backed instead by a strong negative shift in volume, that a price reversal may soon follow.
Further to my point about volume movement, I observed that the volume oscillator's value at the close of December 11 was ~-4%, and more, that the rate of change of the volume oscillator was decreasing. This is especially apparent in the DEMA-9 of the volume oscillator signal. Since volume is an inherently noisy signal, especially in the 4h chart used in this analysis, I prefer to analyze a smoothed, DEMA-9 on the volume oscillator instead. This makes it more straight forward to assess volume movements and not be distracted by strong peaks and valleys seen in the un-smoothed signal. Thus, I anticipated that a further volume decline would ensure, despite the fact that the price appeared to be increasing rather strongly (but deceivingly so).
I thus held off on buying this stock on November 24, where I began my analysis, despite my strong urge to do so given the attractive price increase.
I am not certain when I will buy this stock, as the point I made about an imminent market crash is still valid. However should the price continue to decline significantly - the current decline sits at -2.3% in 3.5 hours since mkt open - it will look much more attractive to buy at that time.
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