Catching an Uptrend Stock

Everybody knows it well on the definition of Uptrend and Downtrend.

Uptrend = Price movement of the stock moves higher and higher over a period of time creating Higher Lows and Higher Highs.

Downtrend = Price movement of the stock moves lower and lower over a period of time creating Lower Lows and Lower Highs.

While company announcement, economic data and global news are the catalyst for price movement in the market, we don’t actually need them to trade the market successfully. The idea is simple, all news and data are reflected into the price of the stock via price charts. Hence what you need for the start is to being able to FIRST identify the past & current trend of a stock. It can be done in many ways but one of my cup of tea is through using Moving Averages.

KHEESAN (6203) showing a simple price + moving averages. August was a month of disaster to the global stock market. Hence a crossover of the moving averages signifies a Bearish Trend. If you are a Short or Mid term investor you will want to get out of this  stock at that period of time to protect both your capital and profits. By the look of the chart above it doesn’t seem to drop that much? Well its just a -40% of losses in a matter of 1 month period of time. If you are okay with this -40% then you have mastered emotional control. 

The good period of time arrived in the month of September instead when we see a cross over of both the moving averages. This is the period of time where Short, Mid, or Long term investor will want to position themselves into this stock and practice holding power. Doesn’t look like the stock price gone much high? Well its just a +36% ROI over the past 4 months which is pretty not too bad if you are a mid-long term investor. 

Stocks on a trending scenario will always create entry points for investor to position themselves inside during each pull back. So long its trend is not being violated, you just need to know what you are doing in this stock.

Moving forward, this stock is on a verge of testing its previous high of RM0.935. But it got to first overcome its minor resistant at RM0.885 for a breakout trading. Those with the holding power should aim for a breakout of its previous high instead. After all an Uptrend stock creates Higher High and Higher Lows over the long run no?

Likewise I have another similar stock to show which is LONBISC (7126). 

LONBISC previous high resistant is at RM0.925. Likewise it will need to overcome its mini resistant at RM0.875. Those with holding power should aim for a breakout of its previous resistant. Again an uptrend stock creates Higher Highs and Higher Lows over a period of time.

Shall there be any suggestion on the reversal of these stocks prices in the near term I will be posting it up here as well. Happy Trading!

(9 Years Position Equity Trader, Founder of trendfollowingmalaysia.com, Finance Speaker)

Don’t forget to follow us on our Facebook!

Search (Trend Following Malaysia)