Buy AIR..Well are you feeling lucky, Punk??
XXXX asked be a simple question of where TA buy points are. He admits TA is not his strong suit. Instead of me saying there's none yet, I thought I better qualify the answer with a quick education but it sadily it turned into a rambling Sunday TA rant...Sorry XXXX
Hi XXX
First of all..
TA is a graphic portrayal of group behavior...Question: does your personal assessment of AIR line up with what TA is saying...It should!!! it tells you the bears (some are big money bears) are beating the bulls atm
There is a sense that the bulls are trying to find (mentally) a bottom and they sense that it is at 2.35 because all other supports so far have failed..the steep drop can't last forever and there's this good FA/ poor shareprice conflict which seems "irrational".. Also there are investors riding out this storm..they are suffering emotional pain which they didn't expect and some are looking to quit out but at a higher price than now (bear) some will create a mirage of happiness through a lesser overall loss by averaging down and relying on hope to change the red ink to blue ink (bull)
On the bear side we have.
1...Competition heats up (Cyclical theory says this event occurs near the top of all cyclical cycles)
2...VAH doesn't help AIR's balance sheet
3...Investor sense of disbelief towards Management Hype
4...$3 share price was too high (using valuation methods specifically for cyclical stocks)..Share price should be $x
What is the $x price..Answer when bulls behaviour (feelings) out number the bear behaviour (feelings) and trepidation outnumbers intrepidation
Chartwise.. the bull/bear line shows where feelings may reverse....If the price bounces off upwards the Stock stays in a Bull Market cycle (higher highs/higher lows) a bull market correction has played out and a bottom is set in place...
If the price falls below the bull bear line it means the bull market cycle may be over ..if the price falls to the next support $2.25 (an old support 2yrs) and bounces up (respects) this may not be a bottom as AIR could be in bear market cycle (lower highs/lower lows) and that support respect maybe temporary
Isn't AIR already in a Bear Market Cycle ??
Conventional investing says Yes>20%...TA Charts says no not yet as the Bull/bear line is at .. $2.35.
There are other chartable ways of assessing investors feelings during sudden falls..Fibonacci Retracements are very spooky ..38.2% and 61.8% are the most known areas.. (there are other points as the price falls to greater extremes)..
AIR price 2.36 at the moment is ..bang on 38.2% (see Baa Baa's post on the AIR thread).
There are other TA indicators that gauge investor behavoural changes....The quicker more sensitive indicators are oscillators, MACD and Stochastics tend to be the favourites among investors using basic simple TA or should I say misusing...the misuse involves using only indicators that agree to reinforce their "set in stone" belief such as when to get in/out quickly...e.g sensing a bottom...These people then blame TA if their beliefs turn to custard..
Overall..it depends on the masses and especially those with the most money that rule which way the market goes
Question:..So where's the bottom using TA?....Answer: Don't Know...Why: Because TA can't predict the future..
And neither can FA or anyone else!!!..many may say the bottom is in at $2.35 but it is an opinion not fact (yet).
TA is an analysis of historic data..Observation has noticed certain price areas have a greater chance of reversion such as Primary trend lines (already failed) major Support areas (bull/bear line at $2.35) and Fib Ret at 38.2% ($2.35) and 61.8%. However favourable TA areas do and often fail to revert (logic.. for a 61.8% area to be reached a 38.2% area has to have failed)..TAer's can analyse historic data predict and at best create a probability of an happening.
I'm not sure what AIR's $2.35 probability of being the bottom is (not enough NZX data), but this area has a higher probability than other area's in proximity on the chart, as it has the 38.2% FIB RETand major support (bull/bear) line in it's favour..
Would I invest now?...Answer..Me personally Hell No!!!...I'm a wimp when it comes to Cyclicals behaving badly and also my TA discipline forbids me...It depends on your risk tolerance and bank balance..Yes AIR is at a support area so buying v risk is more favourable than near a resistance area and dabbling is OK but risking your house is NOT OK!!...Cyclicals as I've mentioned so often before are scary stocks, they are volatile..their falls hurt portfolios...Preempting a bottom is risky business therefore the rewards are higher.. Cyclical stocks in their volatile phase have very high risks..Is AIR's rewards high enough at the $2.35 level ..In market theory if nearly everyone says yes then it will be a market bottom (for now?)...
IF you can't help yourself and buy in at $2.35 then apply tight stops...remember volatility may not be your friend, even your tight stops may fail to get you back out in time..
For me Investing 101 applies.. Don't buy into a downtrend.. wait for buy signals