Hello! If you remember, or were reading, a couple posts ago I said I would be talking about how to identify if a trend is strong or weak and which way it's going. However, I would first just like to say that the stock I bought yesterday (Trevali Mining Corporation. TSX: TV) Has gone up $0.03 (3.55%) Since I purchased it. That's like $20 in my pocket! Also, Zynga. The stock I was talking about the other day. The one that it anticipated to be as strong as google has dropped ↓5% from $10.00 to $9.50. For the people who got in early, this is a bad thing. But for anyone who still hasn't made a purchase, this could be a good thing. 40 million shares of this stock were purchased when the market opened. The stock jumped up 25% and then a lot of people sold bringing it crashing down to $9.50. Since then it has been pretty steady for the rest of the day. I don't think it is going to go much lower than that. I think it's all uphill from here for the next little while. Unfortunately I do not have money to buy shares. At least not that I am willing to spend. If my current stock goes well and I sell soon, I will be putting my money into Zynga if it hasn't gone up too much by then. My guess is though, that tomorrow a lot of people will buy it again and it will jump even higher than $12.50 and it will keep "waving" its way up from there. Never quite dropping as low as it did the time before. ANYWAYS! Enough of that!
How to tell what a trend is doing: this is not a perfect science. But it sure is helpful. When looking at a chart you want to take note of what way the stock is moving. Is it trending upwards or downwards? Now, look at the ADX indicator. It is a horizontal line on a chart that ranges from 0 -100 (might look like 10-90)depending on the range it passed through during the time line of the chart. Here's an example, outlined in red, from the stock i talked about earlier. (TSX: TV)
If the line goes above 30 this is a really good thing. It means you are looking at a pretty strong trend. If you want to be really safe you would invest in stocks that are trending in an upward manner of 30 or more. The ADX will not tell you if it is moving up or down. Only how much "momentum" it has. It's up to you to decide if it is going up or down. A good way is to try and recognize the "waves" and "stages" I talked about in my earlier posts. If you looked at Zynga right now (as I am typing this) you would see that the ADX is over 60 right now! And this stock is not going down! Sorry, I got excited. Anyways, that's all I have for you today. Hope you learned something. Next time I will tell you about the bar chart above the ADX indicator :)
James
How to tell what a trend is doing: this is not a perfect science. But it sure is helpful. When looking at a chart you want to take note of what way the stock is moving. Is it trending upwards or downwards? Now, look at the ADX indicator. It is a horizontal line on a chart that ranges from 0 -100 (might look like 10-90)depending on the range it passed through during the time line of the chart. Here's an example, outlined in red, from the stock i talked about earlier. (TSX: TV)
If the line goes above 30 this is a really good thing. It means you are looking at a pretty strong trend. If you want to be really safe you would invest in stocks that are trending in an upward manner of 30 or more. The ADX will not tell you if it is moving up or down. Only how much "momentum" it has. It's up to you to decide if it is going up or down. A good way is to try and recognize the "waves" and "stages" I talked about in my earlier posts. If you looked at Zynga right now (as I am typing this) you would see that the ADX is over 60 right now! And this stock is not going down! Sorry, I got excited. Anyways, that's all I have for you today. Hope you learned something. Next time I will tell you about the bar chart above the ADX indicator :)
James
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