Certainly, the number one is to see the fundamental analysis, such as Market cap, P/S ratio for non start up potential high-growth stock in cyclical industries, wall street Analyst Price Target. In case of a blue-chip value stock, it is the MArket cap and P/E ratio and comparing it to the benchmark.
But after convincing yourself that the stock is undervalued. You will still need to know at what price to open/add a position. I understand the usual way of doing this is to use the technical indicators. Certainly, there is no method that could guarantee 100% accuracy, but statistical evidence has shown that you just need to get it 55%+ right to beat the market.
What technical indicators are you using, and how accurate they are, based on your own personal experience??
If I’m trying to gauge a good entry, my technical go tos are;
The overall trend is bullish; if not I’ll wait for the turn
Finding support on either a previous level of support, a trend line or an SMA line
If the average volume at that support level is either predominantly bulish, or at least 50:50
If the RSI is under 24 and preferably the MACD curling upward
If there’s been a gap down (tend to only use this one on stocks that are fundamentally winners or momentum/growth stocks with good volume to float ratios or sentiment behind them)
But as has been said before, none of these are guarantees of success.
STNE is a good recent example of where none of the above have made a difference, but the key one is the first rule. STNE is in downtrend, it’s bounced off the 20day SMA all the way down, currently trying to break back through.
With STNE are you referring to STNE (StoneCo Ltd.) which provide financial technology solutions. for merchants and partners that conduct electronic commerce across in-store, online, and mobile channels?
If so, I managed to open a small position @$16.08 as well. I have decided to open position after knowing that this is a stock that Cathie Wood (Focusing on Growth on disruptive innovation) and Warrant Buffet (Focusing on Value investing) both agree. But certainly, I also do my own DDs.
It seems to me most of the bullish signs are confirmed on daily chart.
This is a historic new low. Around $15 seems to be the horizontal support level and it has shown the uptrend. But this is still not very strong signal of uptrend as the day before the last day (Big green Candle) there is still a small red candle.
MACD has formed a golden Cross
RSI is in oversold territory and already showing a reversal to the uptrend
Unusual Buying Volume (Unusual green candle on the volume bar)
In the candle stick chart, the wick (Shadow) of the big candle has crossed EMA20. Normally the best confirmation is if the Body itself (not just Wick) to cross the EMA. Why I am using EMA20? because EMA20 (light green line) seems to be the historical resitance level on moving Avarage. Every time it touches EMA20 it falls again.
The only last confirmation I would like to see is the Solid Body of the candle to be above the EMA20. The day before the last day (Big green Candle) wished to be a green candle (rather than red small candle currently showing). But sometimes if you wait that moment, it will be already too late.
Any comment, criticism on this to improve my technical skill will be very welcome.
I don’t think you can get caught up on getting the bottom, just knowing you have a good price and patience is all you need. Fundamentals will you tell you if the company is sound and fair valued and the technicals can help validate your judgement and entry. I literally just use resistance,support and SMAs tbh.
Certainly not. But The intention is not to get it 100% right and catching the bottom in perfection. You will only need 50%+ right to get a better result than those who bought at any time, any price. Also people could still combine it with DCA while they are moving down if you get the bottom area wrong. . It is at least better than the other alternatives by buying it randomly.
Certainly people will need to have a certain price they would want to pay for a stock.