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PPL Chart
I've been keeping an eye on the PPL chart for the last few weeks. According to the GMMA, this is a strong trend with the long term averages consistant and spread out. The short term averages have dipped a little in the last few days but the underlying trend still seems strong. I couldn't include the GMMA because I don't have the software installed on this machine.
It looks like a pretty good stock to me based on this, and the trend line that I've plotted (I think correctly). I'm only concerned about two things:
1. Would it be right to get in now, or wait until the price dips a little closer to the trend line?
2. Missed the boat already? This trend has been going for a couple of months now,will/has it run out of steam?
Are there any other indicators or methods of telling if this still has a good probability of rising for a while yet?
I've also included the ADX but I'm not too sure how to interpret it.
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Thanks for that. Just one question:
ADX between 30-35 show a strong trend is in place, Most trends run to a ADX of 40-45 before showing signs of trend exhaustion
A good trading Zone is between ADX 30-40
Buy near ADX 25- 30 - Trail stops more aggressively when the ASX exceeds 40, Most Trends will exhaust before 50 with only the very strongest getting above.
ADX is already around the 40 mark. So do you think I should wait for it to pull back to about 30?
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Future Entries could be done better however, the logical entry was on the break above $1.15 .....close price technical resistance which is now support.
You're right about that, unfortunately my money was tied up somewhere else at the time.
I don't really know what my "investment style" is at the moment, I'm still trying to figure all this out.
Basically, I think I just want to stay in until it looks like the trend is turning and hopefully get out with a profit. Not shooting for the stars here, a modest profit will do.
I was thinking that a good stop loss point would be a couple of cents below the $1.27 support level, what do you think?
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Not For Me!
Originally Posted by wbosher
Would it be right to get in now?
Not in my opinion. PPL is in an obvious short-term downtrend. No-one knows how far this will run.
Originally Posted by wbosher
Have I missed the boat already?
Perhaps. PPL has risen 66% in just 2 months. An uptrend that steep is unsustainable.
Originally Posted by wbosher
This trend has been going for a couple of months now,will/has it run out of steam?
It is clearly starting to run out of steam. See how the steep OBV rise has now become much flatter.
Originally Posted by wbosher
Are there any other indicators or methods of telling if this still has a good probability of rising for a while yet?
Yes, there are. What you are wanting is a leading indicator. Moving averages, trendlines, ADX etc are all trailing indicators. They are based on historical price data. The On Balance Volume indicator measures whether volume is flowing into or out of a stock and because changes in volume generally precede price changes, it tends to give signals earlier than price based trailing indicators. It gives us useful insight into the market sentiment lying beneath price action. You don't want to be buying stocks with a flat or falling OBV.
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Thanks for that Phaedrus. I'll start using the OBV in future it looks very useful.
While on the subject of using different indicators, a lot of people appear to be using a line chart to see support/resistance levels. I've heard the Point & Figure charts are also good for that, but don't see it mentioned here very often, if at all. Does anyone have any experience with P&F and is it any good for this purpose?? I've had a bit of a play with Bulls-Eye Broker and some of the results aren't too flash, may just be the way I'm using it (settings etc...).
Any advice??
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Point-and-Figure charts are a very old idea, developed well before the general use of PC's. They made it possible to follow a stock's price action using a completely manual technique that was less labour intensive than trying to maintain conventional charts. They are still good if you don't have any access to computer generated charts and there are still people that really like them. I am not one of those people, however. I guess it comes down to a matter of personal preference.
Re OBV. So long as you follow volume changes closely, the means that you use is of secondary importance. There is no need to fixate on the OBV the way I have! There are a lot of indicators that incorporate volume, the most commonly used probably being OBV, Price/Volume Trend and Accumulation/Distribution. Even a simple volume histogram gives a lot of insight - especially if the bars for Up days and Down days are in different colours.
Here is an updated PPL chart for you. The short-term downtrend continued on, and it has now broken below the trendline, giving a Sell signal. The OBV trendline was broken on 15/5/09, giving an earlier Sell signal. Down another 4 cents today - lucky you didn't buy eh?
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