The Charts tell you everything about a stock you want to know at any point in time. It prepares you for good news as well as bad news, provided you keep your eyes open
Stock Prices tell a powerful story about the current state of the stock. As an observer, it's better to listen than argue with it.
— Deepak Singh (@smarket) October 11, 2017
Case Study: General Electric
GE was making lots of positive noise earlier in 2017
One company that seems to be making all the right moves: GE
Positioning as Digital Industrial Play— Deepak Singh (@smarket) January 11, 2017
Now, It’s very usual for traders/investors to buy bluechip stocks when they decline to long term moving average. It happened in July 2017
Why General Electric stock appears to be compelling Buy? https://t.co/lZoeZKLI9p
— Deepak Singh (@smarket) July 12, 2017
This is how stock looked then – The stock at Ultimate Support of 200 week moving average
Investment Rationale in the article:
Fundamentally, the stock is trading at dividend yield of 3.64%. If all these factors not enough to attract dip buyers and bulls, then I am not sure what else can attract investors. It is for this reason, we can say that if the stock fails to hold 25-26 levels, then that means there is something seriously wrong with the company and in that case one should exit it the stock breaks 25 levels on the downside. So, yes a break here can result in panic selling.
Here’s what GE stock did during July-August time period in 2017:
It broke down below 200 week ma. It was a market way of telling – there is something fundamentally wrong with the company. You have to respect the chart and what you see on the screen. Always remember Stock breaks down first, bad news come later
BREAKING: General Electric says it will cut its dividend in half. https://t.co/TGMGUaWBm7
— CNBC Now (@CNBCnow) November 13, 2017
Here’s the current state of GE stock chart
I have seen many people arguing – Hey how GE was a good buy at 25 and how can you sell below it. The problem – they don’t understand how market discounts a stock. It works on a simple logic – When facts change, the market adjusts to new style
Taking a 10% stop loss is far better than holding on to a stock that’s 60% down and you don’t know what to do with it
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers