A ‘trend’ in financial markets can be defined as a direction in which the market moves. ‘Bullish Trend’ is an upward trend in the prices of an industry’s stocks or the overall rise in broad market indices, characterized by high investor confidence.
‘Bearish Trend’ in financial markets can be defined as a downward trend in the prices of an industry’s stocks or the overall fall in broad market indices. Bearish trend is characterized by heavy investor pessimism about the declining market prices scenario.
“Rome wasn’t built in a day” applies in the stock market trading/investing. The stock market comes in a cycle with a period of time frame for months or even years. Whether you are a trader or investor makes no difference because. The stock market does not go up on a straight line nor goes down on a straight line. It consist of multiple rallies and corrections along the journey. But what is more important being a trader/investor is to be able to identify the primary market trend that speaks the macro view of that particular market trend or stock trend. With that you can see a clear picture of the existing trend and know what actions you should take on that market or stock.
Applied with technical indicators on the chart above allows you to see the past and current trend of this stock. Now what you want is to be able to comfortably identify the past trend and current trend. Not a jig saw trend that confuses you. Trend reversal occurred on this stock GTRONIC on the month of February 2018. Notice how from the month of February on wards to mid of May 2018 it does not present any buying opportunities to us at all? Certainly like I mentioned nothing moves down on a straight line as during a bear trend it will consist of rebound and further correction. If you are able to catch each of those rebound during that period of February – May and make a good profits out of it then you are GENG “great”.
But the actual trend reversal occurred on the month of mid of May 2018. At that point of trend reversal into a bull trend, this is a stock that is worth the pick. Don’t dream of making an instant 20% ROI in just 2 days. That is casino not stock market. Rome wasn’t built in a day thou. It took almost 4 months for the price of GTRONIC to give investor/trader a +30% ROI. Certainly again an upward price movement does not move up on a straight line but consist of multiple rallies and correction. So if you are using technical analysis you will make use of the time during the price correction to time your entry in.
“The trend is your friend until the end when it bends.”
This stock GKENT with applied technical indicator allows you to see the past and current trend comfortably. Trend reversal into Bear Trend occurred on the month of April 2018. Multiple suicide gap downs movement followed by the shock election results. What matters most is since April to August 2018 we have yet to see a trend reversal occurred on this stock. Which means if you invested since the month of May to August, while the market currently been doing well with stocks rallying up to the moon, this stock is still staying put waiting…hoping…..one day…it…will…come….back….on…track.
Notice this stock LIONIND with applied technical indicators, how it entered into a trend reversal into a bear trend which was on January 2018. This bear trend last for 7 months. Again if you are able to made profits out of it during that period of time trading the rebound you are classified as GENG ‘Great”.
The actual trend reversal into a bull trend occurred on the month of August 2018. From there on wards full power of explicit buy movement are churn into this stock up to today. So where do you wish to buy this stock from on wards?
JAKS one of many darlings with applied technical indicators allows you to comfortably identify the past and current trend. Falls into a trend reversal into a bear trend on the month of March 2018. Since then turn into a water fall movement moving downwards lower and lower without a trend reversal happening. Is this your ideal stock pick?
Patience is always a virtue when it comes to stock trading/investing. Sometimes when winter is here we literally need to wait for months as in months before opportunities kick into a summer buying opportunity again. But we are all living in those micro days of months of winter months. Hence knowing when a trend reversed into a bear trend is a must for us to take action on our portfolio to? Cut loss and protect your capital. Else you will be dragged into the long dire months of corrections.
“When a trend reversal turns into a bear trend, wake up and take action.”
Patience can always be rewarding as well because the stock market in Malaysia is not a get rich quick scheme that give bombastic returns daily. Trade it in a mid to long term view instead to give a that bombastic comfortable returns. At many times we waited for a year till a trend reversal into a bull trend appear then we are able to take action. How happy will you be holding onto a stock that moves up on a monthly basis compared to on a stock that moves down on a monthly basis?
“Pay extra attention on stocks that turned into a bull trend. EXTRA attention!.”
TFM Eagle Eye Newsletter Issue #297
(Release date 19.08.2018)
Weekly outlook on equities indices and derivatives market
Weekly Eagle Eye Stocks to pick and trade.
Weekly education on trading strategies.
Get updated first hand before the market open up for the week.