Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Wednesday, January 05, 2005

Red Flags that NGPS Provided

…For this particular stock, I used the point and figure charts to show me that it was reaching overbought levels. The stock was 100% above it’s 50-day moving average and almost 300% above the 200-day moving average.
This is pure overbought levels.

Another huge indicator was the P/E ratio that tripled while plotting on a chart. Once a stock’s P/E ratio doubles, this is the first sign of overbought levels. This is only a secondary indicator to price and volume.

The stock logged a couple distribution days and a few days of ‘higher’ highs on lower volume – all red flags that you make you aware of the stock topping.

Finally, the stock was moving from $25 to $50 in one month – this is too much, too fast, it must digest its gains at some point.

I encourage questions on this blog pertaining to Daily Screens and Weekly Screens that I can answer and provide more detailed analysis in new blogs. Become active in posting comments, I have opened the comments to anyone on the web as of today. Members of course will always be first priority.

Piranha

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