WEEKLY TECHNICAL STOCK WATCH UPDATE
The table below is a compilation of actively traded stocks with their stop‐loss, support and upside targets with some popular technical indicators. Stock name in bold represents stocks that are expected to attract momentum trading plays and hence encourage retail orshort‐term trading participation. Share price in bold reflects revised stop‐loss, support and upside targets. Recommendation (REC) in bold indicate changes to recent technical calls.
Interpretation of Technical Indicators:
Moving Averages: A stock’s short‐term trend is bullish if share price stays above the 10‐day moving average, and bearish if it stays below. The medium‐term trend is positive if share price stays above the 30‐day, and negative if it remains below this average.
14‐day RSI: A reading below 30 is considered oversold, above 70 is overbought. A rise above 50 with a corresponding share price surge above the 30‐day SMA should be taken as a bullish move with good short‐term upside potential. A fall below 50 and a simultaneous dip below the 30‐day SMA is bearish and imply further near‐term downside risk.
Bollinger Bands: Variable width bands that narrow during less volatile periods and widen during more volatile periods. As a general rule, in a bearish trend, traders should buy when share price touches the lower band and exit when price touches the middle band. The reverse is true in a bullish trend, ie. buy when price touches the middle band and sell when price touches the upper band. Momentum traders will buy on price breaks above the upper band, and sell when price breaks below the lower band. Alternatively, a sharp move that originates at one band tends to go all the way to the other band, a useful observation when projecting price targets.
Monday, May 25, 2009
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